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Film Fiasco: where was the Iowa Department of Revenue?

February 10, 2010

Did the Iowa Department of Revenue know that things were badly amiss with the film credit program almost a year before the program collapsed in scandal last September? A passage in the criminal complaint against former Film Office Director Tom Wheeler, makes it look as though the practice of running "in-kind" expenses through the program -- that is, imaginary ones -- was put before the department as early as October 2008:

During the Months of October and November, 2008, the producers filmed "the Scientist" on locations in Omaha, Nebraska, Bellevue, Nebraska, and Council Bluffs, Iowa...

During production of "the Scientist," a representative of Iowa Department of Revenue informed [producer] Weiner and her accountant that any single "service in kind" could not qualify as the basis for both an Expenditure Tax Credit and an Investment Tax Credit. Through Chad Witter, who was listed on the project both as an investor and as a consultant, the producers sought, but did not receive, a change in this ruling.

I'm unable to find any such "ruling" in the Department of Revenue online library. If this account is accurate, though, the Department not only knew that pretend expenses were being run through for tax credits, they apparently approved the practice, as long as any single "in kind" expense was used for only one of the two film credits.

Bureaucracies are ponderous things, and it's not shocking that the Department of Revenue didn't ask the Film Office what they were smoking. Still, it's apparent that Mr. Wheeler's out-of-control operation wasn't a closely-guarded secret, known only in his cubicle at the Department of Economic Development. The truth was out there in the fall of 2008. Somehow it wasn't enough to trigger action.

Other blog coverage:

Tax Policy Blog
Bleeding Heartland
WebCPA