Does a production company that fails to withhold or insure that the personal services company (“PSC”) or professional employment organization (“PEO”) withholds lose an otherwise available film credit?
Yes. An eligible production company that fails to properly withhold would be considered delinquent on an obligation to the state of Michigan, disqualifying it for the tax credit. An eligible production company must also ensure that any PSC or PEO that it employs to provide personnel withhold for the personnel to obtain the credit. This means that if the PSC or PEO do not withhold individual income tax then the eligible production company must withhold to qualify for the credit. An eligible production company will be considered delinquent if neither it nor the PSC or PEO withhold. The eligible production company, however, may cure a delinquency by paying the withholding. Upon payment its entitlement to the tax credit will be reinstated.
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