1. Are you a film production company? Definition of “Film Production Company”: a person that produces one or more films or any part of a film.
      Yes (if Yes, continue)
      No (If No, you cannot qualify)
    
2. Is your production intended for exhibition?
      Yes (if Yes, continue)
      No (If No, you cannot qualify)
    
3. Is your production intended for reasonable commercial exploitation?
      Yes (if Yes, continue)
      No (If No, you cannot qualify)
    

The following types of productions will qualify as long as you answered YES to the three (3) questions above:

• Feature films
• Independent films
• Television (MOW, pilots, series, reality)
• Documentaries
• Student films
• Short films
• Animation
• Video games (make sure you are an “approved film production company”)
• Music videos (make sure the music video is intended for reasonable commercial exploitation)

What are the requirements?

• Script cannot be obscene in nature. Any non-scripted projects (reality television, documentaries, etc…) must submit a treatment/synopsis/storyboard/other medium-appropriate outline and indicate if it involves any potentially hazardous conditions, minors or animals, and its compliance with state laws.
• A long-form narrative film production shall contain an acknowledgment that the production was filmed in the State of New Mexico.
• Production shall agree to pay all obligations the film production company has incurred in New Mexico.
• Production shall agree to publish, at completion of principal photography, a notice at least once a week, for three consecutive weeks, in local newspapers in regions where filming has taken place to notify the public of the need to file creditor claims against the film production company by a specified date. This information will also be posted on the web site of the New Mexico Film Office until all financial obligations have been paid.
• Production shall agree that outstanding obligations are not waived should a creditor fail to file by the specified date.
• Production shall agree to delay filing of a claim for the Production Tax Rebate until the New Mexico Film Office delivers written notification to the Taxation and Revenue Department that the film production company has fulfilled all requirements for the credit.
• Production shall agree to enter into a contract with the New Mexico Film Office (Production Tax Credit Agreement), accepting the terms of the above.

What Qualifies? (all must be subject to taxation by the State of New Mexico):

• Wages or salaries, fringe benefits or fees for talent, management, and labor to a person who is a New Mexico resident for purposes of the Income Tax Act.

  A resident is defined under Section 7-2-2(S) NMSA 1978 of the Income Tax act as follows:

  "resident" means an individual who is domiciled in this state during any part of the taxable year; but any individual, who on or before the last day of the taxable year changed his place of abode to a place without this state with the bona fide intention of continuing actually to abide permanently without this state is not a resident for the purposes of the Income Tax Act.

  Additionally, the resident must file Resident or First-Year Resident tax returns. Anyone filing Part-Year Resident or Non-Resident will NOT qualify.

• Post-production expenditures that are directly attributable to the production of a commercial film or audiovisual product, for services performed in New Mexico; and subject to taxation by the State of New Mexico.

Any of the following “direct production expenditures” (meaning a transaction that is subject to taxation in New Mexico) provided by a New Mexico vendor:

• Costs of a story and scenario to be used for a film if writer is a New Mexico resident
• Costs of set construction and operations, wardrobe, accessories, and related services
• Costs of photography, sound synchronization, lighting, and related services
• Costs of editing and related services
• Rental of facilities and equipment (including location fees)
• Leasing of vehicles, not including the chartering of aircraft for out-of-state transportation; however New Mexico-based chartered aircraft for in-state transportation directly attributable to the production shall be considered a direct production expenditure
• Food and lodging
• Commercial airfare if purchased through a New Mexico-based travel agency or company for travel to and from New Mexico or within New Mexico that is directly attributable to the production
• Insurance coverage and bonding if purchased through a New Mexico-based insurance agent
• Other direct costs of producing a film in accordance with generally accepted entertainment industry practices
• Payment to a personal services corporation for the services of a non-resident performing artist (actors and stunt performers only) if: the personal services corporation pays gross receipts tax in New Mexico on the portion of those payments qualifying for the tax credit; and the performing artist receiving payments from the personal services corporation pays New Mexico income tax.

As applied to direct production expenditures for the services of performing artists, the film production tax credit authorized by this section shall not exceed five million dollars ($5,000,000) for services rendered by all performing artists in a production for which the film production tax credit is claimed, meaning collectively, actors’ salaries, including tax, up to $20 million are eligible.

