Q: What is Digital Interactive Media?
A: In the context of Louisiana's Digital Interactive Media program, it's essentially an interactive software product (e.g. video game, training software, web platform, etc.) that's built for commercial export and not for the producer's internal use.
Q: Is Louisiana's Digital Interactive Media Incentive a grant program?
A: NO. It is an incentive that awards state tax credits to producers of Digital Interactive Media.
Q: What's a tax credit?
A: A tax credit is a credit that can be used against Louisiana tax liability. In the case of the Digital Interactive Media program, it's a refundable credit with an option for an 85% rebate.
Q: What can I do with the tax credits once I receive them?
A: Firstly, you can cover your Louisiana state tax liability. Since the credits awarded in the Digital Interactive Media Program are refundable, the remainder of the credits are considered an overpayment and refunded to the applicant by the Department of Revenue. There is also an option to take the value of the credits as a one-time rebate (any time during the year) at 85% of their original value.
Q: Will I need to hire anyone to help me apply for the program?
A: Louisiana Entertainment has full-time staff members whose job it is to help companies through the process of applying for and receiving the Digital Interactive Media tax credit. We strive to continually improve the transparency and ease with which firms can apply and enter the program.
Q: Will I need to hire a CPA?
A: For projects with an initial certification prior to July 1, 2015, and completed prior to December 31, 2015, yes, but projects with initial certification on or after July 1, 2015, or completed after December 31, 2015, Louisiana Entertainment will engage with the CPA to complete a cost verification report.
Q: How much will I receive back in tax credits for what I spent?
A: Digital Interactive Media applicants' qualifying projects are awarded up to a 25% tax credit on qualified production expenses paid to a Louisiana entity/vendor, and labor costs (for Louisiana residents) are awarded up to an additional 10% (an effective 35% total awarded on labor costs paid to Louisiana residents).
Q: Can I still get tax credits for hiring out-of-state labor?
A: Any qualified expenditures can receive the tax credit award of 25%, regardless of whether the labor is performed by Louisiana residents, so long as the work is done in the state of Louisiana. All labor must be verified to have been performed in Louisiana, and any work performed outside of the state would not qualify.
Q: What project expense costs qualify?
A: The simple answer is costs that are directly related to the project development itself. This includes items such as hardware and software, labor and lease costs — but not for costs associated with running the company (administrative, clerical, etc.) or marketing/distributing the product.
Q: What is considered eligible equipment?
A: Equipment such as computer hardware and software purchased from a Louisiana business for the direct development of the product is considered eligible. Furniture and fixtures do not qualify for the program.
Q: What constitutes a purchase made in Louisiana?
A: An expenditure paid to a Louisiana company that has an active registration with the Louisiana Secretary of State and has a physical presence in the state, posted business hours and at least one full-time employee.
Q: Is there a minimum investment?
A: For the Digital Interactive Media Program, there is no minimum spend required.
Q: Is there a maximum for how many tax credits my project or company can receive?
A: There isn't a maximum amount of tax credits that a project or company can earn, nor is there a cap on the program as a whole.
Q: Can this incentive be used in combination with other Louisiana Entertainment incentives?
A: Louisiana Entertainment has many business incentives, some of which may be combined with the Digital Interactive Media Incentive. Other incentives may carry their own "anti-stacking" clauses, and the various branches of Louisiana Entertainment can work with your firm to see what you might be eligible for.
Q: Can this incentive be used in combination with LED's Quality Jobs program?
A: A specific exclusion in the Digital Media Program prohibits a firm from taking advantage of both the additional Digital Media Incentive as well as LED's Quality Jobs program for the same employee. However, a firm may have some employees enrolled in the Quality Jobs program, while others are claimed under the Digital Media incentive.
Q: Before I can apply, do I have to begin production or spend any money in the state?
A: An applicant can apply before beginning production or expending funds in Louisiana.
Q: I started spending money in Louisiana before I received initial certification. Can I still claim what I've spent?
A: Under the law, a company can claim their first expenditure on a project up to six months prior to the date their project is approved (initially certified) for the program.
Q: How much does it cost to apply for each project?
A: .005 x proposed tax benefit with a minimum fee of $500 and a maximum fee of $15,000. Effective January 1, 2016, at the time of application, the applicant shall submit to the office a deposit of the expenditure verification report fee of $7,500 for a production with qualified production expenses projected to be no more than $1 million, and a deposit of $15,000 for those projected to be in excess of $1 million.
Q: If I apply, does that obligate me to do the production in Louisiana?
A: NO. An applicant to the Digital Interactive Media Program is not obligated to expend funds in the state — even after an application has been pre-certified.
Q: When do I receive my tax credits?
A: Louisiana Entertainment awards credits in the form of a final certification; the Louisiana Department of Revenue will process your tax credit or rebate within 30 to 60 days.
Q: How do I know if my project has been accepted into the program?
A: As soon as we've had a chance to review and clear up any outstanding issues in the application (which we strive to complete as quickly as possible), we will then send the applicant a letter of "pre-certification" that acknowledges Louisiana Entertainment gets a project's applicable expenditures of those proposed in the application.