Section 5555 - [Operative 4/1/2025] Credit Certificate Issuance(a)(1) Within forty-eight (48) months following the date of the thirty (30) month completion deadline for the qualified motion picture, as specified in subdivision (c), every applicant allocated tax credits under the California Film and Television Tax Credit Program 4.0 shall do one of the following:(A) Submit the documents specified in this section through the online application portal accessible on the website www.film.ca.gov or, if necessary prior to portal completion or due to technical issues, in PDF or equivalent non-proprietary document format; or,(B) Submit a written notice to the CFC stating that they will not be requesting certification for the allocated credits; or,(C) An applicant with insufficient tax liability to initiate the process at the timeframe set in subdivision (a) above can request an extension in writing. 1. The applicant may request one or more extensions of up to twelve (12) months and the CFC will approve the extension for an applicant that requests such an extension within the timeframe specified in clause 2. below and submits a statement of insufficient tax liability to initiate use of the allocated tax credits.2. The applicant shall request an extension no less than thirty (30) calendar days prior to the expiration of the timeline specified in paragraph (1) above or prior to the expiration of a previously approved extension for the request to be considered by the CFC.(D) Failing to comply with the requirements of this paragraph shall constitute forfeiture of an applicant's allocated tax credits.(2) Within the timeframe specified in paragraph (1) above, after the qualified motion picture has been produced and the final element has been created, the applicant may proceed to submit the documentation described in this section.(A) The CFC shall not certify any tax credit until it has received a final safety evaluation report from the qualified motion picture project safety advisor, as required pursuant to sections 17053.98.1(g)(3)(A)(ii) and 23698.1(g)(3)(A)(ii) of the Revenue and Taxation Code and outlined in section 5554(d)(7) of this article.(b) The applicant shall be required to submit the following documents upon completion of the qualified motion picture: (1) Proof of copyright registration of the screenplay, teleplay, motion picture, television series or pilot.(2) Documentation indicating the date of completion of postproduction.(A) Documentation may include, but is not limited to, the facility invoice evidencing the date the final element was completed.(3) The final cast list and the final crew list for the project with social security numbers redacted, if applicable.(4) A copy of the script supervisor's lined script or the continuity/spotting log of the project. (A) A television series must submit these materials for two separate episodes of the season. 1. A season of a television series that has submitted both a regular and a supplemental season application is only required to submit two episode scripts for the season as a whole.(5) Expenditure summary report information, as set forth in subparagraphs (A) through (K) of this paragraph, provided to the CFC through the online application portal accessible on the website www.film.ca.gov or, if necessary prior to portal completion or due to technical issues, in PDF or equivalent non-proprietary document format.(A) Applicant Information, updated and current, including: 1. Applicant entity business name.2. Type of business entity.3. Type of taxpayer ID and taxpayer ID number.4. Up to date address(es), phone number(s), contact person(s) and their title(s).5. Parent company entity, if applicable.7. Copyright registration number.8. Seller's permit number, if applicable.9. Payroll service provider.(B) Additional contact information, including:1. Up to date parent company contact information, if applicable.2. CPA company name and contact information.(C) Project Information:1. Actual start date of preproduction.2. Actual start date of principal photography.3. Start and return-date(s) of any hiatus period(s), if applicable.4. Actual end-date of principal photography.5. Actual end-date of postproduction (creation of final element).6. Projected or actual release date, if known.7. For a television series, actual number of completed episodes.(D) Information about production shooting days and locations:1. Production shooting days inside the Los Angeles zone.2. Production shooting days outside the Los Angeles zone.3. Information on each country, state, or county outside the Los Angeles zone where the project filmed, with a Local Community Expenditure Report, Form LCER4 (January 1, 2025), hereby incorporated by reference, filled out for each California county outside of LA County.4. For a soundstage applicant, total actual number of stage shooting days and number of actual stage shooting days on a certified or once-certified soundstage.