Breaking Down the Numbers: New York’s TV & Film Tax Credits Still Paying Out

New York's tax credits helped bring Spider-man back to the city.

New York’s tax credits helped bring Spider-man back to the city. Getty Images

This article has been updated:

It wasn’t so long ago that you had Canadian cities subbing in for New York City in the movies. Then came the years of Katherine Oliver under Mayor Bloomberg, and of New York State’s handsome tax credit, which encouraged production and helped make the Big Apple competitive with California for the new Hollywood boom.

We spoke to John Genz, a partner at accounting and consulting firm Citrin Cooperman, who has advised more than 100 TV or film projects, who spoke to us about recent changes that will help productions get their credit even quicker. In addition to working at a CPA (certified public accounting) firm, Mr. Genz has consulted with several states to develop their tax incentive program.

Observer: So I wanted to hear your take on the New York tax incentive thing. We did a story when Katherine Oliver was in the Mayor’s Office of Film and Entertainment (MOME) under Bloomberg, but we haven’t heard much from the office or about tax credits since then.

John Genz: It’s a $420 million-a-year credit program, which means the state can appropriate up to $420 million a year for film productions. Now the credit is calculated based on 30 percent of below the line costs. Above the line is actors with speaking parts, producer, director, story writers — those types of things. They don’t count toward the credit. What counts toward the credit are rank and file employees, the union employees, the purchasing of tangible property, props, wardrobe, catering.

It used to be location, location, location; now it’s who’s going to give you the most money in tax credits?

It’s an above the line 30 percent incentive if you’re shooting in the five boroughs. Which is pretty attractive. You get a lot of recurring TV series, things like that, because these credits are significant dollars to production companies. It used to be location, location, location; now it’s who’s going to give you the most money in tax credits? People say: ‘I’ll narrow it down to those three states that I like, and then we’ll pick one from there.’ It drives production now unless somebody’s got more money than they need, which is usually not the case.

We’re a CPA (certified public accounting) firm and the state has a voluntary process, where we can come in and audit the records of the production company before they apply for the credit, and that way the state knows an experienced firm has looked at it before they get it and issue the tax credit. We make sure that somebody’s not getting a credit they’re not entitled to.

Observer: And how recent of a development is it, that this  service you provide is necessary for New York?

JG: Well it just came in play in January of ’15, when they started to permit CPA firms. What was happening was the [Governor’s Office of Motion Picture and Television Development] was taking 18 months or more to be able to review these applications themselves, because of the sheer volume. You get some movie like Spider-Man shot in New York, and you can imagine the number of records from a major feature film like that. They have limited resources [to handle The New York State Film Tax Credit Program] , especially people who are experienced looking at these things. They want to make sure they protect the state and the program and the industry, so they opened it up to allow CPA firms to come in. Most other states that have a program that allow CPAs or require CPAs, either for auditing or for what we call agreed upon procedures. “Agreed upon procedures” is the New York program.

We were able to expedite the process, so if someone finishes a TV series or a feature, as soon as they’re done, we can go in, test them, determine if there are any errors. We adjust the reports in our final application, assure it, and they can send it to [the Governor’s Office of Motion Picture and Television Development]. Usually you get your credit in a couple of months—two or three—as opposed to 18.

Observer: So the credit comes in after the shooting has all wrapped up and everything.

JG: Yeah, it’s not like a grant where you get paid money upfront and you spend it. It’s after the fact, and after you spend the money. And a lot of production companies, especially the smaller production companies will use the credit as collateral for a loan, to help them finance the project. There’s plenty of companies out there —boutique lenders — that will say “Okay, you’re going get a million dollars back in the tax credit, and we’re going to charge you an interest rate — 8 or 10 percent — because it’s a high risk investment.”

So, they get their rate of return, and say “Okay we’ll loan you $750,000. You’re going get a million back if you do everything you told us you’re going to do. We’ll take the $750,000 principle plus interest. We loan you that much, and when you get the credit back you pay us back.” So when a company is paying 10 percent interest on a $750,000 dollar loan, and they have to wait 18 months, it’s a lot better to say, “Ok, let me hire a CPA firm,” pay them $20,000 or whatever the number is to do the audit–depending on the size of the production– and get their credit in three months versus 18.

Observer: So who hires you? MOME? The city? The boutique lenders?

JG: We’re hired by the production company.

Observer: So when you talk to the production company, what’s your sort of bid for why they should be filming in New York now as opposed to California or anywhere else? I remember before Oliver took over she said someone was making a Giuliani bio-doc, but they were shooting in Vancouver because there was just no incentive to shoot in New York. 

JG: Well you know ten years ago, they had the runaway production. Everyone was going to Canada because the dollar was 70 cents and Canada was giving you 30 cents back on a credit. So it was half price, basically. You saw all these HBO and Showtime shows were all being shot in Canada, with all these castles and everything. That was like the thing to do. Or they’re making Toronto look like Manhattan.

Then the states started saying “Hey wait a second, let’s try and bring production back to the US.” Now it’s probably 25 or 30 states that have production incentives to come back to the US and shoot here. The Canadian dollar is weaker again, so it’s attractive to go back there, and they still have a program. But now you’ve got competing programs. If I’m in New York, and I’ve got my crew base here, and I’ve got everything I could possibly need here or in California — those are the two hotbeds in the US — if I go to Canada, even though the dollar’s cheaper, I may have to import stuff. I may have to put people up in hotels, pay for travel, and at the end of the day, net after credit, where do you really do better? By staying here in the US or by going to some other jurisdiction. And that’s how they look at it.

