Follow-Up on Recommendations from Report No. 16-08, Audit of Hawai‘i’s Motion Picture, Digital Media, and Film Production Income Tax Credit
A Report to the Governor and the Legislature of the State of Hawai‘i
Hawaii State Auditor’s Report No. 19-14 September 2019
Our follow-up on DoTAX’s and the Film Office’s implementation of recommendations made in Report No. 16-08, conducted between February and June 2019, included inquiring with select personnel, examining relevant documents and records, and evaluating whether DoTAX and the Film Office have addressed our recommendations. We found that DoTAX and the Film Office have fully implemented one recommendation and have partially implemented six of the nine recommendations. Two recommendations have not been implemented and remain open. We also found that DoTAX continues to construe the film tax credit statute to include out-of-state expenditures as “qualified production costs,” which is inconsistent with the plain language of the statute and the Legislature’s intent that the incentive would stimulate economic growth in Hawai‘i.
DoTAX should adopt administrative rules for section 235-17, HRS, that require all productions to provide the following information as part of submitted post-production reports: (1) the number of Hawai‘i resident and non-resident hires by category, such as above-the-line, below-the-line, and extras; (2) salary and wage information for resident actors, producers, directors, and other hires; (3) salary and wage information for non-resident actors, producers, directors, and other hires; and (4) any other information that DBEDT determines necessary to estimate the benefits of the tax credit.
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