See following web link for info: http://www.tax.state.nm.us/pubs/fyi102.pdf

FOR DETAILED INFORMATION ABOUT NON-RESIDENT CAST QUALIFYING FOR THE REBATE, SEE THE QUESTION, “I’m confused about the non-resident actor ‘super loan-out’ thing I’ve been hearing about. Could you explain?” IN OUR FAQS.

Definitions:

“Film” means:
a single media or multimedia program, excluding advertising messages other than national or regional advertising messages intended for exhibition, that is fixed on film, digital medium, videotape, computer disc, laser disc or other similar delivery medium; can be viewed or reproduced; is not intended to and does not violate a provision of Chapter 30, Article 37 NMSA 1978; and is intended for reasonable commercial exploitation for the delivery medium used.

“Commercial audiovisual product” means:
a film or a videogame intended for commercial exploitation.

“Direct production expenditures” means:
a transaction that is subject to taxation in New Mexico.

“Film production company” means:
a person that produces one or more films or any part of a film.

“Post-production expenditure” means:
an expenditure for editing, Foley recording, automatic dialogue replacement, sound editing, special effects, including computer-generated imagery or other effects, scoring and music editing, beginning and end credits, negative cutting, soundtrack production, dubbing, subtitling or addition of sound or visual effects; but not including an expenditure for advertising, marketing, distribution or expense payments.

Note: Expenditures attributable to a production for which the film production company receives a tax credit pursuant to the federal new markets tax credit program will only qualify for a 20% rebate.

Statute:

New Mexico Taxation and Revenue Department Film Production Tax Credit

Section 7-2F-1 and 7-2F-2 NMSA 1978

http://www.tax.state.nm.us/regs/Film_Production_Tax_Credit_Act.pdf

Film Production Tax Rebate Cheat Sheet

Please photocopy this page and distribute to your department heads.

• It is not necessary to register the filing entity to do business in New Mexico. Tax & Rev will use your Federal ID number (or social security number if individual) to process the rebate/return.
• Employee fringe benefits paid to a payroll company qualify for the tax rebate, including Pension, Health & Welfare, Holiday, Vacation. The following does not: SUI, FICA, FUI and Workers Compensation fee. Workers Compensation Insurance will qualify only if purchased through a New Mexico based agent.
• Non-resident performing artists (actors and stunt performers only) will qualify if the personal services corporation pays gross receipts tax in NM on the portion of those payments qualifying for the tax credit; and the performing artist receiving payments from the personal services corporation pays New Mexico income tax. See FAQs (page 12) for details. Fringes for non-resident actors do not qualify.
• Non-resident crew members do not qualify; however, their per diem and housing do.
• New Mexico-based chartered aircraft for in-state transportation directly attributable to the production will qualify; however the chartering of aircraft for out-of-state transportation will not.
• Commercial airfare if purchased through a New Mexico-based travel agency or company for travel to and from New Mexico or within New Mexico that is directly attributable to the production will qualify.
• Purchases made using petty cash must be documented by vendor receipts. Copy the front of each petty cash envelope and include with your summary report. The vendor to whom the petty cash was paid is needed, not the crew member who was given the petty cash.
• Credit card purchases must include detail of purchase/vendor name.
• Fuel cards and P-cards will need backup/detail (especially location for fuel cards) of transaction.
• Expenditures made to Section 501 (c), non-profit organizations do not qualify because these organizations are tax exempt. These include Goodwill, Salvation Army, churches, museums, schools, etc.
• Purchases made on the Internet do not qualify unless the seller is located in New Mexico.
• Payments made to the State or Federal Government do not qualify. This would include permits and postage (parking lots are the exception).
• FedEx or UPS packages will only qualify if they’re being sent from New Mexico.
• Purchases made on Native American tribal lands do not qualify as they are tax exempt. This includes gas stations, restaurants, hotels, etc… located on these lands.
• Cell phone reimbursements when the billing address is outside of New Mexico do not qualify.
• A Declaration of Residency form is required for the payroll of every New Mexico resident you include for the tax rebate except for Background Talent, and you must get proof of residency (Copy of last year’s New Mexico personal income tax return filing as a First-Year Resident or Resident; valid New Mexico driver’s license; current New Mexico voter registration card, or other clear and convincing evidence showing intent to maintain a permanent residence in New Mexico). The employee must completely fill out his/her Declaration of Residency form, and you must include a copy of that form and a copy of their proof of residency in your tax rebate package. If it is discovered that the “resident” filed a New Mexico Part-Year Resident or Non-Resident tax return, or if they have changed their residency to another state on or before the last day of the taxable year (December 31), or if TRD has other evidence indicating they are not a resident (even though they filled out a Declaration of Residency form and provided proof), he/she will NOT qualify for the tax rebate. By signing the Declaration of Residency form, the resident also authorizes Tax & Rev to disclose their residency status to the production company, so you can verify their residency!

