Section 181…ALMOST THERE! (Maybe)
POST UPDATE
Bad news. Section 181 seemsto be cursed. A better explanation is that the extension is linked to a huge political battle over extending unemployment insurance. Washington at its best. Read more here. http://www.opencongress.org/articles/view/1921-Dems-Lose-Big-on-Unemployment-Insurance-Tax-Extenders-Vote.
Originally Published on May 29, 2010
The House voted to pass HR 4213 with some minor revisions and amendments. After passing the House and the Senate earlier this year, Congress could not present the bill to the President until proposed changes (which likely means more pork was added) were debated. Thankfully for film makers, an extension of Section 181 through December 31, 2010 remained as part of the bill without any modification. The extension will permit films that were or are being produced in 2010 to utilize the tax deduction.
Even though it still looks like we are on the right track (which we have been for about 6 months), Congress adjourned for a week long holiday. So the Senate and President will not see this Bill until at least June 7.
Obviously, this extension will be great news for everyone associated with making movies in the United States. To find out more about Section 181 or to figure out how it can help with your film’s money raise, please feel free to contact us at josh@lawyer4musicians or info@tkhlaw.com. Remember, HR 4213 is not a law yet (not until the President signs it) and this blog does not contain legal advice upon which you may rely. Thanks to all readers who help us stay on top of this and correct any misinformation that is out there.
Lawyer 4 Musicians 
I am going to begin my post with the qualifier that I may be wrong.
The House did pass this Bill, HR 4213 now titled the “American Jobs and Closing Tax Loopholes Act of 2010”. The specific language for us, the extension of Section 181 of the Internal Revenue Code is found at Section 255 of this legislation.
Because of unrelated amendments, this Bill needs to be voted upon again in the Senate.
Despite Majority Leader Reid’s urgings, the Senate went home for the Memorial Day recess failing to consider the Bill. Action is to resume after June 7.
While we may take this as somewhat good news, keep the cork in the Champagne bottle and the wrapper on the fine cigar…. Celebration is premature.
While good news tha
From the LIBERTY blog’s June 10 Senate Briefing:
—
On The Floor
“The Senate reconvened at 9:30 AM today and began consideration of the motion to proceed to the Murkowski resolution of disapproval of the EPA’s actions to regulate carbon dioxide as a pollutant, S.J. Res. 26. If passed, the resolution could block the EPA’s action.
There will be up to 6 hours of debate on the motion to proceed to the resolution. Upon use or yielding back of the time (likely around 3:45 PM), the Senate will vote on the motion to proceed. If the motion is agreed to, there will be another hour of debate and then a vote on passage of the resolution. The resolution cannot be filibustered and requires a simple majority to pass.
Following the final vote on the Murkowski resolution, the Senate will resume consideration of the House message to accompany H.R. 4213. . . . Yesterday, the Senate rejected several amendments to the extenders bill. Among those were: an amendment from Sen. Ben Cardin (D-MD) to allow adult children up to age 26 to stay on the health plans of federal employees, an amendment from Sen. Pat Roberts (R-KS) to exempt pediatric medical devices from a new tax on them imposed by the Democrats’ health care bill, and an amendment from Sen. Jeff Sessions (R-AL) to impose discretionary spending caps for the next 3 fiscal years.
Later, senators approved two amendments concerning reporting of foreign debt holdings.”
—
So, is it possible we could see this finished by next week? That would be nice for Section 181 supporters!
(Although the entire bill is such a hodgepodge — some items I really like, others I don’t support. But that’s the way it works, isn’t it?)
Cheers — and hoping for the best,
Chris
Please keep us posted!!! I am trying to close a tough deal on a really great film!
Another defeat in the Senate…. More amendments and back to the House. The good news is that the Bill’s Section 255 which extends the IRC Section 181 treatment remains intact and has not been controversial. Just like Shelly, I too am working on closing a tough deal on a really great film.
