NMSA 1978, § 7-2F-2 — Definitions

As used in the Film Production Tax Credit Act:

# A.

"affiliated person" means a person who directly or indirectly owns or controls, is
owned or controlled by or is under common ownership or control with another person
through ownership of voting securities or other ownership interests representing a
majority of the total voting power of the entity;

# B.

"background artist" means a person who is not a performing artist but is a person
of atmospheric business whose work includes atmospheric noise, normal actions,
gestures and facial expressions of that person's assignment; or a person of atmospheric
business whose work includes special abilities that are not stunts; or a substitute for
another actor, whether photographed as a double or acting as a stand-in;

# C.

"below-the-line crew" means a person in a position that is off-camera and who
provides technical services during the physical production of a film. "Below-the-line
crew" does not include a person who is a writer, director, producer or background artist
or performing artist for the film;

# D.

"commercial audiovisual product" means a film or a video game intended for
commercial exploitation;

# E.

"direct production expenditure" means a transaction that is subject to taxation in
New Mexico and is certified pursuant to Subsection A of Section 7-2F-12 NMSA 1978:
(1) including an expenditure for:
(a) payment of wages, fringe benefits or fees for talent, management or labor
to a person who is a New Mexico resident;
(b) payment for standard industry craft inventory when provided by a below-
the-line crew that is a New Mexico resident in addition to its below-the-line crew
services;
(c) payment for wages and per diem for a performing artist who is not a New
Mexico resident and who is directly employed by the film production company; provided
that the film production company deducts and remits, or causes to be deducted and
remitted, income tax from the first day of services rendered in New Mexico at the
maximum rate pursuant to the Withholding Tax Act [Chapter 7, Article 3 NMSA 1978];
(d) payment to a personal services business for the services of a performing
artist if: 1) the personal services business pays gross receipts tax in New Mexico on the
portion of those payments qualifying for the tax credit; and 2) the film production
company deducts and remits, or causes to be deducted and remitted, income tax at the
maximum rate in New Mexico pursuant to Subsection H of Section 7-3A-3 NMSA 1978
on the portion of those payments qualifying for the tax credit paid to a personal services
business where the performing artist is a full or part owner of that business or
subcontracts with a personal services business where the performing artist is a full or
part owner of that business; and
(e) any of the following provided by a vendor: 1) the story and scenario to be
used for a film; 2) set construction and operations, wardrobe, accessories and related
services; 3) photography, sound synchronization, lighting and related services; 4)
editing and related services; 5) rental of facilities and equipment; 6) the first one
hundred fifty dollars ($150) of the daily expense of leasing of vehicles, not including the
chartering of aircraft for out-of-state transportation; however, New Mexico-based
chartered aircraft for in-state transportation directly attributable to the production shall
be considered a direct production expenditure; 7) food; 8) the first three hundred dollars
($300) of lodging per individual, per day; 9) commercial airfare if purchased through a
New Mexico-based travel agency or travel company for travel to and from New Mexico
or within New Mexico that is directly attributable to the production; 10) insurance
coverage and bonding if purchased through a New Mexico-based insurance agent,
broker or bonding agent; 11) subcontracted goods and services from businesses;
provided that the ordinary course of business of the vendor procuring the goods and
services from the subcontractor directly relates to standard film industry goods and
services; and 12) other direct costs of producing a film in accordance with generally
accepted entertainment industry practice; and
(2) does not include an expenditure for:
(a) a gift with a value greater than one hundred dollars ($100);
(b) artwork or jewelry, except that a work of art or a piece of jewelry may be a
direct production expenditure if: 1) it is used in the film production; and 2) the
expenditure is less than two thousand five hundred dollars ($2,500);
(c) entertainment, amusement or recreation;
(d) subcontracted goods or services provided by a vendor when the
subcontractors providing those goods or services to the vendor are not subject to state
taxation, such as equipment and locations provided by the military, government and
organizations that demonstrate to the taxation and revenue department that they have
been granted exemption from the federal income tax by the United States commissioner
of internal revenue as organizations described in Section 501(c)(3) of the United States
Internal Revenue Code of 1986, as amended or renumbered;
(e) subcontracted services provided by a vendor when the subcontracted
services are provided by a person who is below-the-line crew and is not a New Mexico
resident;
(f) hidden or other indirect service fees, costs, commissions or other
remuneration received by third parties and that are not directly paid by the film
production company or expressly enumerated on a film production company's filing to
claim a new film production tax credit;
(g) wages for a person who is not a New Mexico resident and who falsely
claims to be a New Mexico resident. The wages of such person shall not be considered
an eligible expense for two years from the date in which the person is determined by the
taxation and revenue department as having made a false claim, regardless of whether
the person becomes a New Mexico resident within that time frame; or
(h) which the film production company receives funding pursuant to Section
21-19-7.1 NMSA 1978;

