How Buying Tax Credits Can Generate Additional Revenue for Your Business – Chrissie Merrill, State Tax Incentives

On today’s show, we’re very pleased to welcome, Chrissie Merrill, Managing Partner and Director of Film Finance at State Tax Incentives. Chrissie has been working with the syndication of film credits for 11 years, ever since the Georgia film and entertainment incentive became more robust in 2008. She assists production companies by helping them understand the process of monetizing their state incentive, and handling the transaction. Chrissie also develops relationships, on the buyer’s side, with individuals and companies to purchase tax assets to offset their state tax liability.

VIDEO TRANSCRIPT: 

Jim Fitzpatrick: Hi everyone. Jim Fitzpatrick with the Atlanta Small Business show. Thanks so much for joining us today. Today we have a special guest with us, Chrissie Merrill, who is the managing partner at State Tax Incentives. Thanks so much for joining us on the show.

Chrissie Merrill: Thanks for having me.

Jim Fitzpatrick: Sure. So you are in the tax incentive business in a big way, right?

Chrissie Merrill: I am, yes sir.

Jim Fitzpatrick: Well, before we jump into that, tell us a little about your background and your entrepreneurial journey. Just opened up this great company, right?

Chrissie Merrill: I did. I did just in January, so it’s brand new.

Jim Fitzpatrick: Congratulations.

Chrissie Merrill: Thank you very much. It’s been an exciting and crazy journey from when I graduated college. I had my first job here in Atlanta and was the literally selling t-shirts door to door.

Jim Fitzpatrick: There you go.

Chrissie Merrill: So I got a really a lot of great experience in being told no, and I would not trade that experience for anything. It’s totally made me into the salesperson I am today and gave me a lot of good experience for sure.

Jim Fitzpatrick: That’s awesome. Yeah. Did you go to a Georgia school?

Chrissie Merrill: I did. I went to university of West Georgia in Carrollton.

Jim Fitzpatrick: Oh wow. Great school.

Chrissie Merrill: And it was lovely. Great experience. Small school. Big fish in a small pond as they like to say.

Jim Fitzpatrick: And you decided to get into the tax industry. Huh? So talk to us about that. You were with another company previously?

Chrissie Merrill: Yes, I was. So I have been doing the Georgia film tax credits since the incentive was passed in 2008 to make the film tax credit more robust. And it’s funny because I was actually an executive recruiter for accounting and finance professionals and I helped recruit a CFO to a tax credit firm and he turned around and recruited me to come over and start their film tax credit incentive practice back in 2008.

Jim Fitzpatrick: That’s pretty cool and that has really spun so much business and thrown so much business our way in Georgia hasn’t it?from the film industry. It’s been just incredible, hasn’t it?

Chrissie Merrill: Absolutely. You know, the whole reason that the incentives like this exist is to bring economic development to the state and it has done so much for Georgia. The studios that have grown up in Georgia. I feel like I hear an announcement of a new studio every six months and then they’re huge and they employ so many people. People from like carpenters to-

Jim Fitzpatrick: Catering.

Chrissie Merrill: Catering. It’s insane.

Jim Fitzpatrick: Costumes, you name it.

Chrissie Merrill: Absolutely. Absolutely. It’s been a huge economic development and stimulant to this day.

Jim Fitzpatrick: And it’s cool to watch a movie now that there’s probably few movies where you’re sitting and you go, “Wow that’s Georgia. That’s Atlanta, right there.” Or that’s a part of Georgia. It’s maybe the Chattahoochee river or Lake Lanier.

Chrissie Merrill: Yes. Absolutely. Or you know the lake exactly where they did Ozark. It’s crazy. And then you have the big Georgia peach at all the end of the productions.

Jim Fitzpatrick: That’s right. Makes you feel good as a Georgia resident. Right?

Chrissie Merrill: Absolutely.

Jim Fitzpatrick: So talk to us what exactly for the people that are watching, what is a film tax credit? Kind of walk us through that.

Chrissie Merrill: Sure. So the production companies come here or they’re located here, for example, like Turner, Crazy Legs that are based here. But the New York and California production companies come here and they spend money and the monies that they spend, as long as they’re qualified expenditures, they get 30% of those qualified expenditures back in the form of a tax credit.

Jim Fitzpatrick: Okay.

Chrissie Merrill: So the tax credit itself that the production companies generate is transferable. That means that the production company can sell it off to an individual corporation for the individual or corporation to use against their own Georgia income tax liability.

Jim Fitzpatrick: Okay. Okay.

Chrissie Merrill: So that’s what I do is I help to monetize the tax credit for the production company by selling it off to individuals in corporations.

Jim Fitzpatrick: So it becomes a revenue stream for the production company. Right? And at the same time, it also helps people with a tax liability here in Georgia to pay a little bit less taxes because they picked up that transfer.