TO BEGIN THE PROCESS, START HERE:

For film/television projects, please do not complete these steps until you are officially greenlit/fully financed and in prep. For stand-alone post-production, bypass non-applicable steps.

Step One: Registration & Agreement

Complete the following two (2) forms. Forms can be found at www.nmfilm.com under “Incentives.” There is no deadline to submit these forms; however, we ask that they are submitted before principal photography begins, or for stand-alone post-production, before post has been completed.

• Film Production Company Registration
• Production Tax Credit Agreement* (Stand-alone post production has a separate form)

Mail, fax or email to:
John Raymond Armijo
New Mexico Film Office
418 Montezuma Ave.
Santa Fe, NM 87501
Fax: 505 476 5601
Email: john@nmfilm.com

*After we receive this agreement, a signed copy will be faxed to you for your records.

Step Two: Submit script

Submit script to the New Mexico Film Office. For non-scripted projects (reality television, etc…), you must submit a synopsis or medium-appropriate outline. If you have applied for the Film Investment Loan Program and already submitted your script, please skip to Step 3.

Preferred method for sending script: Final Draft or PDF via email to jennifer@nmfilm.com or hard copy (to support our Green efforts, printing double-sided would be appreciated) to:

Jennifer Schwalenberg
New Mexico Film Office
419 Montezuma Ave.
Santa Fe, NM 87501

Step Three: Pre-production meeting

If applicable*, call or email Jennifer Schwalenberg to schedule a pre-production meeting with the New Mexico Taxation & Revenue Dept. and the New Mexico Film Office. This meeting should include your Head Accountant, Line Producer and/or UPM and/or Production Supervisor. Jennifer Schwalenberg: (505) 476-5610 or jennifer@nmfilm.com

*For budgets under $1M, this meeting is optional.

Step Four: Cheat Sheet

Distribute the Rebate Cheat Sheet (on page 5) to your department heads.

Step Five: Verifying New Mexico residency

Each New Mexico resident employed on your production (excluding Background Talent) must complete a Declaration of Residency form, a document which they sign under penalty of perjury stating that they are in fact a New Mexico resident, and which also authorizes TRD (Tax & Rev) to disclose their residency status to the production company, so you can verify their residency status! Residents must also provide proof of residency, which must be one (1) of the following:

• A copy of last year’s New Mexico personal income tax return (filing as a Resident or First-Year Resident)
• A valid New Mexico driver’s license
• Voter registration card
• Other (If you cannot provide one of the three forms of evidence, other evidence may be acceptable. Other evidence must be clear and convincing, and show intent to maintain a permanent residence in New Mexico.)

IMPORTANT NOTE: If it is discovered that the crew member filed a New Mexico Part-Year Resident or Non-Resident tax return, or if they have changed their residency to another state on or before the last day of the taxable year (December 31), or if TRD has other evidence indicating they are not a resident (even though they filled out a Declaration of Residency form and provided proof), he/she will NOT qualify for the tax rebate.

Step Six: Preparing your bibles

Keep a detailed account (ledger/bible), in print and on CD, of all rebateable expenditures incurred in New Mexico during pre-production, production and post (if applicable).

Here are some guidelines for preparing your Tax Rebate Package (For stand-alone post-production, please concentrate on applicable items):

• Create three (3) separate binders/comprehensive bibles:


1. One for Payroll & Declaration of Residency forms: Make copies of each employee’s Declaration of Residency form and proofs of residency (attaching them) and sort alphabetically by last name


2. One for Petty cash: Make copies of petty cash envelope summaries, copying the front of each petty cash envelope and sort by PC envelope number.


