Chapter 122:21-1 | General Provisions

Rule 122:21-1-01 | Definitions.

• Effective: August 28, 2020
• Promulgated Under: 119.03

The following definitions are applicable to the rules set forth in this chapter of the Administrative Code as well as the guidelines, application and other materials of the "Motion Picture Tax Credit Program" approved by the director.

(A) "Above-the-line talent" means all principal cast, writers, directors, and producers working in the production.

(B) "Applicant" means a motion picture company that files an application with the director to certify a motion picture production as a tax credit-eligible production pursuant to section 122.85 of the Revised Code.

(C) "Below-the-line talent" means employees in the production other than principal cast, writers, directors, and producers.

(D) "Director" means the director of the Ohio department of development.

(E) "Distribution plan" means the plan for any theatrical, television, movie of the week, internet, and festival submission of the production.

(F) "Loan-out talent" means cast or crew who provides services to a tax credit-eligible production who are not employed by the applicant, but are loaned to the applicant for the purposes of performing production tasks for the tax credit-eligible production. Payments to the individual or corporation employing the loan-out talent, to the extent qualified, are eligible production expenditures provided the individual or corporation actually employing the cast or crew register with Ohio secretary of state.

(G) "Production" means

For motion pictures, the production company has incurred eligible production expenditures directly attributable to the commencement of principal photography. Eligible expenditures directly attributable to the commencement of principal photography include purchase or lease of a production office, purchase or rental of personal property and services for use in production, hiring of a unit production manager or line producer, hiring of crew members, a committed shooting schedule with confirmed dates and locations, and set construction activities.

For broadaway theatrical productions, the production company has incurred eligible expenditures directly attributable to the commencement of paid performances. Eligible expenditures directly attributable to the commencement of paid performances include hiring of cast and crew members, rehearsal dates in a qualified production facility scheduled and confirmed, confirmed scheduled performance dates in a qualified production facility, and the commencement of load-in in a qualified production facility.

For other types of eligible productions, production is the incurring of eligible expenditures necessary for the commencement of the main phase of producing a final product, as determined by the director.

(H) "Resident cast and crew wages" means pretax wages paid to the Ohio-resident individuals employed as cast or crew of the tax credit-eligible production, including the contract amount of loan-out talent and any other employment contracts. For the purposes of this chapter, wages also includes the dollar value of employer contributions to Ohio resident pension, health and welfare benefits, holiday, and vacation to the extent included in wages.

(I) "Non-resident cast and crew wages" means pretax wages paid to individuals who are not Ohio residents employed as cast or crew of the tax credit-eligible productions, including the contract amount of loan-out talent and any other employment contracts. For the purposes of this chapter, wages also includes the dollar value of employer contributions to pension, health and welfare benefits, holiday, and vacation to the extent included in wages.

(J) "Reviewable progress" means the particular steps leading to the implementation of the tax credit eligible production have been undertaken and are continuing or accomplished as demonstrated by objective evidence which be documentary or otherwise. For example, a production report indicating the specific production tasks are under way, documentation for production financing is complete or, pre-production approvals have been received.

(K) "Series" means either a television series or miniseries. A television series is a set of no less than six interrelated episodes of regularly occurring production intended in its initial run for broadcast on television or streaming. A miniseries is a set of two or more filmed projects or episodes for broadcast on television or streaming based on a single theme or storyline that are verified for distribution as a package or slate by executed agreement. For priority consideration under division (C)(5) of section 122.85 of the Revised Code, episodes of a series are to be filmed a minimum of seventy-five per cent in Ohio and foreseeably create sustained jobs for Ohio residents. Series exclude pilot programs produced for the purpose of selling a proposed television series and clip-based programming with greater than fifty per cent of its content comprised of licensed content.

(L) "Shooting days" means days of principal photography for the production.

Supplemental Information

Authorized By: 122.85(G)(1)
Amplifies: 122.85, 5703.19, 5726.55, 5733.59, 5747.66, 5751.54
Five Year Review Date: 8/28/2025

Rule 122:21-1-02 | Eligibility; application process.

• Effective: August 28, 2020
• Promulgated Under: 119.03

(A) An applicant who is a corporation, partnership, limited liability company, or other form or business entity must be registered with the Ohio secretary of state to do business in Ohio.

