Entertainment Industry Pushes for New COVID-19 Relief Package

Hollywood Sign 2-Getty-H 2019
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A letter to Congress on Monday from the Motion Picture Association, SAG-AFTRA and other groups calls for hiring incentives, changes to the tax code and a new federal insurance program.

As COVID-19 cases continue to rise sharply in many states including California, Hollywood is demanding that federal lawmakers step up with new legislation to help save the entertainment business. In a letter that went out on Monday to Congressional leaders, prominent industry groups have outlined policies from hiring incentives to a federal insurance program they'd like to see enacted.

"These policies would help jumpstart domestic film and television production, encourage hiring and ameliorate the higher costs that must be undertaken to protect our industry’s workforce," states the letter signed by the leaders of the Motion Picture Association, the Directors Guild of America, the Independent Film & Television Alliance, the International Alliance of Theatrical Stage Employees and SAG-AFTRA.

The specific call comes as lawmakers get ready to debate a third major COVID relief package. Previously, the CARES Act provided direct payments to Americans earning below a certain income as well as forgivable loans to small businesses, among other facets.

This time, entertainment groups are supporting broad incentives to employers hiring workers. They say that work opportunity tax credits should also be available to employers who rehire workers who had previously worked for them.

The letter to federal lawmakers, obtained by The Hollywood Reporter, also includes directed proposals that would be of particular benefit to the entertainment sector. For example, lawmakers are being called upon to modify an aspect of tax code pertaining to domestic production. Under Section 181, any production that meets certain basic qualifications can deduct the first $15 million of the cost against federal tax obligations. One idea thrown out is that this section be expanded with the cap changing to $15 million or 50 percent of overall production costs, whichever is greatest. Another option deals with Section 168(k), a full expensing allowance for bonus depreciation that is set to be phased out in the coming years. The entertainment industry puts this portion of the tax code on the table with proposed modifications like allowing production costs to be deducted as incurred (instead of when films are exhibited), eliminating a 44-episode limit for television production, and allowing application to acquisition of so-called "used" films.

The goal would be to quickly inject liquidity into the business.

Additionally, SAG-AFTRA and other industry groups have an eye on allowing performing artists to deduct their own unreimbursed employment expenses. At the moment, the tax code permits this only for low-income workers ($16,000 or less), but the letter states, "We ask Congress to pass the Performing Artist Tax Parity Act (HR 3121), which will raise the maximum income cap to $100,000 for individual filers and $200,000 for joint filers."

Perhaps the biggest proposal pertains to the request for a new federal insurance program to cover pandemic-related losses. Although the letter doesn't go into detail, it sets up a larger conversation.

"The ability of our industry to return to active production, whether on set or on location, is severely compromised by the inability to purchase insurance to cover losses stemming from communicable diseases amongst cast, crew, and others involved in the production," states the letter. "This insurance has been available in the past and is essential to the decisions by banks and others to risk investment in a film or program that may be shut down while a single member of the cast recovers from illness or as a result of civil authority order unrelated to the specific production. Without it, production – especially independent production – cannot resume on a significant level. We urge Congress to develop a program of federal insurance (or guarantee to fill this gap) to cover pandemic-related business losses in the future."