Corruption and Abuse in Iowa’s Film Tax Credit Program

September 22, 2009

Iowa’s film tax credit program is coming under scrutiny after allegations of corruption and lax accounting. The Iowa Independent reports:

Last week allegations of misconduct surrounding the tax credits, known officially as the Film, Television and Video Promotion Program, led Gov. Culver to suspend the program. An internal audit of the program found that credits were not used properly. For instance, some credits were used to purchase luxury vehicles (a Mercedes and a Land Rover) that were not used directly on the film and the amount of credits claimed was the full purchase price rather than the lease cost during the project. The audit found numerous irregularities, ranging from substandard reporting of how credits were used to using venders who reside outside of Iowa.

The debacle has led to the resignation of Mike Tramontina, director of the state’s Department of Economic Development, two days after he sent this memo containing the results of an independent audit of the Film Office. Tom Wheeler, manager of the Iowa Film Office was then placed on administrative leave. Governor Culver has put a freeze on the credit program and filmmaker reimbursements.

The Governor wants to ensure he “protects the interests of Iowa taxpayers,” but even a well-run film tax credit program is a bad use of hundreds of millions of dollars of taxpayer money. It amounts to a corporate welfare for movie producers.

The Tax Update Blog has been covering the Iowa film tax credit controversy extensively. Read more about film tax credits from us here, here, here, and here.

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