(B) Any application submitted must be submitted on a form prescribed by the director and meet the requirements set forth in division (B) of section 122.85 of the Revised Code and the budgetary requirements of division (C) of section 122.85 of the Revised Code.

(1) Documentation that shows the applicant has secured funding equal to at least fifty per cent of the total estimated production budget as required by division (B) of section 122.85 of the Revised Code can be evidenced by any one or a combination of paragraphs (B)(1)(a) to (B)(1)(d) of this rule.

(a) Private financing documented by any one or more of the following:

(i) Term sheet signed by a financial institution or other investment source declaring its total financial investment in the applicant production, the date that the investment will be made, the term of the investment and any condition for closing.

(ii) Executed loan agreement demonstrating a commitment to loan a specific amount of financing for the applicant production, the date the commitment was made and an established period in which the investment will take place.

(iii) Commitment letter signed by a financial institution or other investment source declaring its total financial investment in the applicant production, the date the commitment was made and an established period the investment will take place.

(b) Public financing documented by an approved council or commission ordinance, development agreement, letter of commitment or approval letter from a jurisdiction or public agency that contains the dollar amount of financing for the applicant production.

(c) Investor equity documented by, at a minimum, a signed letter of commitment from the investor containing the dollar amount committed and information from a financial institution or third-party accountant demonstrating to the satisfaction of the director the committed investor equity is unencumbered and available for the applicant production.

(d) Other funding source deemed to be acceptably documented by the director.

(2) Documentation of financial ability to undertake and complete the production also includes submission of a planned outline for the total funding of the production, which includes the expected sources of funding, dollar amounts, and anticipated times for receipt of funding.

(C) Eligible production expenditures are as authorized by section 122.85 of the Revised Code, which does not include alcoholic beverages. An applicant's eligible production expenditures may not include the expenditures for the purchase of alcoholic beverages.

(D) The application must include a certification by the applicant that the production does not require records to be maintained under 18 United States Code 2257 with respect to sexually explicit content.

(E) The application process includes the following steps:

(1) Applications are reviewed in two rounds each state fiscal year, as required by division (C) of section 122.85 of the Revised Code.

(a) For the first round each state fiscal year, applications may be submitted April fifteenth through June first.

(b) For the second round each state fiscal year, applications may be submitted October fifteenth through December first.

(2) Following the closing of the application window for each round, the director will review applications for completeness. If the information submitted in an application is materially insufficient, requiring more than basic clarifications or supplemental information to be evaluated and ranked, the director will notify the applicant that its application will not be evaluated during that round. The applicant is not restricted from applying again in subsequent rounds.

(3) Upon review of the applications, the director may request clarification or supplemental information about a production. The applicant must respond to the director by June thirtieth for applications submitted in the first round of each state fiscal year and by December thirty-first for applications submitted in the second round of each state fiscal year. If an applicant fails to respond or provide the requested information, the director may determine the applicant's application insufficient for evaluation for tax credit eligibility in that round. If the director determines an applicant's application is insufficient for evaluation for tax credit eligibility, the applicant is not restricted from reapplying for evaluation in subsequent rounds.

(F) For each round the director scores and ranks all completed applications based on the extent of positive economic impact a production is likely to have in Ohio and the potential effect on developing a permanent workforce in motion picture or theatrical production industries in Ohio, in accordance with division (C) of section 122.85 of the Revised Code.

(1) Economic impact is based on the applicant's total estimated eligible expenditures in Ohio directly associated with the production.

(a) The application in each round with the highest amount of total estimated eligible expenditures is assigned a score of ten.

(b) All other applications are given a score determined by calculating the total estimated eligible expenditures in Ohio directly associated with the applicant's production divided by the highest estimated eligible expenditures for an applicant production in that round and multiplying the resulting quotient by ten. For example, in a round where the highest amount of estimated eligible expenditures of all applicants is one million dollars and an applicant's estimated eligible expenditures is eight hundred fifty thousand dollars, the applicant would receive a score of 8.5 for economic impact.

(2) The effect on developing a permanent workforce in the motion picture or theatrical production industries is determined as follows:

(a) first, by the number of new jobs created.