(E) Production statistics, including actual numbers for: 1. Total number of cast members.2. Total number of base crew members.3. Total number of extras/background performer days worked.4. Total number of stand-in days worked.5. Total number of California resident cast and crew.6. Total number of non-California resident cast and crew.7. Total number of local hire labor crewmembers.(F) Financial statistics, including actual numbers for:1. Total worldwide expenditures.2. Total California expenditures, including:(i) Total qualified California expenditures; and,(ii) Total non-qualified California expenditures.3. Total worldwide VFX expenditures.4. Total California VFX expenditures, including:(i) Total qualified California VFX expenditures; and,(ii) Total non-qualified California VFX expenditures.5. Total qualified California VFX expenditures eligible for uplifts.6. Total California music scoring/recording wages eligible for bonus points.7. For soundstage applicants, total soundstage wage expenditures.8. For soundstage applicants, total expenditures for California picture editing and postproduction sound labor and services.(G) Career Readiness and Career Pathways Programs:1. Verification of fulfillment of career readiness requirement utilizing one of the required forms for Career Readiness verification, Forms CR4-1, CR4-2, CR4-3, CR4-4, and CR4-5 (January 1, 2025), hereby incorporated by reference. If applicable, verify submission of Career Readiness payment.2. Verification of payment to the Career Pathways Program, of the amount specified in section 5554.1(c)(1), with date paid and amount, utilizing required Form CPP4 (January 1, 2025), hereby incorporated by reference.(H) A listing of voluntary, self-reported race/ethnicity and gender statistics as specified in sections 5554.2(b)(2) of this article. All applicants must submit this data, including an independent film with a qualified expenditure budget of ten million dollars ($10,000,000) or less and an applicant that has opted out of the requirements of Revenue and Taxation Code sections 17053.98.1(g)(3)(D) and 23698.1(g)(3)(D).(I) Uplifts, as confirmed in the AUP report required pursuant to paragraph (6) of this section: 1. For non-independent productions, except relocating television series, information relating to the five percent (5%) Out of Zone Uplift:(i) The verified total out of zone wages, excluding local hire labor, incurred during the applicable period.(ii) The verified total out of zone non-wages, excluding the total consumables, incurred during the applicable period.(iii) The verified total non-wage expenditures entirely consumed outside the Los Angeles Zone during the applicable period.(iv) The combined sum of the qualified out of zone expenditures provided pursuant to subclauses (i), (ii), and (iii) above, is the sum to which the uplift percentage applies. Multiply this amount by .05.(v) The aggregate uplift amount of the combined sums pursuant to clauses 1. and 2. of this subparagraph cannot exceed five percent (5%) of the non-independent production's overall qualified expenditures.2. For non-independent productions, except relocating television series, information relating to the five percent (5%) California Visual Effects (VFX) Uplift:(i) For a qualified motion picture project that fulfills the uplift threshold detailed in section 5553(j)(7)(B)1. of this article, provide the total actual dollar amount of California VFX expenditures.(ii) The total dollar amount of California VFX expenditures provided pursuant to subclause (i), above, is the sum to which the uplift percentage applies. Multiply this amount by .05.(iii) The aggregate uplift amount of the combined sums pursuant to clauses 1. and 2. of this subparagraph cannot exceed five percent (5%) of the non-independent production's overall qualified expenditures.3. For non-independent productions, except relocating television series, information relating to ten percent (10%) Local Hire Labor Uplift: (i) Provide the verified total of out of zone local hire labor wages.(ii) The sum of the local hire labor wages provided pursuant to subclause (i), above, is the sum to which the applicable uplift percentage applies. Multiply this sum by .10.(iii) Local hire wages must be substantiated in accordance with section 5552(i)(3) of this article.4. For independent productions and relocating television series, information relating to the five percent (5%) Local Hire Labor Uplift:(i) Provide the verified total of out of zone local hire labor wages.(ii) The sum of the local hire labor wages provided pursuant to subclause (i), above, is the sum to which the applicable uplift percentage applies. Multiply this sum by .05.(iii) Local hire wages must be substantiated in accordance with section 5552(i)(3) of this article.5. Total additional tax credit: (i) For non-independent productions, excluding relocating television series, calculate the total uplift amount by adding the sums of 1.(iv) + 2.(ii) + 3.(ii) above.