Yes, an eligible production company that fails to withhold individual income taxes as required under MCL 206.351, or fails to insure that the PSC or PEO the production company uses withholds, may be denied the otherwise available film credit. Failure by the eligible production company to properly withhold would be deemed a delinquency on the part of the eligible production company as to a debt or obligation to the state of Michigan, and is cause to disqualify the company for the tax credit. However, the eligible production company could still qualify for the tax credit if the company cures the delinquency prior to and as a pre-requisite condition of the Film Office entering into an agreement for the provision of the credit and the issuance of the certificated credit.

One of the requirements to qualify for film credits is that the production company (or taxpayer, in the case of the infrastructure credit) "not be delinquent in a tax or other obligation owed to this state or be owned or under common control of an entity that is delinquent in a tax or other obligation owed to this state." MCL 208,1455(1)(e); MCL 208.1457(1)(e); and MCL 208.1459(1)(e). For each of these credits, the "no delinquency" requirement must be met in order for the Film Office both to enter into an agreement with the eligible production company (or taxpayer, in the case of the infrastructure credit) and to give the certificated credit to an eligible production company. Therefore, if an eligible production company (or taxpayer, in the case of the film infrastructure credit) fails to withhold taxes, an agreement may not be entered into for the credit nor may a credit certificate be issued.

However, where an eligible production company (or taxpayer, in the case of the film infrastructure credit) fails to withhold, and thus is delinquent on a tax or other obligation to the state, the occurrence of the delinquency is not forever fatal to the company (or taxpayer) qualifying for the tax credit. The eligible production company (or taxpayer) can cure the delinquency by paying the withholding taxes (and any interest and penalties) as a pre-requisite condition for entering into an agreement for a credit or having the credit certificate issued. Once the delinquency no longer exists, the eligible production company (or taxpayer, in the case of the infrastructure credit) satisfies the "no delinquency" requirement for qualifying for the credit.

To the extent a PSC or PEO does not withhold payments to it for services of a performing artist or crew member that qualify for the credit, such payments are subject to withholding by the eligible production company. Accordingly, an eligible production company must ensure that any PSC or PEO with which it contracts to provide personnel to a production must withhold for such personnel provided in order to obtain the credit. The state's grant of a credit or refund is premised upon the agreement and relationship with the eligible production company (or taxpayer) for the credit, and it is the eligible production company's (or taxpayer's) obligation to ensure compliance with the withholding requirement in order to qualify for the credit.