(i) The number of new jobs created by an applicant project is derived by calculating the quotient resulting from the total estimated hours for which a wage greater than one and one half times the federal minimum wage will be paid to Ohio residents in the production divided by two-thousand eighty.

(ii) The application with the highest number of new jobs created in a round is given a score of five. All other applications are given the score calculated by dividing the number of new jobs created by the project by the highest number of new jobs created for applications in the round and multiplying the resulting quotient by five. For example, if an applicant project has twenty-five new jobs created and the project with highest amount of new jobs created in that round is one hundred, the applicant project receives a score of 1.25 for new jobs.

(b) Second, by the amount of eligible payroll added by employees in Ohio. For purposes of this section, eligible payroll means the estimated amount of compensation used to determine the withholding obligations in division (A) of section 5747.06 of the Revised Code and estimated to be paid by the applicant during the production to an employee of the production who is a resident of Ohio or an employee who is not a resident of Ohio and whose compensation is not exempt from the tax imposed under section 5747.02 of the Revised Code pursuant to a reciprocity agreement with another state under division (A)(3) of section 5747.05 of the Revised Code.

The applicant project with the highest amount of estimated total eligible payroll expenditures is given a score of five. All other applicants are given the score calculated by dividing the applicant project total eligible payroll by the highest amount of total eligible payroll for a project for the round and multiplying the resulting quotient by five. For example, if an applicant project has three hundred thousand dollars of total eligible payroll and the highest amount of total eligible payroll for a project in that round is one million dollars the applicant project is given a score of 1.5 for eligible payroll added by employees in Ohio.

(3) Starting with television series and then all other production types, the director ranks all applicants in each round by calculating the sum of the scores derived for positive economic impact and effect on developing a permanent workforce in motion picture or theatrical production industries in Ohio from highest to lowest in accordance with division (C) of section 122.85 of the Revised Code. The director finds applicants eligible for Ohio motion picture tax credit in descending order until the amount of funds available for allocation in that round have either been exhausted or are insufficient to allocate credits for the total estimated tax credit amount for the next highest ranked project in that round, as determined by the director.

(G) The director will send notice of eligibility for motion picture tax credit by the following dates:

(1) July thirty first for the first round of each state fiscal year; and,

(2) January thirty first for the second round of each fiscal year.

Supplemental Information

Authorized By: 122.85(G)(1)
Amplifies: 122.85, 5703.19, 5726.55, 5733.59, 5747.66, 5751.54
Five Year Review Date: 8/28/2025
Prior Effective Dates: 4/5/2010

Rule 122:21-1-03 | Application fee.

• Effective: August 28, 2020
• Promulgated Under: 119.03

(A) Upon certification by the director that the project proposed by the applicant is a tax credit-eligible production, the director shall issue the applicant an invoice for a non-refundable application fee in an amount equal to one per cent of the estimated value of the credit, up to a maximum application fee of ten thousand dollars.

(B) The applicant shall pay the non-refundable fee within forty-five days of the invoice date.

(C) The applicant's failure to pay the application fee within the timeframe set forth in paragraph (B) of this rule shall result in rescission of the director's certification that the application is a tax credit-eligible production.

(D) An application fee is due and payable for each production certified by the director as a tax credit-eligible production and is not transferrable to any other or future application or production.

Supplemental Information

Authorized By: 122.85(G)(1)
Amplifies: 122.85, 5703.19, 5726.55, 5733.59, 5747.66, 5751.54
Five Year Review Date: 8/28/2025

Rule 122:21-1-04 | Reporting.

• Effective: August 28, 2020
• Promulgated Under: 119.03

(A) Reviewable progress reports in a format acceptable to the director are due within ninety days of certification of the application as a tax credit-eligible production. Failure to demonstrate commencement of production within ninety days of certification of the application as a tax credit-eligible production will result in rescission by the director under division (B) of section 122.85 of the Revised Code, unless an exemption otherwise applies. The director may, from time to time in his or her discretion, request in writing additional reviewable progress reports after ninety days of certification of the application as a tax credit eligible production. The applicant's failure to report to the director or failure to demonstrate reviewable progress in a report to the director may result in rescission of the director's certification of the production as a tax credit-eligible production.

