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This bulletin explains how New York State and local sales and use taxes apply to film production activities. It provides general information for film producers on what property and services are exempt from tax as they relate to film production.
In addition, this bulletin explains the difference between a license to use or exhibit and a right to reproduce. It also explains how that difference affects the taxability of films produced in New York State.
This Tax Bulletin is intended to provide basic information. See Publication 28, A Guide to Sales Tax for the Film Industry, for additional details, including a chart detailing the taxable status of various expenses incurred when making a film and frequently asked questions (FAQs).
The term film includes, but is not limited to:
Film production activities that are eligible for the exemption from sales tax are:
Pre-production involves all activities engaged in before the shooting of a film. Sometimes these activities are referred to as above-the-line costs.
Production involves the entire process of recording a film. The actual shooting may take place either on location or at a film studio.
Post-production involves the editing, dubbing, and mixing of a film. It consists of the entire process by which the individual actions recorded during production are transformed into the final release print.
Sale and distribution
Sale and distribution involves all activities that consist of getting the final release print ready for actual sale. Marketing activities are considered part of distribution.
Film producers engaged in the film production activities described above can make tax exempt purchases of:
These exemptions and exclusions apply even if the resulting film is delivered in an intangible form (for example, when a film is delivered electronically).
A film producer must register for New York State sales tax purposes to claim exemptions from sales tax. See Tax Bulletin How to Register for New York State Sales Tax (TB-ST-360).
Tangible personal property
A film producer can purchase, lease, or rent exempt from sales tax machinery or equipment, as well as parts, tools, and supplies, used directly and predominantly in the production of a film for sale.
Directly means that the property is actually used in the production of the film or has an active, causal relationship to the production of the film for sale.
Predominantly means that the property must be used more than 50% directly in the production of the film for sale.
Items eligible for the exemption include:
Example: A film company rents a truck for three months to be used in the production of a film for sale. The truck is used 40% of the time to transport equipment to and from shooting locations, and 60% of the time to carry the main camera and cameramen during actual filming. The rental of the truck qualifies for the film production exemption, as carrying the camera and cameraman during filming is considered part of the production process.
The exemptions for tangible personal property do not apply to property used in administrative activities, including but not limited to:
A film producer can purchase exempt from sales tax services to tangible personal property used directly and predominantly in the production of a film for sale. These services include:
For example, film processing services and film editing services performed for a film produced for sale are exempt from sales tax. Also, the installation on a motor vehicle of a camera used in making a film for sale is exempt from sales tax.
Utilities, utility services, and fuel
The following utilities and utility services purchased for use or consumption directly and exclusively in the production of a film for sale are exempt from tax:
With respect to utilities, directly means the gas, electricity, refrigeration, fuel, or steam (and like services), must be used during the production of the film to:
Exclusively means that gas, electricity, refrigeration, fuel, and steam (and like services) are used 100% directly in the production process.
Examples of exempt utility and fuel usage include:
Examples of taxable utility and fuel usage include:
Purchases for resale
Certain purchases that a film producer makes may qualify as purchases for resale. You may purchase materials, and services to these materials, exempt from tax when they become a component part of the film for sale. The purchase of negative raw film stock, as well as any services associated with developing it, may be exempt as purchases for resale.
Forms to use
Use Form ST-121, Exempt Use Certificate, to purchase exempt tangible personal property, services, and utilities. For motor fuel and diesel motor fuel used in film production, you must pay the sales tax at the time of purchase, and claim a refund using Form FT-500, Application for Refund of Sales Tax Paid on Petroleum Products.
If you are purchasing materials or services to materials that become a component part of the film, complete Form ST-120, Resale Certificate, and give it to your supplier.
If you pay tax on any purchase or rental of tangible personal property that was used directly and predominantly in producing a film for sale, you may apply for a refund directly from the Tax Department by filing Form AU-11, Application for Credit or Refund, within three years from the date the tax was due and payable. See also, Tax Bulletin How to Apply for a Refund of Sales and Use Tax (TB ST 350).
Sales and use tax is imposed on the total selling price of a film sold in a tangible form, unless otherwise exempt. The person selling the film is responsible for collecting the sales tax. The sales tax rate is the rate in effect in the taxing jurisdiction where the film is delivered. A film is considered to be delivered where the original negative is delivered.
The materials used for exhibition in theaters or for distribution by cable or broadcast (for example, release prints, dupes, or other release copies), may be in the form of a film or tape, as well as CDROMs, Digital Video Disks (DVDs) and any other medium, both analog or digital. The sale of these materials is considered separate and apart from the sale of the film.
No New York sales tax is due on a film delivered out of state. Also, a film is not taxable when the film is delivered in an intangible form, whether the delivery takes place in or out of New York State.
License to use or license to exhibit
A license to use or license to exhibit means the granting of a right or license to exhibit a film to the public. Sometimes a film producer will not sell a film outright, but instead will grant a distributor a license to use or license to exhibit. In this case, the producer must collect sales tax unless the distributor has acquired the license for resale. If this happens, the distributor must complete Form ST-120, Resale Certificate, and give it to the producer.
The granting of a license to exhibit or license to use is not taxable when the film is delivered in an intangible form, whether the delivery takes place in or out of New York State.
Right to reproduce
In some instances, a producer will grant a right to reproduce a film. The granting of a right to reproduce is neither a sale nor a license to use or exhibit. Therefore, granting a right to reproduce is not subject to tax.
However, if a producer makes a film intending to grant a right to reproduce it, rather than selling or licensing the film for distribution, the producer is not making a film for sale. Therefore, sales tax must be paid on all purchases of tangible personal property used in the production of the film, as well as services to that property, and all fuel, utilities, and utility services used in connection with the production of the film.
If a producer makes a film with the intent of granting both a right to reproduce to one or more parties, and a license to exhibit or use to one or more other parties, then the producer will be entitled to purchase qualifying tangible personal property and services used in producing the film exempt from sales and use taxes.
Tax Law: Sections 1115(a)(12) and 1115(a)(39)
Regulations: Sections 526.7, 528.13 and 528.22
Publication 28, A Guide to Sales Tax for the Film Industry
How to Apply for a Refund of Sales and Use Tax (TB-ST-350)
How to Register for New York State Sales Tax (TB-ST-360)
Miscellaneous Personal Services and Related Sales in New York City (TB-ST-575)