I can only hope that the original sponsoring legislatiors don’t lose track of their efforts to get 181 treatment permanently adopted…
Definitely not good news. Read here: http://www.opencongress.org/articles/view/1921-Dems-Lose-Big-on-Unemployment-Insurance-Tax-Extenders-Vote.
My hope is that the 181 extension gets included in another, less controversial Bill because HR 4213 seems to be doomed to linger forever.
I’ll keep everyone posted.
Josh@lawyer4musicians.com
The Senate just voted 57-41 against limiting debate on HR4213. As I write this I am thinking many words none of which are suitable for polite company. Suffice it to say I am exceedingly disappointed.
@#$%ing Republicans, and @#$%ing fake “Blue Dog” Democrats.
This is going to seriously hurt our efforts to get a small slate of ultra-low-budget horror films financed for production here in Chicago. It seems that every month, some skilled person in the local production community either quits the business and moves back home (wherever “home” is), or else leaves for New Mexico or Louisiana chasing work.
Meanwhile, my friends in Los Angeles aren’t doing much better…
What irks me most is that Congress had no problem handing multi-billion-dollar bailouts to America’s failed auto industry. Why not do something for movie producers? After all, unlike our cars, foreigners actually PAY for our movies!
Speaking of which, here’s hoping my foreign distributors can step in and save our slate! G-d knows it’ll be tough getting any American backing, given the circumstances.
I don’t know whether this will work but this article was raised in another discussion forum:
http://en.wikipedia.org/wiki/Nuclear_option
In U.S. politics, the nuclear option allows the United States Senate to reinterpret a procedural rule by invoking the constitutional requirement that the will of the majority be effective. This option allows a simple majority to override precedent and end a filibuster or other delaying tactic. In contrast, the cloture rule requires a supermajority of 60 votes (out of 100) to end a filibuster. The new interpretation becomes effective, both for the immediate circumstance and as a precedent, if it is upheld by a majority vote. Although it is not provided for in the formal rules of the Senate, the nuclear option is the subject of a 1957 parliamentary opinion by Vice President Richard Nixon and was endorsed by the Senate in a series of votes in 1975, some of which were reconsidered shortly thereafter.[1] Senator Trent Lott (R-Miss.) first called the option “nuclear” in March 2003.[2][3] Proponents since have referred to it as the constitutional option.[4][5][6]
The maneuver was brought to prominence in 2005 when then-Majority Leader Bill Frist (Republican of Tennessee) threatened its use to end Democratic-led filibusters of judicial nominees submitted by President George W. Bush. In response to this threat, Democrats threatened to shut down the Senate and prevent consideration of all routine and legislative Senate business. The ultimate confrontation was prevented by the Gang of 14, a group of seven Democratic and seven Republican Senators, all of whom agreed to oppose the nuclear option and oppose filibusters of judicial nominees, except in extraordinary circumstances.
The Nuclear Option is not to be confused with reconciliation, which allows issues related to the annual budget to be decided by a majority vote without the possibility of filibuster
IRC 181 was intended to prevent productions “running away” to Canada.
Well, guess what? Now that it hasn’t been renewed, I’ve been talking to some Canadian producers about teaming up and shooting our slate of films up there.
It’s just embarrassing, as an American, that I might end up shooting my next two or three films in Canada, with a mix of British, German, and Canadian financing.
Hopefully it won’t come to that, but we’ll see.
Senators Baucus and Grassley in their capacities as Senate Finance Committe Chair and Ranking Member commented on December 22, 2009 as to the prompt passage of the extension of numerous expiring tax provisions, not the least being Section 181.
The announcement (today not worth the paper it’s printed on):
“Although the House and Senate were unable to come to agreement on a package to extend several expiring tax provisions before Congress adjourned, these measures must be addressed as soon as possible. These expiring tax provisions help American families and businesses and address some of our most urgent national priorities, including job creation, at a critical time in our nation’s economic recovery. Expiration of these provisions makes it difficult for taxpayers to fully and effectively realize the intended benefits by creating uncertainty and complexity in the tax law. In an effort to provide a seamless extension of these provisions with the fewest disruptions and administrative problems, we will take up legislation as quickly as possible in the new year.”