(ii) For independent productions and relocating television series the total additional tax credit is the sum of 4.(ii) above.(J) Total Credit Amount. Applicants must provide, based on the findings of the AUP report: 1. Total sum of verified qualified wages paid or incurred during the qualified period, as defined in section 5550(q)(1).2. Total sum of verified qualified non-wages paid or incurred during the qualified period, as defined in section 5550(q)(1).3. Verified completion bond fee, if applicable.4. Total qualified expenditures: 1. + 2. + 3.5. Total tax credit amount, which equals the sum pursuant to clause 4. above multiplied by 0.2 for non-independent projects except relocating television series and by 0.25 for independent films and relocating television series.6. Total uplift amount as calculated in accordance with 5555(b)(5)(I)5.(i) or 5555(b)(5)(I)5.(ii) above, as applicable.7. Total adjusted tax credit percentage, 5. + 6.8. Total verified tax credit amount: 7. adjusted for original CAL amount limit, if applicable.9. Verified adjusted jobs ratio, as provided in the AUP. Any jobs ratio reduction penalty consistent with sections 17053.98.1(d)(2) and 23698.1(d)(2) of the Revenue and Taxation Code shall be applied to the sum pursuant to clause 8. above.10. Diversity goals percentage in accordance with CFC determination pursuant to section 5554.2 of this article and as noted in the AUP. The percentage shall be applied to the sum pursuant to clause 9. above, if applicable, or the sum pursuant to clause 8. above if no jobs ratio reduction penalty is applied.(K) Signature certification. By signing the Report, the applicant acknowledges, agrees and certifies that the applicant has read and reviewed the summary, and that the content provided is true and accurate to the best of their knowledge or at least the knowledge of what would be expected of a reasonable person in the same capacity.(6) An AUP report in compliance with the Program 4.0 agreed upon procedures, Form 4.0 AUP (January 1, 2025), hereby incorporated by reference. The AUP report shall be prepared and certified by a certified public accountant (CPA) who meets the following criteria: (A) Maintains an active license or has proof of a valid out-of-state accounting firm registration for the firm practicing attest services in California.(B) The accounting firm performing the assurance services shall provide documentation from the California Society of Certified Public Accountants or other organization administering said review, indicating that a Peer Review Report was completed within the last three years and the rating was a "Pass." If the firm performing attest services is newly formed, the firm must provide evidence it is registered for review by an organization administering the review in the state in which the firm resides.(C) Successful completion of a CFC orientation meeting for CPAs performing Agreed Upon Procedures for the California Film and Television Tax Credit Program 4.0. The frequency of training shall be offered on an as needed basis as determined by the CFC.(D) The same public accounting firm is not permitted to perform the AUP report required pursuant to this section for a soundstage applicant, if it is providing or has provided services related to Phase A for the soundstage or soundstages where the soundstage applicant's qualified motion picture is being produced, such as the certified studio construction project verification report required pursuant to section 5532 of article 4 of this chapter, or the annual soundstage workforce report required pursuant to section 5538 of article 4 of this chapter.(7) The actual layout of the main and end titles produced by a title house or other postproduction facility.(8) A vendor final element creation letter documenting the date the final composite answer print, air master, or digital cinema files of the qualified motion picture is/are produced, not including archival or international elements. In the case of a television series, the required letter shall refer to the final episode of the season. The letter shall originate from the postproduction facility or postproduction department, printed on letterhead with original signature.(9) Documentation from each visual effects, title, digital effects and/or post sound company contracted by the production company, indicating the total dollar amount of work performed within the State of California shall be certified by managerial level personnel with knowledge of the project.(10) Documentation from the designated representative of the California Community Colleges Chancellor's office and/or the California Department of Education or the CFC, verifying participation in the career-based learning and training program as required in section 5554.1.(11) A miniseries/limited series shall submit documentation verifying that its initial distribution consists of two or more episodes longer than forty (40) minutes each exclusive of commercials.