Georgia attorney general drops ‘Sully’ movie tax credit case

The Department of Revenue didn’t appear to do a thorough investigation

Originally posted Tuesday, September 24, 2019 by RODNEY HO/ on his AJC Radio & TV Talk blog

Georgia’s attorney general’s office dropped a fraud investigation into whether Warner Bros. improperly received $600,000 in tax credits for its film “Sully” that was shot in part in the state.

The 2016 Clint Eastwood film about Capt. Chesley "Sully" Sullenberger starring Tom Hanks was also shot in other states, including New York, California, North Carolina and New Mexico. Production began in September, 2015 and ended in April, 2016.

The film, which featured Sully landing a U.S. Airways plane onto the Hudson River after a bird strike with no fatalities, shot in downtown Atlanta , Alpharetta and Gwinnett Technical College, according to Eastwood also shot scenes at EUE Screen Gems.

Credit: Jennifer Brett

Credit: Jennifer Brett

According to a story in Variety, a whistleblower alleged that Warner Bros. received Georgia tax credits for expenses actually incurred in California in an effort to save money.

The attorney general passed the information about potential tax fraud to the Georgia Department of Revenue to investigate, according to a statement from the attorney general’s office. But the revenue department didn’t provide the attorney general’s office with any “evidence, a report, or information that a crime occurred... Accordingly, our office closed this case.”

The whistleblower, who asked to remain anonymous, confirmed to Variety magazine that the revenue department did not contact the person to follow up on the complaint. Warner Bros. also told Variety nobody from the agency contacted them as well.

A spokesman for the Department of Revenue referred the case back to the attorney general's office. "Generally speaking, the Department cannot comment on confidential taxpayer information, including confirming or denying ongoing or closed investigations," said spokesman William Gaston, in an email.

Warner Bros. said last year in a statement to the AJC that it filed all the proper documentation and Georgia’s Department of Revenue approved them with no issues.

The informant provided Variety documents including invoices and contracts that indicated purchases of two decommissioned airplanes were not actually related to the Georgia portion of the film and therefore not eligible for tax credits. Sources told Variety that the film producer insisted on including the planes on the Georgia bill to save 30 percent, the value of the tax credits.

The $600,000 in tax credits would equate to $3 million in total expenditures. Box Office Mojo estimated the film's entire budget was $60 million. The movie was a success, ultimately grossing $125 domestically and another $113 million worldwide.

The movie and film tax credit system is among the most generous in the world and Georgia hands out more tax credits annually to production companies such as Disney and Sony than the entire country of Canada or any other state in America. There is no cap on the credits, which has encouraged many big-budget films to come here, including the”Hunger Games” and “Avengers” series.

During the fiscal year of 2019 covering July 1, 2018 through June 20, 2019, the state handed out an estimated $870 million in tax credits while estimating $2.9 billion in direct spending.

Former SAG-AFTRA Atlanta local president Ric Reitz, who helped design the credits in 2008, last year told my colleague Jennifer Brett: "You must qualify your expenses, whether they are labor or otherwise, through a pretty rigid system.We want to run the cleanest tax-credit system in the country. I'm not familiar with the case. I'm not going to judge Warner Bros."

Today, after reading the Variety story, he added: “I don’t know enough about the details so I have no idea about how to read this.”