Credit Is Limited to Commercials that Promote or Market other State-Certified Qualified Productions
In Michigan Film Coalition v. State of Michigan, et al., Michigan Court of Appeals, No. 304000, August 21, 2012, the Michigan Court of Appeals has held that the film production expenditures credit available against the Michigan Business Tax is limited to commercials that promote or market other state-certified qualified productions. Therefore, commercials that advertised some other product or service were not eligible for the credit. The appellate court reversed the trial court, which found that any Michigan-created commercial could be eligible for the credit under M.C.L. §208.1455. In relevant part, the statute defined "state certified qualified production" to include commercials, among other things, but it excluded productions that primarily marketed a product or a service other than a qualified production. The government argued that the trial court's finding essentially made the statutory exception meaningless. The appellate court agreed and noted that statutes cannot be construed to make one part ineffective. To explain, the court observed that a movie could qualify for the credit and then a commercial promoting the movie would be eligible. On the other hand, a commercial that advertised some other product or service would not be eligible for the credit. The dissenting opinion reasoned that the taxpayer did not have standing because there was no actual controversy; that is, the injury that was sought to be prevented was merely hypothetical.