Chrissie Merrill: Absolutely. So typically it’s the production company, even though they’re getting a dollar of tax credit for them to be able to sell it, they decrease the value of that dollar and sell it anywhere from 85 cents to 90 cents on the dollar. So the tax payer gets that 10% additional benefit and saves on their Georgia tax return. The production company gets 90 cents on the dollar free.

Jim Fitzpatrick: Wow. Fantastic. And it can be used for individuals as well as companies. You don’t have to be a company to purchase this. It could be somebody with a big tax liability that is going to Georgia or Georgia is coming to them saying, “Hey, you owe X number of dollars.” They buy this tax credit from you or through you. And it lowers that by maybe 10 or 15%

Chrissie Merrill: And it doesn’t have to be someone who makes an exorbitant amount of money.

Jim Fitzpatrick: Okay.

Chrissie Merrill: If somebody who pays $10,000 in Georgia state income tax can use this immediately on their Georgia tax return.

Jim Fitzpatrick: Why is it important for companies to understand how to monetize their incentives?

Chrissie Merrill: Sure. So the production companies, they come here to the state and they generate the tax credit. If they had tax liability here in the state, they would be able to use it to offset their own tax liability. But most of them don’t have nexus, meaning they don’t pay state income tax here in Georgia. So therefore they’re able to sell it off to individuals and corporations for a lowered amount.

Jim Fitzpatrick: Is there a difference between the tax credits in Georgia compared to the other States such as California or New York?

Chrissie Merrill: Absolutely. So a lot of different States, they want to generate that economic benefit, right? They want people to come into their state and work and generate tax revenue, right? So a lot of other States offer tax credits. I will say that Georgia is the best, most robust incentive out there. Other States like California, New York, Louisiana, Connecticut, Rhode Island, Pennsylvania. They also offer different types of tax incentives for the film industry.

Jim Fitzpatrick: Sure.

Chrissie Merrill: But every state has different situations. For example, Connecticut. Connecticut, taxpayers can use a film tax credit against corporate income tax or premiums tax, which is insurance companies.

Jim Fitzpatrick: Okay. So what are some of the perceived challenges for entrepreneurs that are listening when it comes to the brokerage of these tax credits?

Chrissie Merrill: Well, I would say relationships are everything in business. I got this into this industry from a CFO that I helped get into his position.

Jim Fitzpatrick: Right.

Chrissie Merrill: The relationships that I have with the major studios and production companies have been paramount to my success.

Jim Fitzpatrick: I would imagine, yeah.

Chrissie Merrill: I work with Warner Brothers, Disney, Fox, Paramount, Viacom, CBS, and have been working with them for many years. And so I’ve established that rapport. They know why I’m going to do what I say I’m going to do.

Jim Fitzpatrick: Right.

Chrissie Merrill: And it’s just evolved. So relationships again are just extremely paramount.

Jim Fitzpatrick: Because if you don’t have the tax credit, you can’t sell the tax credit. So it’s all about having built those relationships with those studios that trust you as a brokerage company, right? To say this person’s going to steer us right. So therefore we’re going to give you more tax credits to put on the market.

Chrissie Merrill: Having established those relationships over the course of 10 years has also enabled me to be somewhat of a consultant for these production companies. And they look to me to say, “I’m coming to Georgia or I’m going to Pennsylvania. What’s a good amount to budget for my tax credit that I’m going to generate?”

Jim Fitzpatrick: Oh really? Okay.

Chrissie Merrill: So it’s morphed into a consulting role as well.

Jim Fitzpatrick: Sure. That’s fantastic. And it’s become quite a profit center I would imagine for these studios.

Chrissie Merrill: Absolutely.

Jim Fitzpatrick: When you’re looking at huge tax credits that are on the market there, I mean really in the hundreds of millions of dollars, right, that they’re going to benefit from it.

Chrissie Merrill: Absolutely. It becomes part of the capital stack of the production and the project getting done.

Jim Fitzpatrick: Yeah, I bet it does. Boy, it can be a differentiator on some films, I bet. Right?

Chrissie Merrill: For sure. For sure.

Jim Fitzpatrick: You bomb on a film, but you pick up money on the tax credit side. That’s the good news. So what are the goals for your company? You’re relatively new in the field, although you’ve got a long list of great clients that you’ve been working with sounds like over 11 years. But what are the challenges or I should say what are the goals for your company?

Chrissie Merrill: I would say just to continue to grow our sales force. Getting the word out there. It’s amazing how many people don’t realize that an individual can use these film tax credits on their tax return. So just growing that knowledge. We’ve seen a lot of people it snowball, but I’d like for that to snowball even more for everybody to understand, hey, if I paid $10,000 to the state of Georgia, I can really benefit and reduce that to 9,000 I mean, pick up $1,000.

