Originally adopted as part of the "American Jobs Creation Act of 2004," the provision allowed for tax deductions within the taxable year of filming for film, television and animated programs commencing shooting prior to 2009. There were three key limitations to the incentive: A) The film or television production would sustain a budget that did not exceed $15 million (or $20 million in areas eligible for designations as low-income communities or Delta Regional Authority distress areas). In the case of a television series, this dollar amount would apply to each individual episode up to the 44th episode of the series. B) The film or television production had to be a qualifying production, meaning the entire budget for the production could not exceed the $15/$20 million dollar guidelines, and 75 percent of the total production compensation had to be "qualified compensation." Qualified compensation was considered payment made to United States citizens who were employed as talent and crew of the production. In the case of animation, at least 75 percent of all keyframe, in-between frame, animation photography and the recording of voice-over talent had to be performed by United States based companies and citizens. C) The production company submitting for the incentive had to have an exclusivity of the deduction/amortization.

Congress has extended IRC 181 to include productions commencing prior to January, 2010. In addition to expanding the time allotment of the credit, Congress has expanded the dollar limitation of the production. The credit now applies to the first $15 million (or $20 million in recognized economically distressed areas) of a qualified film, television or animation program shot in the United States. The cap of a total budget of $15/$20 million no longer applies.

"Passage of this extension is the culmination of a long year’s work for IFTA (Independent Film and Television Alliance), the DGA (Director’s Guild of America) and the industry coalition that has supported this important legislation," states IFTA President and CEO Jean Prewitt in a recent press release. "IRC 181’s targeted provisions have proven to be of real assistance in keeping independent production and jobs here in the United States."

The foreign market has been developing attractive incentive packages aimed at drawing international production budgets to be spent in their territories. IRC 181, along with individual state incentives, is a means of keeping production costs lower and allowing the jobs to stay stateside. In response to the extension, Ann Lerner, Director of the Albuquerque Film Office, stated, "I do know that the recent extension indicates a strong support for the film industry from our legislators, and shows recognition that this industry provides creative, high paying and non-polluting jobs to our citizens."