Review finds Georgia film tax credit has improved oversight
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By Dave Williams
Capitol Beat News Service
ATLANTA — The state agencies in charge of Georgia’s film tax credit have strengthened oversight of the program by fully or partially addressing all shortcomings identified in a 2020 audit, a follow-up review has concluded.
The General Assembly passed legislation two years ago requiring all film productions located in Georgia to undergo mandatory audits by the state Department of Revenue or third-party auditors selected by the agency.
It also tightened rules governing how film companies transfer or sell unused tax credits to other businesses, a common practice for production groups that conduct part of their movie-making work outside Georgia.
Georgia’s film industry took off after the state began offering generous tax credits to lure productions. The program’s economic impact has soared from $242 million in 2007, the year before the General Assembly passed legislation significantly increasing the tax credit, to a record-setting $4 billion in direct spending in Fiscal 2021.
But the program’s supporters were put on the defensive after two critical audits released at the beginning of 2020 found it had been poorly managed and called into question the accuracy of fiscal impact estimates.
To address insufficient audit procedures, the revenue department has begun publishing a detailed manual for film tax credit audits, which includes agreed-upon procedures to be used for any mandatory audits, according to a follow-up review released late last week.
Under the agreed-upon procedures, auditors must verify all expenditures above $100,000 and select a statistical sample of those under $100,000 for testing.
The agency also has taken steps to identify and disallow expenditures that are ineligible under the law or that have limited economic benefit to the state and updated the manual and training materials for tax examiners who process the credit.
The Georgia Department of Economic Development has taken steps to exclude from the tax credit projects not intended for multimarket commercial distribution, the review found.
The 2020 audit concluded the agency had broadly interpreted the law’s provisions, approving projects that could be considered of local interest and live events that likely would have taken place without the credit.
Both the revenue and economic development departments agreed for the most part with the follow-up review’s findings. However, the economic development agency disagreed with a recommendation to require that a minimum percentage of productions occur within Georgia.
The agency indicated such a mandate “would exceed the authority delegated to it by the Georgia General Assembly considering the film tax credit … does not require a minimum amount of in-state shooting.”
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