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Audit: Georgia film program lacks oversight, ideal for fraud

January 11, 2020 GMT

ATLANTA (AP) — A state audit found that lax oversight of Georgia’s tax credit for television and movie filming makes the program an ideal environment for fraud.

Georgia’s film tax credit is politically popular, but expensive, The Atlanta Journal-Constitution reported. The tax credits have grown from $141 million in 2010 to an estimated $870 million in 2019.

But state auditors say that some companies have received film tax credits they did not earn.

Auditors found millions of dollars in ineligible expenditures by film companies, including payments to workers or contractors for work that was done outside Georgia.

“Deficiencies in the credit’s administrative controls and the significant financial benefit provided by the credit create an environment ideal for fraud,” auditors wrote.

The audit found that the state lacks an adequate system to prevent improper granting of credits.

Georgia requires companies to provide less documentation than any of the 31 other states with a film tax incentive, auditors wrote. Hundreds of projects annually receive the credits.

State officials say the industry has created and maintained tens of thousands of jobs in Georgia, though some researchers say boosters have exaggerated the impact of the tax credit.

The audit comes as some lawmakers are talking about making changes to the program because of rising costs and Gov. Brian Kemp’s call for state budget cuts.

State Sen. Lindsey Tippins, R-Marietta, is among several influential Republicans looking at reducing the credits this year to avoid steeper budget cuts.

Tippins said he’s concerned that each film receives a tax credit without any guarantee of long-term jobs.

“There’s no expectation of continued employment in the state’s economy,” Tippins said. “There needs to be much more analysis on return on investment that any successful business would have.”

Supporters of the tax credit say it has sparked what’s now a burgeoning movie industry in Georgia.

Georgia’s filming before the tax credit included movies such as “Smokey and the Bandit” and “Deliverance” and TV shows including the “The Dukes of Hazzard.” The number of TV shows and movies has grown substantially since the program was created. The audit noted that 450 movies, TV shows and other projects were eligible for tax credits in fiscal 2016, for instance.

“The tax credit has been a huge success,” said Republican state Sen. Frank Ginn, the chairman of the Economic Development and Tourism Committee. “What we need to do is evaluate where we go moving forward.”