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Reinstatement of the Pennsylvania Loan-Out Registration Requirement

Pennsylvania film tax credit guidelines require that all personal service corporations or loan-out companies engaged by the applicant are incorporated in or have registered to do business in Pennsylvania prior to the commencement of principal photography in Pennsylvania or the date on which such company was engaged, whichever is later.

Pennsylvania had waived this requirement for films approved under the Commonwealth’s 2007/2008 budget. However, with these films now complete or nearing completion, we want to remind everyone of the importance of this requirement. Effective beginning with applications for the Pennsylvania film production incentive approved under the fiscal year 2008/2009 budget, any payments made to a loan-out company for the services of an individual where the service was performed prior to completing the registration process will be deemed to be non-Pennsylvania expenditures for purposes of calculating the film incentive tax credit. The result of this treatment could cause a reduced credit and in some cases, could result in a film not meeting the 60% in state spend requirement and ultimately disqualify the film entirely from the incentive program.

As such, it is imperative that the production company verify full compliance with state registration requirements prior to the start of work or contract with the loan-out owner. We recommend consulting your legal counsel to incorporate this specific requirement into the loan-out contract and have all registrations completed as a condition of the contract. We appreciate the difficulties that can be encountered in getting loan-outs to register with the Secretary of State. However, due to the significant cost associated with non-compliance in this area, it is a challenge that in many cases must be undertaken. (Loan-out companies should register with both the Secretary of State and Department of Revenue depending on the taxes they may owe for engaging in business in Pennsylvania but procedures require us to check only with the Secretary of State.)

For more information on the Pennsylvania Film Tax Credit Program and these requirements, please visit:
Film in PA - Incentives 

Search for a Business Entity on the PA Department of State Corporation Search website.

If an organization determines that it needs to register to do business in Pennsylvania, visit the Forms section of the PA Department's Corporation Bureau Website website:

 

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