a) No, a fee paid to a business located outside Michigan for processing a film production company's payroll at a location outside Michigan is not a qualified expense. To qualify as a "direct production expenditure" the expenditure for a service must be made in this state. To be "made in this state" a service must be wholly performed within Michigan. The payroll processing business does not have the required physical presence in Michigan.
b) The answer would not change if the payroll processing business caused an employee or agent to be present in Michigan to handle the data transfer. The payroll processing business would still not have the required level of physical presence in Michigan and would not have any substantive relationship to Michigan. If the payroll processing business did establish the required level or physical presence in Michigan, the expenditure would qualify only if the payroll services were entirely performed in Michigan.
c) The answer would not change if the payroll processing business is the "employer of record" for the employees. The nature of the transaction remains substantially that of payroll processing because the true employer of the employees whose payroll is being processed is the film production company.