3. One for Vendors/AP/all other transactions: full vendor names must be clearly visible on ledgers


• Only include New Mexico rebateable expenditures
• Any credit card purchases must include detail of purchases/vendor names; it can’t just say “Visa.”
• Submit backup for fuel cards (invoices with location address); it can’t just say, “Shell.”
• If qualifying non-resident cast via a “super loan-out,” please include a summary of the transactions (actors, salaries, and proof of the Gross Receipts Tax being paid)
• No other receipts are required at this time, though have them on hand in case they are requested

Step Seven: Newspaper ad

In compliance with the Production Tax Credit Agreement, please provide proof of the following:

(Stand-alone post-production submissions are excluded from this requirement.)

“Production shall agree to publish, at completion of principal photography, a notice at least once a week, for three consecutive weeks, in local newspapers in regions where filming has taken place to notify the public of the need to file creditor claims against the film production company by a specified date.” Ads can be of any size. Please include production title, address phone, fax, and/or contact name(s) for your primary or corporate office – not your New Mexico production office, as vendors need to be able to contact you after you have closed your NM office. Please submit this information to John Raymond Armijo at john@nmfilm.com and fax a copy of the newspaper bill for all three weeks: (505) 476-5601

This information will also be posted on the web site of the New Mexico Film Office until all financial obligations have been met. To view a sample newspaper ad, please contact John Raymond Armijo: (505) 476-5600 or john@nmfilm.com

Step Eight: Completing your bibles

Complete your three (3) binders/ledgers/bibles of New Mexico expenditures: one for payroll, one for petty cash envelopes, and one for vendors/AP/all other transactions. See Step Six for details. Do not complete your ledgers until your very last New Mexico expenditure, which would include any post-production, as you can only file once.

Step Nine: Did you pay everyone?

Email jennifer@nmfilm.com and sharmaine@nmfilm.com for verification that payment of all financial obligations incurred in the State of New Mexico has been made and that you do not have any outstanding financial obligations. The NMFO will provide a letter to the New Mexico Taxation and Revenue Department confirming that this requirement, per law, has been fulfilled. Until we have confirmation that all financial obligations in the state have been met, we cannot, by law, submit your tax rebate package to TRD.

Step Ten: Stats

Please email jennifer@nmfilm.com the following (12) pieces of information. Stand- alone post production: please send applicable items. Click here for a Word version:

PRODUCTION INFORMATION
1. Title of production:
2. Type of production (Feature Film, Television Series, Documentary, etc…):
3. Prep dates AND Number of prep days:
4. Shoot dates AND Number of shoot days:
5. Average New Mexico crew size (per day) for prep:
6. Average New Mexico crew size (per day) for shoot:
7. Estimated total number of New Mexico crew members hired (please include prep crew, construction, caterers, teamsters, production office, etc… Do not include day players or actors)
8. List of all New Mexico cities/towns/Native American lands for locations:
9. Final Crew list and Final Vendor list (for productions with budgets over $1 million only):
BUDGETARY INFORMATION
10. Total budget:
11. Total dollar amount spent in New Mexico (including New Mexico labor):
12. Total dollar amount spent in New Mexico on:
1. New Mexico Crew (All New Mexico crew: Director, Producers, Writer, BTL, Security):
2. New Mexico Talent (Principals and Background/Extras):
3. New Mexico Facility/Property Rental: Stage Space, Production Office, Location Fees:
4. New Mexico Lodging/Accommodations:
5. New Mexico Food (Catering, Craft Service, Other):
6. New Mexico Rental Vehicles/Non-Film Vehicles:
7. New Mexico “Rolling Equipment” Rentals (Trucks, Trailers, Cranes, Picture Cars):
8. New Mexico Film Equipment Rentals (Grip, Lighting, Camera, other):
9. New Mexico Construction costs (Lumber, Hardware, Supplies, other):
10. New Mexico Set Dressing:
11. New Mexico Wardrobe:
12. New Mexico SPFX/Props:

Why do you need to submit this statistical data when you’re already sending your bibles?
Although we receive your complete tax rebate package, including your bibles, the New Mexico Film Office protects the confidentiality of your financials and does not review any of your reports. This proprietary information is only examined by the New Mexico Taxation & Revenue Department for purposes of the audit.

