The Rebate Debate: Cash with Caveats for Productions.

Author:Reynolds, Mike
 
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The ability to negotiate the appropriate location, and one offering tax and/or cash-in-hand incentives, can be a godsend when seeking funds to start and complete a production.

However, at times, a seemingly dream incentive becomes a nightmare when trying to wade through the grants, tax rebates, or cash-back deals offered by about two-thirds of U.S. states, every Canadian province and territory, and a growing list of countries around the globe.

That said, eye-catching incentives from film and TV commissions and entities can certainly be important in helping achieve and overcome some of the many demands a production faces.

Eye-catching is one thing, reality is another, as not all of those tantalizing offers are as wonderful as they appear at first sight, at least when it comes to actual cash in hand!

Take that "20 percent back" offer. Is it a grant requiring months of wait time and reams of complicated paperwork? Is it cash in hand? And if so, when will you get it? Is it a tax break? And if so when will you get it? Do you have to work with a local production company to get a break, or use local talent, or can you just walk in, work, and collect as you leave? Having a very experienced accountant (and attorney) on hand to decipher and clarify many of the incentive offers is definitely a must in order for everything to be clear.

When looked at by savvy financiers, your deal may be the key to full financing. "You have 20 percent of the budget (through incentives), that's great, I'll give you the other 80 percent," the deal seems to say.

However, it isn't always as easy at that. If the financier decides he wants the 20 percent back once the project is posted and out the door, or at best a few months after that, your 20 percent back can then become a nightmare. The incentives come with so many riders you could go crazy trying to fathom the oft-times confusing, even seemingly contradictory, rules. Your crew, so carefully put together, might have to be reconfigured because local talent must be involved in order to receive that incentive. Your percentage return is not actual cash in hand that you will receive immediately, but a tax credit, which could take a while. In some instances "it could be as much as two years," said Dave Bowers, principal of the Fort Washington, Pennsylvania-based Film Incentives, an entity specializing in providing certain incentive services. Backers don't always want to wait that long, even for a return that seems really good...

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