It’s all budget-driven. They’re very, very budget sensitive in this industry. You look at the different programs. California and New York are very similar programs. They’re structured very much the same, they’re both 30 percent below the line, they have kickers — like New York, for instance, if you go upstate and your labor is upstate, you get an extra [10 percent] if you’re out of the area. So they want to incentivize people to go out of the area. Or if you have hotel rooms: if you have people that are staying overnight and you’re 20 miles away from Times Square, then that counts. But if it’s within 20 miles of Times Square it doesn’t, so they’re trying to incentivize people to start using resources outside of the immediate area.

The one great thing about New York as compared to California, let’s say, is New York’s got money. California — their program is $300 million a year. They used to have a lottery where it was $100 million a year. The first 25 projects picked in the lotto got money and the other 150 that applied got nothing. Then they upped it to 330 million, but they still burned through that money overnight.

Observer: Is California still on a lottery system?

JG: It’s not in a lottery system anymore; they revamped the program over the last few years where there’s certain money allocated to features, certain money allocated to TV, to independent films…so they’ve moved it around. They’re only accepting applications at a certain time because they’ll go through the $330 million very, very quickly.

Where, in New York, I think they’re still using money from 2013 or 2014. So New York with a $420 million dollar program has not been using all of its funds, and it’s not a system where you use it or lose it.

Observer: So it carries over into the next fiscal year or fiscal quarter?

“There are a lot of states that incentivize technology companies and manufacturing companies. Because they create jobs, and they’re great businesses to have in your state. Well, this is a great business to have in your state…And you’re manufacturing a film.”

JG: Right. I just got a credit certificate from a client the other day. They just sent it to us and it was 2013 money. But that was probably an 18 month project. They let that one go through the film office. It was a small indie film that spent three or four million dollars in New York. I like to look at these programs. It’s just like manufacturing. There are a lot of states that incentivize technology companies and manufacturing companies. Because they create jobs, and they’re great businesses to have in your state. Well, this is a great business to have in your state: It’s clean, it’s green, they shoot, they leave, they bring in money from out of state and spend it in your state, which is great economically, because a dollar’s going stay here a while before it leaves. And you’re manufacturing a film.

I’m an accountant, that’s why I like to look at things. It’s inventory. I’m putting all this money, we manufacture a film, then we turn around and try to sell it or distribute it. That’s just like any other manufacturing company. You got union employees. The only bad thing is people look at it and go, ‘Oh, you know it’s this glitzy glamour. They’re giving all this money to Brad Pitt and Johnny can’t read.’ But New York’s program is not structured like that, because it’s below the line. The production companies would probably like to have it on everything…if you go to Massachusetts or Pennsylvania, they give away money for above the line. George and Louisiana too.

Observer: But California does not do above the line?

JG: No, they don’t do it either.

Observer: What would your suggestion be for states looking to incentivize filming, but maybe don’t have the unions or infrastructure of New York?

JG: Well, the states I see with the most activity is Pennsylvania. You’d be surprised with some of the states. Georgia is probably maybe number three now. Louisiana used to be one of the hottest areas, but governor Jindal changed the program a bit, put some limitations in place, so I think you’re going see the production activity dwindle, because of the certain limitations on the program there. Illinois has a lot of production activity. Massachusetts. We’re working on a couple of projects in New Mexico, which has a very nice program. Those are the most popular states we see. Florida’s program, there was a lot happening down there, but that just sunset. New Jersey had a little program, that just sunset last year and they didn’t renew it. Governor Christie is not a believer in the program, or else he didn’t have the support of the legislature to do something. TV shows like Law and Order: SVU were shot there for years, you know and as soon as they froze the program, NBC packed their bags and moved to Brooklyn.

Observer: I was actually on Law and Order SVU. I feel like everyone in New York gets to be on that once in awhile.

JG: We used to do the audits for that when it was in Jersey, and now we might do the audits for that in New York, depending on what their backlog is.

There’s a lot of money to be made in TV these days, where maybe ten years ago, or before Friends, when people weren’t making a boatload of money in TV. Now if you’re on Homeland you’re probably making a lot of money. You know that’s going be shooting season six here in New York.

A perfect example of (a show leaving the state because of tax credits)… I don’t know if you’re familiar with the show Banshee.

Observer: The Cinemax show?

JG: Yeah, which has the greatest characters. I love that show.

So they shot in North Carolina. It’s supposed to be these Amish folks from Pennsylvania basically, but North Carolina got rid of the tax credit and put a grant program in place, so Banshee just picked up and left and moved to Pittsburgh to shoot its last season.

The incentive program there, you can get 25 to 30 percent in Pennsylvania, above and below the line. On the other hand, it’s only a $65 million dollar program, so the money goes pretty quick.

Observer: I find this tax credit stuff really interesting. It’s kind of like a wonky thing, but I find it super interesting.

JG: I love this stuff, I’ve been doing this for like ten years now. It’s one of my favorite industries.

Observer: My final question is how have the unions — I’m not sure if you’ve worked with them directly or have heard stuff trickle down — how are the unions responding to this sort of influx of workload?

JG: I don’t think it’s made a problem. For the unions it’s fantastic. It’s making jobs for them. I hear more issues that they can’t find enough crew to work on projects because there are so many projects, now you got the streaming networks and they’re doing a bunch of shows, so they’re grabbing crew. I can’t tell you how hard it is to find a good production accountant to work on a show.


JG: Yeah, we don’t do production accounting, but we do the audits for a CPA firm. To find a good accountant — they fight over these people. They’ll pay them the whole year just to get them to work on nine months of a TV series, and they’ll pay them another three months just so they don’t leave.

ObserverThat’ll be a nice little tip for anybody recently graduating college and looking to know what kind of accounting to work in.

JG: Oh I tell you, it’s a grueling life, because you could be on the road a lot. But, they can do very, very well.

  Breaking Down the Numbers: New York’s TV & Film Tax Credits Still Paying Out