The Massachusetts Live Theater Tax Credit Program was created to strengthen the state’s performing arts sector and boost local economic activity. By offering financial incentives to eligible theater companies, the program encourages productions to take place in Massachusetts, supporting jobs, tourism, and cultural enrichment. This initiative reflects the state’s commitment to fostering creativity while driving economic growth through the arts.
Before an eligible theater company can receive Live Theater Tax Credits, it must obtain a Final Certificate from the Massachusetts Office of Travel and Tourism (MOTT). To receive the Final Certificate the production must submit:
- Cost Accounting Report prepared by an independent Massachusetts-licensed certified public accountant (CPA), detailing all actual Eligible Production Costs (including payroll, production, performance, and transportation expenses),
- Documentation substantiating these costs, compared against the original budget submitted with the initial tax credit application, AND
- Economic Impact Report.
All Final Certificate materials, including the independent CPA Cost Accounting Report, must be submitted within 6 months of the production’s completion, or the tax credits may be forfeited.
About the Cost Accounting Report
MOTT provides the CPA with Agreed Upon Procedures to follow to certify the production’s expenditures. After performing the procedures, the CPA furnishes a report letter and required schedules as the Cost Accounting Report. The Agreed Upon Procedures include, but are not limited to, the following:
Procedures to Determine Eligibility for Theater Company
- Review of Regulations
- Ensure CPA Independence
- Collect Documentation
- Analyze Eligible Costs
- Verify the Following Compliance Requirements:
- Costs were incurred in Massachusetts.
- At least $100,000 in eligible expenses.
- Final credit amount does not exceed the Initial Certificate.
Payroll Cost Procedures
- Collecting Payroll Data
- Verifying Massachusetts Activity
- Checking Withholding Compliance
- Excluding High-Earning Compensation
- Recalculating and Comparing
- Sample Test of Payments
Production, Performance, and Transportation Costs Procedures
- Verify In-State Expenses
- Recalculate and Compare
- Confirm Responsibility
- Sample Test of Expenditures
Withum offers extensive experience in performing independent CPA reviews for theater-related tax credit incentives nationwide. Our dedicated specialists are well-versed in the distinct financial and compliance demands of live productions, delivering precise, regulation-ready reporting that empowers clients to fully leverage their available credits. Withum has independent Massachusetts-licensed certified public accountants who can complete the Cost Accounting Report and ensure compliance with the program.
Authors: Ryan Flash, CPA | [email protected] and Alex Holderbaum, CPA, Team Leader, Theatre and Entertainment | [email protected]
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For more information on this topic, reach out to Withum’s Theatre and Entertainment Services Team today.
