Many items purchased, rented or repaired for the
production of film/video projects are exempt from state sales and use
taxes (6.25%) and local sales taxes (usually 0.25-2%). Eligible projects
include features, television projects, commercials, corporate films,
infomercials or other projects intended for distribution (even if
distribution is very limited, as in training films). Films or videos not
intended for distribution (such as wedding videos) are not eligible for
these exemptions. These exemptions are covered in the Texas Tax Code,
Section 151.318, and the Comptroller of Public Accounts Administrative
Rule 3.300.
Use Tax
Texas use tax is
due on items purchased outside the state and used in Texas. The use tax
is the same rate as the sales tax, but producers may get credit for any
sales tax paid to another state.
Purchases and Rentals
Producers may claim 100% exemption from state and local taxes
on purchases or rentals of qualifying machinery, equipment and supplies.
To qualify, all items must be necessary and essential to the production,
and used directly in production or post-production. Some items, even
though essential to production, are not tax-exempt; see "Exemptions,"
below.
Examples of qualifying items: cameras, camera
accessories, costumes, lights, props, video assist systems, time code
equipment, VTR editing equipment, switchers, character generators,
teleprompters, sound equipment, pagers (if used solely on the set),
cellular phones (if used solely on the set), walkie-talkies (if used
solely on the set), film stock, makeup, dollies and cranes, lights,
lighting control systems, grip equipment, fog machines, wind machines,
terminating boxes and extension cables.
Services
Many services
performed directly on the film or videotape are tax-exempt. They
include: editing, film processing, film-to-tape transfers, Foley
services, multi-image services, sound mixing, voice-overs, ADR/looping
and audio sweetening. Repairs to qualifying machinery, equipment or
supplies are also tax-exempt.
Services that are not exempt include catering, script
typing, landscape maintenance, and duplications of the master tape.
Fuel Used Off the Road
Producers may receive a refund of taxes paid on fuel used in
generators, in unlicensed vehicles such as tractors, or in boats.
Original invoices must be presented when claiming fuel tax refunds, and
claims must be made within 12 months of use. For information on motor
fuel refunds, call the Office of the Comptroller of Public Accounts,
(800) 252-1383.
Hotel Occupancy Tax
The 6%
state hotel occupancy tax is waived for persons staying for 30
consecutive days or longer. Occupants must claim this exemption upon
checking in.
Exceptions
Under Texas
law, certain items do not qualify for sales tax exemptions. These
include office equipment, hand tools, transportation equipment
(including motor vehicles) and items not absolutely essential to the
production process. Items not eligible for tax exemptions include but
are not limited to: director's chairs, gas cans, ladders, rakes,
shovels, shipping cases, battery chargers, office utilities and car
rentals.
To Claim Exemptions
Exemption Certificates are available from the Texas Film
Commission, (512) 463-9200.
Filling out the form: in the section marked "Purchaser
claims this exemption for the following reason," an appropriate entry
would be "items are to be used directly in production of [the feature
film XXX/Radio Shack TV commercial/whatever's appropriate]." Provide a
completed form to each vendor from which you're buying or renting
qualifying items. If you're making many purchases from the same vendor,
they may keep one completed form on file; you don't have to fill out a
new one for each transaction.
Even for exempt purchases, the vendor will include sales
tax on your invoice. Deduct the amount from the total, and include a
completed Exemption Certificate with your payment. Please don't ask that
the invoice be prepared without sales tax; it's necessary for the
vendor's records.
For more information about the exemptions, contact
Adina Whittemore at the Tax Administration Division, Comptroller of
Public Accounts, (800) 531-5441, extension
34614.
