• 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.

Who Qualifies:
Feature films, television, national and regional commercials, (proof of national or regional broadcast required), documentaries and commercial audiovisual product.

What Qualifies: (all must be subject to taxation by the State of New Mexico):
Click here for the Rebate Guidelines "Cheat Sheet."

• 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.

  Out-of-state crew members do 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 an out-of-state 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(for out-of-state companies, this means paying a 5% tax on the total cast salaries); and the performing artist receiving payments from the personal services corporation pays New Mexico income tax. See following web link for info: http://www.state.nm.us/tax/pubs/FYI-102__INFORMATION_FOR_NEW_BUSINESSES.pdf 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.

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.
* = Video Games will only qualify if the filing entity is “an approved film production company.”
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:

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

The Process:  (For stand-alone post-production, bypass non-applicable steps):

1. Complete the following two 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.



• Film Production Company Registration
• Production Tax Credit Agreement
  
  Mail or fax form to:
  John Raymond Armijo
  New Mexico Film Office @ the Jean Cocteau
  418 Montezuma Avenue
  Santa Fe, NM 87501
  Fax: (505) 476-5601

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

Please note: Failure to comply with the Production Tax Credit Agreement may delay your tax rebate.

2. Submit script to the New Mexico Film Office. For non-scripted projects (reality television), 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, Deputy Director
   New Mexico Film Office @ the Jean Cocteau
   418 Montezuma Avenue
   Santa Fe, NM 87501
   (505) 476-5610 phone
   Please include all contact information.




3. 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 $1 million this meeting is optional.
4. Distribute the Rebate Guidelines Cheat Sheet handout (see below) to your department heads.
DURING PRODUCTION:
5. 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 provide proof of residency, which can be one of the following:
    

   a. valid New Mexico driver's license

   b. or current New Mexico voter registration card

   c. or copy of last year's New Mexico personal income tax return


IMPORTANT NOTE: If it is discovered that the “resident” filed a New Mexico Non-Resident tax return or if they have changed their residency to another state on or before the last day of the taxable year, 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.


6. Keep a detailed account (ledger), in print or on CD, of all expenditures incurred in New Mexico during pre-production, production and post (if applicable). See box below.




Tips for preparing your Tax Rebate Package: (For stand-alone post-production, please concentrate on applicable items): Full vendor names must be clearly visible on ledger Create two separate binders/detailed bibles: one for payroll, one for vendors/all other transactions Any credit card purchases must include detail of purchases/vendor names Make copies of each employee's Declaration of Residency form and proof of residency (attaching them) and sort alphabetically by last name Make copies of petty cash envelope summaries (copy the front of each petty cash envelope) and sort by PC envelope number Submit backup for fuel cards (invoices with location address) and P-cards (detail). No other receipts are required at this time, though make copies for your records in case they are requested No other receipts are required at this time, though make copies for your records in case they are requested

AFTER PRODUCTION:
7. 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 (Classified Ad) 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. Please include production title, address, phone, fax, and 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. Ads can be of any size. Please submit this information to John Raymond Armijo at john@nmfilm.com and fax a copy of the newspaper bill for all three weeks to John Raymond Armijo: (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

8. Use your records from Step 6 to compile a comprehensive ledger of New Mexico expenditures and calculate your 25% rebate. Do not complete your ledger until your very last New Mexico expenditure, which would include any post-production


9. Contact Jennifer Schwalenberg at the NMFO (505) 476-5610 or jennifer@nmfilm.com for verification that payment of all financial obligations incurred in the State of New Mexico has been made. 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.

   In addition the NMFO will need the following eight (8) pieces of information:

   • Total dollar amount spent in New Mexico (including labor):
   • 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.):
   • Average New Mexico crew size (per day) for prep:
   • Average New Mexico crew size (per day) for shoot:
   • Prep dates & Number of prep days:
   • Shoot dates & Number of shoot days:
   • List of all New Mexico cities used for locations:
   • Final Crew list and Final Vendor list (for major feature film and television projects only)
   
   Please email this information to Jennifer@nmfilm.com



10. 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.

Mail this package, which must include the following if applicable (see Tips for Preparing your Tax Rebate Package in Step 6):
• Ledgers (Two binders/bibles: one for payroll, one for vendors). One hard copy and one soft copy.
• Declaration of Residency forms with Proof of Residency (attached to the Declaration of Residency forms), sorted alphabetically by last name
• Petty cash envelope summaries sorted by PC envelope number
• Backup for fuel cards (invoices with location address) and P-cards (detail)
• Hard copy Final crew list and Final Vendor list, if applicable
• And above form

NOTE: FEWER MISTAKES EQUAL A FASTER REBATE!


To:

John Raymond Armijo

New Mexico Film Office

@ the Jean Cocteau

418 Montezuma Avenue

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 two audits and will review your claim line by line and 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.

11. 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.

    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, by check, back to your production company.

For questions regarding the tax incentive program, 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

Film Production Tax Rebate Guidelines

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 of 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.
• Out-of-state performing artists (actors and stunt performers only) will qualify if the personal services corporation pays gross receipts tax in New Mexico on the portion of those payments qualifying for the tax credit (for out-of-state companies, this means paying a 5% tax on the total cast salaries); and the performing artist receiving payments from the personal services corporation pays New Mexico income tax. Call Jerry at TRD or Jennifer at the film office for details – see page 8 for contact info. There is a tax rebate cap of $5 million dollars collectively for all performing artists meaning collectively, actors' salaries (including the GRT) up to $20 million are eligible. Fringes for out-of-state actors do not qualify.
• Out-of-state crew members do not qualify; however, 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 of 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 except for Background Talent you include for the tax rebate. You must get proof of residency (valid New Mexico driver's license, current New Mexico voter registration card, or copy of last year's New Mexico personal income tax return) from the employees you hire. Please make certain that the employee completely fills out his/her Declaration of Residency form, and 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 Non-Resident tax return or if they have changed their residency to another state on or before the last day of the taxable year, 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.

NEW MEXICO’S 25% TAX REBATE CHECKLIST

BEFORE PRODUCTION (before principal photography begins):

     Send Film Production Company Registration form

     Send Production Tax Credit Agreement

      Send 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)

DURING PRODUCTION:

      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

      Completed Step Nine

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

AFTER TRD CONFIRMS YOUR TAX REBATE “APPROVED AMOUNT”:

      Send NM Income Tax Return and copy of approved Application for Film Production Tax Credit to Jerry Montoya at TRD