Jim Fitzpatrick: Yeah.

Chrissie Merrill: Who doesn’t want to do that?

Jim Fitzpatrick: That’s right. That’s exactly right. So is there a number that’s out there that says here’s the amount of tax credits that went unused? Is that a number that says, hey, you had a half a billion dollars in tax credits with companies and they couldn’t sell them off or does everything get sold off at some point?

Chrissie Merrill: Everything gets sold off. Two years ago, the production companies came in and they filmed major motion pictures. Like Disney filmed two back to back Avengers and Sony filmed two major motion pictures and Fox filmed a major motion picture. So there’s a lot of tax credits on the market right now. That’s why we’re seeing the price go down just a little bit. But I promise you they’ll all be gone by the end of this year. So I’ve been in this industry since it became more robust in 2008. I’ve never seen excess tax credits going around. Just because it’s just that snowball effect.

Chrissie Merrill: Everybody kind of figures out and they’re like, “Oh my gosh, this is an amazing way to save 10% right off the top. Government sponsored.”

Jim Fitzpatrick: That’s right. No question. So I would imagine every accountant that’s preparing taxes looks at this and says, “I think I might have some help for you here. Right?”

Chrissie Merrill: Absolutely. And a lot of the times the accountant says if they’ve never seen it before, they’re like, “This is too good to be true.”

Jim Fitzpatrick: Yeah.

Chrissie Merrill: A lot of individuals as well. They’re like, “This is too good to be true.”

Jim Fitzpatrick: Right.

Chrissie Merrill: It’s not, it’s government sponsored.

Jim Fitzpatrick: It’s the real deal. Wow. That’s great. Let’s back up a little bit and talk a little bit about your entrepreneurial journey. What challenges did you see when you said, “Okay, I’m going to go from working for a company to open up my own company?”

Chrissie Merrill: Wow. So that was really interesting. Little things that you don’t think about like payroll.

Jim Fitzpatrick: Oh. Almost forgot.

Chrissie Merrill: Right. Closing out the books for the month. Little things like that. But it’s been a journey. I’ve read a lot, read a lot on how to manage. I got a book called Dare To Lead by Brene Brown has been phenomenal. Super helpful. Talks about attacking issues. She calls it rumbling. We have to rumble and just hitting those issues head on.

Jim Fitzpatrick: Yeah.

Chrissie Merrill: Taking care of it in a professional loving manner.

Jim Fitzpatrick: That’s right.

Chrissie Merrill: So that’s been super helpful.

Jim Fitzpatrick: Yeah. What pieces of advice would you have for entrepreneurs that are listening to you right now?

Chrissie Merrill: I would say just do it.

Jim Fitzpatrick: Just do it. Just jump in.

Chrissie Merrill: Just jump in. Find the people in your circle that are good at what they do. And you stay true to doing what you’re good at and don’t be afraid to ask for assistance and help.

Jim Fitzpatrick: Sure, sure. So many people, so many entrepreneurs or want to be entrepreneurs will sit on the sidelines and wait for the perfect time to open up a business and year after year they keep putting it off because everything isn’t perfect. And I think from my perspective anyway, I’m like you just said, you got to jump in, you’ve got to do it right?

Chrissie Merrill: You do. You do.

Jim Fitzpatrick: I mean there’s never going to be an absolute perfect time.

Chrissie Merrill: There isn’t, there is not. And it’s honoring that a lot of my clients, every single one of them, the production company clients, when I decided to open this business, they all came with me because I had established that relationship and that level of trust.

Jim Fitzpatrick: Right.

Chrissie Merrill: And I think I would say to the entrepreneurs, just do it. There’s so many people out there that are going to respect and trust what you do and they’ll come with you.

Jim Fitzpatrick: Yeah, that’s, that’s great advice and I couldn’t agree more. Chrissie Merrill managing partner of State Tax Incentives. Check that out online if you’re looking to benefit from Chrissie’s services one way or the other. Whether you’re one of the studios watching right now and you want to be a client or more importantly, if you’re looking to save a ton of money on your taxes, she’s got the answer for you right here. So what’s the URL? Statetaxincentives.com? Wow. Pretty cool. That’s a great URL. Awesome. Well thank you so much for joining us on the Atlanta Small Business show. Been very interesting to talk about this topic and I commend you for launching this successful company so thank you so much.

Chrissie Merrill: Thank you and call me when you need some Georgia film tax credits.

Jim Fitzpatrick: I’m going to, thanks so much.

Chrissie Merrill: Thank you.

Thanks for watching Atlanta Small Business show with Jim Fitzpatrick. This has been a JBF Business Media production.


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