The full article may be found at: http://www.tax.com/taxcom/features.nsf/Articles/2ADE34D750839D7D8525769B006F696D?OpenDocument
Section 181 is not a credit, it is a deferral… over the duration of a production cycle, taxes still will be paid on a successful project and losses will still be deductible on a failed project.
I am as enraged as anyone over the Republican filibuster which has placed our needs back in limbo but desire to add that there is plenty of blame to lay at the doorstep of Senators of BOTH parties, particularly with respect to the Democratic Party’s incorporating of the unemployment extension into this legislation.
I have a call in to my Congressmember’s office (Mike McIntyre D-NC) which has been very responsive to my concerns. I will post updates as I receive them.
The following is from a press release from Senate Committee on Finance today, June 29, 2010
For Immediate Release
June 29, 2010 Contact: Scott Mulhauser/Erin Shields (Baucus) (202) 224-4515
Richard Carbo (Landrieu) (202) 224-5175
Baucus, Landrieu Unveil Bill to Create Jobs and Help Small Businesses Grow
Finance and Small Business Chairs Release Small Business Jobs Act
Washington, DC – Senate Finance Committee Chairman Max Baucus (D-Mont.) and Senate Committee on Small Business and Entrepreneurship Chair Mary Landrieu (D-La.) today released the Small Business Jobs Act, a bill to help small businesses access capital, stimulate investment in small businesses and promote entrepreneurship – all of which will help small business create jobs.
“Small businesses are the engine of our economy and need to be a critical focus of our job-creation efforts. Helping small businesses helps get Americans back to work,” said Baucus. “Working together, we crafted our bill to promote entrepreneurship and investment in small businesses and provide small businesses with the vital access to capital they need to create jobs.”
The full text of this release may be seen at: http://finance.senate.gov/newsroom/chairman/release/?id=b7c67e81-801a-4485-ac7b-5582806a6191
I already have my call in to Mr. Carbo from Senator Landrieu’s office conveying the need to get the language contained in Section 255 of the American Jobs and Closing Tax Loopholes Act of 2010, HR 4213 included in this current legislation. [This language is the extension of the Special Expensing Rules for Certain Film and Television productions described in Section 181 of the Internal Revenue Code.]
The talking points I have raised are:
Section 181 is not a credit, it is merely an acceleration of already allowable deductions.
We have been waiting for more than six months for action on this legislation despite early indications of its impending approval from Senate Finance AND its having passed the House on December 9, 2009.
WE, by and large represent a creative and hardworking SMALL BUSINESS COMMUNITY held in a state of limbo due to political inaction.
Film making creates and maintains jobs here in America.
Film making enjoys a positive balance of trade.
I will be spending most of the remainder of this afternoon communicating with my NC Senate offices and Representative. Senator Landrieu becomes a factor as a result of her state (Louisiana’s) encouragement of the film industry.
I think that promotion of adding this to the proposed Small Business Jobs Act is a shot worth taking.
Best regards to all,
Peter
I am going to have an opportunity to meet with
Mike Thompson US congressmen for the first district of California,
This week.
I wanted to discuss the current state of federal film tax credit with him.
Can any one direct me to current information on section 181?
For example where the bill is in the legislative process?
What are the remaining obstacles to it’s passage?
What measures can be taken to expedite it’s passage?
What economic benefits will arise by passage?
I think the information I am looking for is related to
H.R. 4213
Section 255
http://abovethelineproducer.blogspot.com/
I spoke to Representative Watson’s office today. She is a huge supporter of 181 and introduced one of the proposed bills which would have extended it. According to her staffers, she is thinking about re-introducing it, but for now, it is DEAD IN THE WATER. Vote accordingly.