(a) As required by
section
235-17(h),
HRS, and Section 6 of Act 143, Session Laws of Hawaii 2017, a taxpayer claiming
the tax credit under section
235-17,
HRS, must submit to the Hawaii film office a verification review, together with
a production report as described in section
18-235-17-03(b), no later than
ninety days following the end of the calendar year in which the qualified
production costs were incurred.
(b)
A "verification review" is an agreed-upon procedures report prepared by a
qualified certified public accountant. The agreed-upon procedures report, must:
(1) Verify that the production has obtained a
preproduction registration approval letter and tentative allocation of credit
under section
18-235-17-04(c) from the Hawaii film office;
(2) Evaluate the taxpayer's assertion of the
amounts proposed as qualified production costs within the meaning of section
235-17,
HRS, for the calendar year;
(3)
Test compliance with the elements set forth in section
235-17,
HRS, and any relevant administrative rules or administrative guidance issued by
the department and Hawaii film office;
(4) Verify that the production report to be
submitted to the Hawaii film office complies with section
18-235-17-03(b);
(5) Separately
state any costs that were deemed not qualified production costs; and
(6) Separately state the total of qualified
production costs for which no exceptions were noted.
(c) The department, in consultation with the
Hawaii film office, shall issue a Tax Information Release specifying the
procedures by which the agreed-upon procedures report shall be prepared by the
qualified certified public accountant.
(d) There is no requirement that the
preparation of the verification review start after the end of the calendar
year. The process of preparing the verification review may begin after
production is completed or if no further production costs will be incurred for
the calendar year.
Example 1: XYZ Productions finishes the filming
of its feature film on July 31,2019. The qualified certified public accountant
that XYZ Productions retains may begin the preparation of the verification
review on August 1, 2019 because the filming of the feature film was completed
on July 31, 2019.
Example 2: Assume the same facts as Example 1,
except that XYZ Productions' feature film is a split-year production, filming
in calendar year 2019 will stop on November 30, 2019, and filming will be
completed in March of 2020. The qualified certified public accountant that XYZ
Productions retains may begin the preparation of the 2019 verification review
on December 1, 2019 because the filming of the feature was stopped for calendar
year 2019 on November 30, 2019.
(e) It is not necessary that the verification
review be addressed to, or be relied upon by, any person other than the
taxpayer.
(f) It is the taxpayer's
responsibility to provide all relevant information to the taxpayer's qualified
certified public accountant.
(g)
The cost of the verification review shall be the responsibility of the
taxpayer; provided that it may be claimed as a qualified production cost as
described in section
18-235-17-10(b).
(h) Inclusion of a verification review with
the production report does not preclude the department from auditing and
adjusting the tax credit amounts claimed.
