About $60 million in Georgia film tax credits for more than 80 projects should not have been applied, according to an audit report from the Georgia Department of Audits and Accounts.
Some production companies received credits that they did not qualify for, or more than they earned, the report says.
The department is recommending more screening measures and modifications to the state law that allows for the tax credits.
“As Georgia’s largest and arguably most generous credit, the film tax credit must be accompanied by sufficient controls to ensure that production companies are entitled to the credits granted,” auditors wrote.
Georgia’s film tax credit gives a 20 percent tax incentive to production companies that spend at least $500,000 on selected projects in the state.
Feature films, television movies and series, commercials, music videos and interactive entertainment qualify for the incentive program. Companies that promote the state in their work get an additional 10 percent credit.
Nearly 400 projects were filmed in Georgia in fiscal 2019, according to a September press release from Gov. Brian Kemp’s office. Film and television producers also spent $2.7 billion in Georgia in 2018.
More than $3 billion in credits were awarded between 2013 to 2017, according to the report. Most credits, which are transferable, have been sold by the companies to other taxpayers.
The Georgia Department of Economic Development reviews and approves the credits, which are administered by the Georgia Department of Revenue.
Auditors said the program has “limited requirements” and faulty procedures. They suggest lawmakers clarify the eligibility requirements in the statute and provide more resources for departments that oversee the program.
State auditors recommend that lawmakers implement mandatory audits of each applicant and hire more auditors to do so. The application process should also be fine-tuned and more documentation, such as in-depth tax information, should be required.
The Department of Revenue, in its response, agreed with most of the recommendations. The Department of Economic Development also agreed with stronger review measures but said it is crippled by a lack of resources. Economic Development officials disagreed with the auditors' conclusions on the ineligible credits that were issued.