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​Tax Rebate to Spur Creative Economy Jobs in the District

​By Aaron M. Fox, CPA - Senior Tax Manager at Raffa, P.C.

On March 9th of last year, the District of Columbia enacted a new tax rebate that did not get a lot of coverage and may not have been noticed by many decision makers in the nonprofit sector.   The new law, adapted from a pre-existing law, establishes a range of incentives for taxpayers that use the District of Columbia as a site for the production of film, television, interactive and digital video content; support media industry infrastructure projects; and create opportunities for District residents to have access to “creative economy” jobs.  If successful, the rebate could increase tax revenue for the District, increase media industry jobs in the District, and provide financial incentive to media production companies.

Subject to District fund availability, the rebate provides an eligible program recipient with a range of potential benefits:

  1. 35% of the company’s qualified production expenditures that are subject to taxation in the District;
  2. 21% of the company’s qualified production expenditures that are not subject to taxation in the District;
  3. 30% of the company’s qualified personnel expenditures that are subject to taxation in the District;
  4. 10% of the company’s qualified personnel expenditures that are not subject to taxation in the District;
  5. 50% of the company’s qualified job training expenditures; and
  6. 25% of the company’s base infrastructure investment; provided the facility is used for purposes related to media production or postproduction activities.

What exactly is meant by “qualified production or personnel” expenses?  These include expenses for motion picture, television, or video content created in whole or in part in the District, intended for nationwide distribution or exhibition by any means, including by motion picture, documentary, television programming, commercials, or internet video production and includes a trailer, pilot, or any video teaser associated with a qualified production.  It does not include televised news or current events, live sporting events (except boxing), political advertising, or radio programs.

Another prerequisite is that the organization must spend at least $250,000 in the District for the production, which can include expensing or capitalization of infrastructure for the project.  This threshold is high enough to exclude most small-scale projects such as issue advocacy advertisements or commercials. 

However, there are some nonprofits that do spend large amounts on media production in furtherance of their exempt purpose and would hugely benefit from the financial incentives this rebate offers.  Online video content is still one of the best ways a nonprofit can reach its target audience and get out its message.  Perhaps your nonprofit’s mission involves working with cities across the country to improve tourism and wishes to showcase a specific city with a short film production.  Or maybe your nonprofit is an ocean conservation organization attempting to educate the general public on ways to participate in this effort through a documentary.  Another example could include an organization that just had a massive conference or event during which it captured video content of attendees and presenters that it would like to turn into a film production to promote future events.  There are many potential applications for this rebate and nonprofits should take a close look at planned media projects over the next few fiscal years to see if they might qualify.

Organizations must apply in advance to qualify. There is no rebate available for production work already completed or ongoing currently.  The District is now accepting applications at https://film.dc.gov/.  If you would like to discuss this rebate with someone in our nonprofit tax department, please feel free to reach out with questions at 202-822-5000.