# F.

"division" means the New Mexico film division of the economic development
department;

# G.

"federal new markets tax credit program" means the tax credit program codified
as Section 45D of the United States Internal Revenue Code of 1986, as amended;

# H.

"film" means a single medium or multimedia program, including television
programs but excluding advertising messages other than national or regional
advertising messages intended for exhibition, that:
(1) is fixed on film, a digital medium, videotape, computer disc, laser disc or
other similar delivery medium;
(2) can be viewed or reproduced;
(3) is not intended to and does not violate a provision of Chapter 30, Article
37 NMSA 1978; and
(4) is intended for reasonable commercial exploitation for the delivery medium
used;

# I.

"film production company" means a person that produces one or more films or
commercial audiovisual products or any part of a film or commercial audiovisual
product;

# J.

"fiscal year" means the state fiscal year beginning on July 1;

# K.

"New Mexico film partner" means a film production company that has made a
commitment to produce films or commercial audiovisual products in New Mexico and
has purchased or executed a ten-year contract to lease a qualified production facility;

# L.

"New Mexico resident" means an individual who is domiciled in this state during
any part of the taxable year or an individual who is physically present in this state for
one hundred eighty-five days or more during the taxable year; but any individual, other
than someone who was physically present in the state for one hundred eighty-five days
or more during the taxable year and who, on or before the last day of the taxable year,
changed the individual's place of abode to a place without this state with the bona fide
intention of continuing actually to abide permanently without this state is not a resident
for the purposes of the Film Production Tax Credit Act for periods after that change of
abode;

# M.

"performing artist" means an actor, on-camera stuntperson, puppeteer, pilot who
is a stuntperson or actor, specialty foreground performer or narrator; and who speaks a
line of dialogue, is identified with the product or reacts to narration as assigned.
"Performing artist" does not include a background artist;

# N.

"personal services business" means a business organization, with or without
physical presence, that receives payments pursuant to the Film Production Tax Credit
Act for the services of a performing artist;

# O.

"physical presence" means a physical address in New Mexico from which a
vendor conducts business, stores inventory or otherwise creates, assembles or offers
for sale the product purchased or leased by a film production company and the vendor
or an employee of the vendor is a resident;

# P.

"postproduction expenditure" means an expenditure, certified pursuant to
Subsection A of Section 7-2F-12 NMSA 1978, for editing, Foley recording, automatic
dialogue replacement, sound editing, special effects, including computer-generated
imagery or other effects, scoring and music editing, beginning and end credits, negative
cutting, soundtrack production, dubbing, subtitling or addition of sound or visual effects;
but not including an expenditure for advertising, marketing, distribution or expense
payments;

# Q.

"principal photography" means the production of a film during which the main
visual elements are created;

# R.

"qualified production facility" means a building, or complex of buildings, building
improvements and associated back-lot facilities in which films are or are intended to be
regularly produced and that contain at least one:
(1) sound stage with contiguous floor space of at least seven thousand
square feet and a ceiling height of no less than eighteen feet; or
(2) standing set that includes at least one interior, and at least five exteriors,
built or re-purposed for film production use on a continual basis and is located on at
least fifty acres of contiguous space designated for film production use; and

# S.

"vendor" means a person who sells or leases goods or services that are related
to standard industry craft inventory, who has a physical presence in New Mexico and is
subject to gross receipts tax pursuant to the Gross Receipts and Compensating Tax Act
[Chapter 7, Article 9 NMSA 1978 ] or income tax pursuant to the Income Tax Act
[Chapter 7, Article 2 NMSA 1978] or corporate income tax pursuant to the Corporate
Income and Franchise Tax Act [Chapter 7, Article 2A NMSA 1978] but excludes a
personal services business and services provided by nonresidents hired or
subcontracted if the tasks and responsibilities are associated with the standard industry
job position of director, writer or producer.