(12) Form CPP4 (January 1, 2025), hereby incorporated by reference, verifying that the required fee was paid by the qualified taxpayer to fund the Career Pathways Training Program.(c) The production shall be completed within thirty (30) months from the issuance date of the CAL, Form D4 (January 1, 2025), hereby incorporated by reference as required in sections 17053.98.1(b)(19)(B)(ii) and 23698.1(b)(19)(B)(ii) of the Revenue and Taxation Code.(d) The qualified motion picture shall be considered complete when the process of postproduction has been finished and a final composite answer print, delivery air master, or digital cinema files of the qualified motion picture is completed.(e) The CFC shall review all the required materials submitted by the applicant to determine the sufficiency of the required documentation and that the applicant meets all the criteria for the program. During the review, the CFC may reject insufficient documentation not in compliance with the requirements found in this section or may request additional documentation to determine if the production is a qualified motion picture and to verify the qualified expenditures. (1) An applicant that receives a request for additional documentation shall have thirty (30) calendar days to submit that documentation.(2) An applicant that fails to meet the deadline in paragraph (1) shall have its request for a tax credit certificate disapproved in accordance with section 5555(f)(2) below.(f) The CFC shall approve or disapprove the request for the tax credit certificate, Form M4 (January 1, 2025), hereby incorporated by reference. (1) An entity that fulfills all program requirements, provides all required supporting documentation, and is able to substantiate its eligibility with information requested by the CFC shall be approved. Upon approval, the tax credit certificate shall be issued to the applicant.(A) If the entity that incurs the qualified expenditures is a partnership, limited liability company or subchapter S corporation (pass-through entity), that entity is the applicant for purposes of filing the tax credit application and receiving the final tax credit certificate.(2) Upon rejection of insufficient documentation or disapproval of the request for a tax credit certificate, the CFC shall provide the applicant with a notice of disapproval stating the reasons for the disapproval. Disapproval is final and shall not be subject to administrative appeal or review.(g) Certified tax credits attributable to an independent film may be sold by the applicant to an unrelated party, as applicable and in accordance with section 17053.98.1(c) of the Revenue and Taxation Code.(h) Certified tax credits attributable to non-independent production that exceed the applicant's tax liability may be assigned to one or more affiliated parties, as applicable and in accordance with section 23698.1(c) of the Revenue and Taxation Code.(i) An applicant allocated tax credits under the California Film and Television Tax Credit program 4.0 that has received its tax credit certificate may make a one-time, irrevocable election to be paid a refund of at most ninety percent (90%) of the certified tax credit amount, as applicable and in accordance with sections 17053.98.1(k) and 23698.1(k) of the Revenue and Taxation Code. The one-time, irrevocable election must be made to the Franchise Tax Board on an original, timely filed tax return for the taxable year in which the tax credit certificate is issued by the CFC.(1) The total refundable amount is ninety percent (90%) of the amount of certified tax credits that exceed the applicant's tax liability in the first taxable year.(2) The total refundable amount will be paid out over five consecutive taxable years, making the annual refundable amount twenty percent (20%) of the total refundable amount.(3) The annual refundable amount will first be applied to any tax liability the applicant has, and the excess of the annual refundable amount will then be refunded.(4) If the one-time, irrevocable election to make the tax credits refundable has been made, the applicant cannot hold any amount over to use against future tax liability outside of the sums and timeframes of the set refundability schedule.(5) A taxpayer that has purchased a tax credit from an independent producer, as referenced in subdivision (g) of this section, cannot elect to be paid a refund.Cal. Code Regs. Tit. 10, § 5555
Note: Authority cited: Sections 17053.98.1(e), 17053.98.1(j), 23698.1(e) and 23698.1(j), Revenue and Taxation Code; and Section 11152, Government Code. Reference: Sections 17053.98(k), 17053.98.1(a), 17053.98.1(b), 17053.98.1(c), 17053.98.1(d), 17053.98.1(e), 17053.98.1(f), 17053.98.1(g), 17053.98.1(k), 23698(k), 23698.1(a), 23698.1(b), 23698.1(c), 23698.1(d), 23698.1(e), 23698.1(f), 23698.1(g) and 23698.1(k), Revenue and Taxation Code; Section 9152, Labor Code; and Section 14998.1, Government Code.
1. New section filed 12-17-2024; operative 4/1/2025 (Register 2024, No. 51).