How to Hire Bennett Thrasher to Perform a New Mandatory Georgia Film Tax Credit Audit
Last year, the Georgia General Assembly enacted legislation HB 1037, which requires new mandatory film tax credit audits in Georgia to be performed by either the Georgia Department of Revenue or an approved external CPA firm. Bennett Thrasher is pleased to be one of the firms approved to perform such audits for 2021. The below information outlines the procedures for how companies can retain an approved accounting firm to perform them.
Mandatory audits are required for projects claiming in excess of $2.5 million in credits and certified by the Georgia Film Office on or after January 1, 2021. Projects originally certified prior to 2021 and receiving an annual certification for continuation of the project in 2021 are grandfathered under the old rules, even if the annual certification is issued after January 1, 2021.
As revised by HB 1037, the film tax credit statute provides that the Georgia Department of Revenue will conduct or cause to be conducted an audit performed by either the Department or an independent third party certified by the Department (O.C.G.A. § 48-7-40.26(l)(2)). Such audits have to be performed in accordance with “procedures developed by the Department” (O.C.G.A.§ 48-7-40.26(l)(4)). The Department is also required to keep a list of “all eligible auditors that the production company may hire to conduct the audit required by this subsection” (O.C.G.A. § 48- 7-40.26(l)(5)(B)). Following the audit, the Department is required to review the audit conducted by the eligible auditor, perform additional auditing as necessary and issue a final certification to the taxpayer (O.C.G.A. § 48-7-40.26(l)(5)(G)). The production company has to pay the outside auditor’s fees for performing the audit, as well as a fee for the Department to review the CPA’s audit (O.C.G.A. § 48-7-40.26(l)(6)). The Department’s fee schedule for reviewing outside audits may be found here.
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To have Bennett Thrasher perform your audit, production must file a Mandatory Film Tax Credit Audit Application with the Department no later than one year after completion of the production in Georgia. As part of the application, the production may elect to have the audit completed by an approved outside CPA firm, such as Bennett Thrasher.
In addition to making the election to use an outside auditor on the application and paying the requisite fee to the Department, the production will also have to sign an engagement letter with the audit firm. Bennett Thrasher’s engagement letters for such purposes will be structured as an agreed upon procedures (AUP) engagement conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. Fees for these engagements will vary directly with the budget of the production in Georgia. Bennett Thrasher will be following the procedures set out in the Department’s Audit Procedures Manual (as presumably will the Department for audits conducted directly by the Department), a copy of which can be found here.
Bennett Thrasher has the expertise you need to ensure your film tax credit audit is performed efficiently and follows all procedures. We are already performing mandatory film tax credit audits in Georgia and look forward to continuing to help production companies with this important task. To learn more about our services, please contact Peter Stathopoulos, Partner and leader of our firm’s Entertainment practice, by calling 770.396.2200.