ATLANTA – State agencies responsible for the film tax credit in Georgia have strengthened oversight of the program by fully or partially addressing all deficiencies found during a 2020 audit, according to a review.
The General Assembly passed legislation two years ago requiring all Georgia-based film productions to be subject to mandatory audits by the state Department of Revenue or external auditors selected by the agency.
It also tightened rules on how film companies transfer or sell unused tax credits to other companies, a common practice for production groups that conduct part of their film production outside of Georgia.
The Georgian film industry took off after the state began offering generous tax credits to attract production. The economic impact of the program has grown from $242 million in 2007, the year before the General Assembly passed legislation significantly increasing the tax credit, to a record $4 billion in direct spending in fiscal 2021.
But supporters of the program went on the defensive after two critical reviews released in early 2020 found it had been mismanaged and questioned the accuracy of fiscal impact estimates.
To address poor auditing procedures, the Treasury Department has begun releasing a detailed film tax credit auditing manual that includes agreed procedures for all mandatory audits, according to a follow-up audit released late last week.
Under agreed procedures, auditors must review all spend over $100,000 and select a statistical sample of spend under $100,000 for testing.
The agency has also taken steps to identify and prohibit expenditures that are ineligible under the law or have limited economic benefit to the state, and updated the manual and training materials for tax auditors processing the credit.
The Georgia Department of Economic Development has taken steps to exclude projects not intended for commercial distribution in multiple markets from the tax credit, the review said.
The 2020 audit concluded that the agency had interpreted the provisions of the law broadly, approving projects that could be considered of local interest and live events that would likely have taken place without the credit.
Both the finance department and the economic development department largely agreed with the results of the inspection. However, the Economic Development Agency disagreed with a recommendation to require a minimum percentage of production in Georgia.
The agency stated that such a mandate “would exceed the authority conferred on it by the Georgia General Assembly regarding the motion picture tax credit … requires no minimum level of filming in the state.”
This story is available through a news partnership with the Capitol Beat News Service, a Georgia Press Educational Foundation project.