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Iowa issues film credit FAQ, updates list of approved projects

December 24, 2009

Now that it has already squandered millions of dollars on phantom film expenses, Iowa has gotten around to "clarifying" the rules governming the program to take your money and give it to Hollywood. A FAQ issued yesterday by the Department of Economic Development "clarifies" that some of the worst abuses of an already-stupid program will no longer be tolerated:

For example:

FAQs Re: “Payment”

1. Are Deferred Payments qualified expenditures? No, the statute requires "payments," not promises to pay.

2. Are In-kind Amounts qualified expenditures. No, In-kind amounts are not "payments."

These address sleazy tricks outlined in the accountant's report on the program, where credits were allowed before money was spent, or even for non-cash "expenditures" like listing somebody in the film credits.

Also:

FAQs RE: Authorized Types of Expenditures

1. Are sponsorships paid by the film makers to other organizations qualified expenditures? No, these sponsorships are not services directly related to the registered project.

These "sponsorships" were paid in pretend money -- see "in-kind" expenditures, above.

And there's a new one that wasn't in the accountant's report:

2. Are "Marketing Fees" for Actors qualified expenditures? No, the use of marketing fees for actors is a way to avoid application of the pre-July 1 prohibition against labor and personnel payments to actors being included as qualified.

It's not a labor payment to a movie star... it's a marketing fee! That's the ticket!

The FAQ also denies credits for advertising costs, professional fees, tax credit broker fees, and interest payments. It tries to limit the use of strawmen Iowa LLCs to pretend that money being paid to Hollywood is really spent in Iowa.

And the issue that exploded the program in the first place:

5. Are vehicles qualified expenditures? Vehicles are listed among the specifically enumerated items of personal property that qualify as qualified expenditures. However, the purchase of a vehicle for short-term use of a member of the film crew or cast while the project is filming in Iowa is not appropriate and is not a qualified expenditure. The rental of a vehicle for the use by a crew or cast member during the Iowa production is most likely a qualified expenditure, if the rental is directly related to the project.

But good luck getting that Benz back, Iowa.

The IDED also issued an updated list showing the status of the various film projects under way, so you can get a warm fuzzy feeling for how Hollywood is spending your money.