AICP Spotted
Give Us Thirty Seconds, We'll Give You The Industry
August 12, 2013
In This Issue
BUSINESS AFFAIRS
PROPER FILING OF TAX INCENTIVES
AICP DIGITAL UNVEILS STATEMENT OF WORK
PATENT TROLLS - WHAT YOU NEED TO KNOW
COMMUNITY AFFAIRS
AICP SHINES IN L.A. AT THE SHOW & NEXT AWARDS
MADISON AVE. OPEN "RAINS" SUPREME
NEXT STOP ON AICP AWARDS TOUR: A SAN FRANCISCO TREAT
AICP FOUNDATION BENEFICIARY STREETLIGHTS CREATING CAREERS
MEMBER SERVICES
WELCOME NEW MEMBERS
SPOTTED SPONSOR

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HAPPENINGS
September 10th, 2013 - Annual Members Meeting - East

September 12th, 2013 - Digital Town Hall

September 18th, 2013 - AICP Show  Gallery Exhibition And Reception & AICP Next Awards in San Francisco

September 19th, 2013 - Annual Members Meeting - West

September 26th, 2013 - AICP Show in Austin

 

 

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BUSINESS AFFAIRS
PROPER FILING OF TAX INCENTIVES

AICP continues to work through creating an industry-recognized set of guidelines with the Association of National Advertisers.  However it seems that in recent weeks there has been an uptick in documents circulated and practices put forth that in the absence of practical guidelines causes great concern.

Please be aware that in many states, the producer (i.e. the production company) is the only entity authorized by the state to file for a tax incentive and therefore should be concerned about its legal responsibility for the accuracy and truthfulness of information contained in the application (including the identification of others presenting themselves as the actual producing entity).

AICP has recently received several calls from members with questions and concerns regarding the filing process for state tax incentives.  In several cases, it appeared that representatives in the name of the advertiser have attempted to circumvent the producer’s status of production company, and present themselves as the producer and the production company as its subcontractor which may be a violation of the state’s law and the legislative intent of the incentive.

As a fundamental principle, the respective roles of all parties, and the actual production costs for which each is responsible, should be described accurately and not in a manner that would distort or misrepresent the production process or inflate the reported costs of qualified production expenditures.

Therefore, if an advertiser or any entity representing the client demands that it be inserted as the producer and that the production company be inserted as its subcontractor performing production services, a scenario that most likely is completely artificial and inaccurate, it is highly recommended that the production company immediately consult with its attorney about the legality of such demand by the advertiser and the potential consequences to the production company of complying with that demand, under applicable state civil and criminal law.  

In addition, it has been reported that in certain instances, the advertiser or its consultant(s) have attempted to exercise control placing parameters over certain facets of the production process, and the production company's normal role of making decisions consistent with being the producer (i.e. how to staff a job, where to purchase/rent items or with whom to coordinate and book travel). This usurps the producer’s control of the project and its contractual obligations to assume responsibility to manage and execute the budget. Loss of control of these types of business decisions and ultimate responsibility for such decisions is a fundamental breakdown in the production process.
 
Some caveats to keep in mind when engaging in a production which may qualify for a tax incentive and having certain production decisions dictated by advertisers, agencies, or consultants:

  • Part of the producer’s role is to obtain the best crew and materials for the job and it is solely responsible for the quality of the physical production. This means that the producer must have the ability to decide the best source of all labor and materials.     

  • The producer is responsible for any hiring, preference or obligations as the signatory employer under its labor agreements, and employer of all other production related employees. The advertiser or its consultants are not the labor contract signatory (in most cases), nor the employer, and as such should not compel a producer to hire particular individuals or take any controlling action under its labor agreements.

If you are required to use unknown or un-vetted vendors or employees at the insistence of the advertiser or its consultant(s), who have selected those sources with an eye on realizing the most incentive benefit, then you should not be held responsible for their lack of performance including any delays that may occur.
 
AICP further recommends that when cooperating with any consultant at the direction of the advertiser in filing an incentive, you have the following documents in place:

Indemnification from the consultant and the advertiser.

Direct Confidentiality And Non-Disclosure Agreement with the advertiser and its consultant.
 
We continue to monitor the incentive situation, and will keep you informed of developments.

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AICP - Association of Independent Commercial Producers