What will the Film Office do with this information?
This information will NOT be made available to the public on a per-production basis; however, we will release yearly aggregates for categories a – l based on all film/television programs within that fiscal year. We believe this policy will protect truly proprietary information while fulfilling our fundamental responsibility to the people of New Mexico to provide meaningful, accurate data regarding this program.

Step Eleven: Mail your tax rebate package

Complete the following form:

Application for Film Production Tax Credit (RPD-41229)

The address on this form should be your corporate, home or primary office – not your New Mexico production office, as your rebate check will be sent to the address you list if you do not choose direct deposit.

Physically mail your TAX REBATE PACKAGE (email submissions are not acceptable), which should include the following:

   Application for Film Production Tax Credit form (RPD-41229)

   Payroll Ledger/Binder/Bible (One printed/hard copy and one CD). Included in the Payroll bible should be Declaration of Residency forms with proofs of residency attached to the forms and sorted alphabetically by last name

   Petty cash Binder: Copies of petty cash envelopes, sorted by PC envelope number

   Vendor/AP Ledger/Binder/Bible (One printed/hard copy and one CD)

   Be sure to include:

Backup for fuel cards (invoices with location address)

Backup for P-cards/credit cards

Transaction summary for non-resident cast (actors, salaries, and proof of GRT being paid)

   Hard copy Final Crew list and Final AP Vendor list

NOTE: FEWER MISTAKES EQUAL A FASTER REBATE!

Send your completed tax rebate package to:
John Raymond Armijo
New Mexico Film Office
418 Montezuma Ave.
Santa Fe, NM 87501

Upon review by the NMFO and after confirmation that all financial obligations in the state have been met, this package will be forwarded to the New Mexico Taxation & Revenue Department (TRD). TRD performs an audit and will review your claim line by line. After a review of the audit, they will return the Application for Film Production Tax Credit form to you with the approved amount.

Depending upon the amount of submissions (TRD performs audits based upon the order in which they are received) TRD projects that the average audit process will take approximately sixty (60) – seventy-five (75) days to complete; however, it is imperative to provide TRD with any documentation immediately upon request in order to stay within this timeframe. Please note this projection is not guaranteed by TRD though they make every effort to stay within this timeframe.

Step Twelve: File your return and wait for your cash

After you receive the form back from TRD with the approved amount, file an income tax return (Using forms: PIT, CIT, PTE or FID-1). For a quicker check, be sure to check the “REFUND EXPRESS” box for direct deposit. Filing a tax return is just the mechanism for receiving your rebate.

Attach a copy of the approved Application for Film Production Tax Credit to your income tax return and send to:

Jerry Montoya
Audit and Compliance Division, Director’s Office
P.O. Box 630
Santa Fe, NM 87504-0630

The credit will then be applied to any tax liability you have incurred (franchise fees, if applicable), with the excess credit refunded back to your production company. Once TRD has received your approved Application and tax return, it will take approximately 2 – 4 weeks to receive your rebate.

For questions regarding the tax incentive program, please see the FAQs or you may contact Jennifer Schwalenberg, Deputy Director, New Mexico Film Office: 505 476 5610 or jennifer@nmfilm.com OR Jerry Montoya, Taxation & Revenue Department: 505 827 0929 or jerrym@state.nm.us

NEW MEXICO’S 25% TAX REBATE CHECKLIST

BEFORE PRODUCTION:

     Sent Film Production Company Registration form

     Sent Production Tax Credit Agreement

      Sent script (for non-scripted projects: synopsis or other medium-related outline)

      Pre-production meeting with NMFO & TRD (if applicable)

      Distributed Rebate Guidelines “Cheat Sheet” to department heads (if applicable)

      Collected Declaration of Residency forms and proofs of residency

AFTER PRODUCTION:

      Completed requirement for Newspaper Ad (if applicable)

      Confirmed that all New Mexico financial obligations have been paid (Step Nine)

      Completed Step Ten (Stats)

      Mailed the tax rebate package, including the Application for Film Production Tax Credit, to NMFO

AFTER TRD CONFIRMS YOUR TAX REBATE “APPROVED AMOUNT”:

      Sent New Mexico Income Tax Return and copy of approved Application for Film Production Tax Credit to Jerry Montoya at TRD