(B) Upon completion of a tax credit eligible production, an applicant may apply to the director for a tax credit certificate in a form developed by the director in consultation with the tax commissioner.

(C) With its application for tax credit, an applicant will submit the independent certified public accountant report due to the director under division (D) of section 122.85 of the Revised Code. The applicant will cause its certified public accountant to certify to the director that the applicant's reported costs of its tax credit- eligible production are eligible production expenditures as defined in division (A) of section 122.85 of the Revised Code. In addition, the independent certified public accountant shall:

(1) Certify to the director that the loan-out talent contractors are registered with the Ohio secretary of state to do business in Ohio;

(2) Review and certify to the director all contract and expense items greater than or equal to one-thousand dollars and review and certify to the director no less than fifty per cent of the contracts and expense items less than one thousand dollars;

(3) Certify to the director that all eligible production expenditures for the tax credit eligible production were incurred during the period beginning the date of certification as a tax credit eligible production to the production complete date; and

(4) Certify to the director that the goods and services claimed as eligible production expenditures were purchased and performed or consumed in Ohio.

(D) The costs of the certified public accountant's report does not qualify as an eligible production expenditure.

(E) Within sixty days of receipt of the independent certified public accountant's report, the director shall review and provide a written notice to the applicant accepting the report or identifying any deficiencies in the report, and if the report is accepted, identifying any disallowance of expenditures claimed and providing the reason for any disallowance. If the report does not satisfy the reporting requirements, the applicant shall have thirty days after the notice date to cause the independent certified public accountant to remedy the identified deficiencies. Also, within thirty days of receipt of the director's notice of any disallowed expenditure, the applicant may request reconsideration and provide additional documentation in support of the report. The director shall consider all relevant information submitted and respond in writing. Upon reconsideration, the director's determination shall be final.

(F) If the applicant fails to provide a report of an independent certified public accountant complying with the requirements of this rule and section 122.85 of the Revised Code, no tax credit certificate will be issued.

Supplemental Information

Authorized By: 122.85(G)(1)
Amplifies: 122.85, 5703.19, 5726.55, 5733.59, 5747.66, 5751.54
Five Year Review Date: 8/28/2025

Rule 122:21-1-05 | Certificate.

• Effective: August 28, 2020
• Promulgated Under: 119.03

(A) A tax credit certificate shall be issued to the applicant as the certificate owner and shall not be transferable. If the certificate owner is a pass through entity, such as a partnership, S-corporation, limited liability company (LLC), or other such pass through entity, the pass through entity shall provide the director a list of partners or members, including the correct legal name, taxpayer identification number, and proportion of ownership interest in the entity for allocation of the tax credit.

(B) No credit certificate may be issued before the completion of the tax credit eligible production. A tax credit-eligible production is not considered complete until the applicant certifies to the director that all costs of the production and creditors have been paid in full, or as otherwise agreed. Upon acceptance of the accountant's report as provided in rule 122:21-1-04 of the Administrative Code, the director will issue a credit certificate in an amount equal to thirty per cent of the lesser of the budgeted eligible production expenditures stated in the application and the director's certification of the tax credit-eligible production or the actual eligible production expenditures incurred and certified by the independent certified public accountant.

(C) The tax credit certificate shall include the amount of the tax credit and be calculated as set forth in division (C) of section 122.85 of the Revised Code.

(D) The tax credit shall be claimed in accordance with section 5726.55, 5733.59, 5747.66, or 5751.54 of the Revised Code.

(E) No application will be certified as a tax credit-eligible production if the total budgeted eligible production expenditures stated in the motion picture company's application is less than three hundred thousand dollars. In addition, if the actual eligible production expenditures as finally determined under division (D) of section 122.85 of the Revised Code is less than three hundred thousand dollars, the certification of the production as a tax credit eligible production will be rescinded and no credit will be allowed.

Supplemental Information

Authorized By: 122.85(G)(1)
Amplifies: 122.85, 5703.19, 5726.55, 5733.59, 5747.66, 5751.54
Five Year Review Date: 8/28/2025
Prior Effective Dates: 4/5/2010