N.J. Admin. Code § 19:31T-1.3

Current through Register Vol. 56, No. 12, June 17, 2024

Section 19:31T-1.3 - Eligibility criteria

(a) An applicant shall be eligible for the program for film tax credits if the Authority finds that:

1. The applicant will incur after July 1, 2018:

i. At least 60 percent of the total film production expenses, exclusive of post-production costs, for services performed, and goods purchased, through vendors authorized to do business in New Jersey, including wages and salaries; or

ii. The qualified film production expenses of the applicant during at least one privilege period or taxable year for services performed, and goods purchased, through vendors authorized to do business in New Jersey, including wages and salaries, exceed $ 1,000,000 per production;

2. The principal photography of the film commences within 180 days from the date of the completed application for the tax credit;

3. The film includes, when determined to be appropriate by the Commission, taking into account factors including, but not limited to, the budget and audience of the film, at no cost to the State, marketing materials promoting this State as a film and entertainment production destination, which materials shall include placement of a "Filmed in New Jersey" or "Produced in New Jersey" statement, or an appropriate logo approved by the Commission, in the end credits of the film;

4. The applicant submits a tax credit verification report prepared by an independent certified public accountant licensed in this State in accordance with N.J.A.C. 19:31T-1.7(c)2;

5. The applicant complies with the withholding requirements provided for payments to loan out companies, independent contractors, and any homeowner in accordance with (c) below;

6. At least one principal photography day is shot in New Jersey; and

7. For a studio partner or film-lease production company, the principal photography of the film commenced after the designation of the studio partner or the corresponding film-lease partner facility.

(b) An applicant shall be eligible for the program for digital media tax credits if the Authority finds that:

1. The applicant will incur qualified digital media content production expenses during a privilege period or taxable year, provided that:

i. At least $ 2,000,000 of the total digital media content production expenses of the applicant are incurred for services performed, and goods purchased, through vendors authorized to do business in New Jersey, including wages and salaries;

ii. At least 50 percent of the qualified digital media content production expenses of the applicant are for wages and salaries paid to full-time or full-time equivalent employees in New Jersey; and

iii. The applicant submits a tax credit verification report prepared by an independent certified public accountant licensed in this State in accordance with N.J.A.C. 19:31T-1.7(c)4; and

2. The applicant complies with the withholding requirements provided for payments to loan out companies and independent contractors in accordance with (c) below.

(c) An approved applicant shall withhold from each payment to a loan out company, to an independent contractor, or, for an applicant for a film tax credit, to a homeowner for the use of a personal residence an amount equal to 6.37 percent of the payment otherwise due. The amounts withheld shall be deemed to be withholding of liability pursuant to the New Jersey Gross Income Tax Act, N.J.S.A. 54A:1-1 et seq., and the approved applicant shall be deemed to have the rights, duties, and responsibilities of an employer pursuant to Chapter 7 of Title 54A of the New Jersey Statutes. The director shall allocate the amounts withheld for a taxable year to the accounts of the individuals who are employees of a loan out company in proportion to the employee's payment by the loan out company in connection with a trade, profession, or occupation carried on in this State or for the rendition of personal services performed in this State during the taxable year. A loan out company that reports its payments to employees in connection with a trade, profession, or occupation carried on in this State or for the rendition of personal services performed in this State during a taxable year shall be relieved of its duties and responsibilities as an employer pursuant to Chapter 7 of Title 54A of the New Jersey Statutes for the taxable year for any payments relating to the payments on which the approved applicant withheld.

(d) For any applicant applying to be designated as a studio partner, the applicant shall be eligible if the applicant demonstrates to the Authority that the applicant meets the definition of a studio partner for purposes of designation and that it shall satisfy the conditions of approval at N.J.A.C. 19:31T-1.8(f) within the prescribed time. No more than three film production companies may be designated as a studio partner.

(e) For any applicant applying to be designated as a film-lease partner facility, the applicant shall be eligible if the applicant demonstrates to the Authority that the applicant meets the definition of a film-lease partner facility and that it shall satisfy the conditions of approval at N.J.A.C. 19:31T-1.8(f) within the prescribed time.

1. Except for a production facility, or portion thereof, owned, built, leased, or operated by a film production company designated as a studio partner by the Authority on or before January 3, 2024, in order for a production facility to be designated as a film-lease partner facility, the owner or developer shall accept the acquisition by the Authority, at the Authority's discretion, of equity in the production facility, on commercially reasonable and customary terms and conditions determined by the Authority and the film-lease partner facility and on the condition that the Authority's may require the applicant to redeem the investment if the applicant is not compliant with the program. The Authority may, at its discretion, accept the offer to purchase the shares of stock by the film-lease partner facility or any other investor in lieu of redemption.

2. No more than three New Jersey production facilities may be designated as a film-lease partner facility; provided, however, this limitation shall not apply to production facilities, or portions thereof, owned, built, leased, or operated by a film production company designated as a studio partner.

(f) For any applicant applying to produce a reality show, the applicant will be eligible for the program if the Authority finds the applicant meets the requirements set forth at (a) above and demonstrates to the Authority that the applicant's production meets the definition of a reality show and meets the requirements for reality show productions set forth in the definition of a film.

(g) For two or more buildings to qualify as a production facility, the buildings must be proximate to each other. Proximate buildings shall include, but not be limited to, buildings that are adjacent to each other or across a single public right-of-way from each other. The following are examples of buildings that are proximate:

1. A production facility consists of building A and building B, which are both on the same block, but separated by other buildings.

2. A production facility consists of building A and building B, which are adjacent to each other, but have separate entrances.

3. A production facility consists of building A and building B, which are located in an industrial park and are separated solely by a parking lot.

N.J. Admin. Code § 19:31T-1.3

Amended by R.2020 d.007, effective 1/6/2020.
See: 51 N.J.R. 1256(a), 52 N.J.R. 58(b).
In (a)2, substituted "completed" for "original".
Special amendment, R.2024 d.022, effective 2/26/2024 (to expire 2/22/2025).
See: 56 N.J.R. 491(a),.
Rewrote (a); in (b), substituted "applicant" for "taxpayer" throughout, in (b)1i, inserted "including wages and salaries"; in (c), substituted "approved applicant" for "taxpayer" throughout, substituted the first comma for "or", inserted "or, for an applicant for a film tax credit, to a homeowner for the use of personal residence" following "contractor" and inserted "the New Jersey Gross Income Tax Act," preceding "N.J.S.A."; and added (d) through (g).

Recodified from 19:31-21.3 56 N.J.R. 807(a), effective 5/6/2024