Qualified Production Franchise Excise Tax Credit
A franchise and excise tax credit is available for tax years beginning on or after July 1, 2021 for qualified payroll expenses incurred by taxpayers engaging in qualified productions in Tennessee. To apply for the credit, the taxpayer must first apply to the Tennessee Entertainment Commission (“Commission”) and complete Form A.
To qualify for the credit, the taxpayer must be engaged in a “qualified production” in this state and incur “qualified payroll expenses.”
Qualified Payroll Expenses
After applying and being notified of approval by the Commission, the taxpayer engaged in the qualified production may submit an application for credit. If all statutory requirements are met, the taxpayer will receive a tentative approval letter. Prior to filing its return and claiming credit, the taxpayer must submit a List of Qualified Payroll Expenses for Qualified Production.
Qualified Production Sales/Use Tax Exemption
A sales and use tax exemption is also available for the sale, use, storage, or consumption of tangible personal property, computer software, or services that are necessary to and primarily used for a “qualified production” in this state. A taxpayer also cannot be approved for sales and use exemption until the applicant engaged in the qualified production first completes the Commission's Form A.
If the Commission notifies the taxpayer of approval, the taxpayer may then apply to receive a sales and use tax exemption certificate that identifies the qualified production. A third party that purchases or uses tangible personal property, computer software, or services that are necessary to and primarily used for a qualified production, and for which an exemption has been granted, may separately apply for a sales and use tax exemption certificate. The third party must have the approved applicant for qualified production credit sign the application to certify the third-party’s work on the qualified production.
Upon completion of the qualified production, the taxpayer must submit a List of Qualified Production Sales/Use Expenses of the taxpayer and all third-parties that have made purchases using the tax exemption.