Senate Bill 422 – Motion Picture Industry and Loan-Out Companies
Senate Bill 422 recognized the role of loan-out companies and clarified their responsibility to pay employment taxes under the California Unemployment Insurance Code (CUIC).
The bill requires a Motion Picture Payroll Services Company to file with EDD a report of payments made to a loan-out company each quarter, beginning with the first calendar quarter ending March 31, 2026.
Loan-Out Companies
A loan-out company is a corporation, or a limited liability company that is classified as a corporation for federal income tax purposes, and:
- The main business activity is the performance of personal services for a motion picture production company or allied motion picture services company.
- The person doing most of the work is an employee who also owns more than 10% of the company’s stock during the taxable year.
Motion Picture Payroll Services Companies
A Motion Picture Payroll Services Company (MPPSC) is a business that directly or through its affiliated entities meets all the following criteria:
- Provides the services of motion picture production workers to a motion picture production company or to an allied motion picture services company or makes payments to a loan-out company as directed by a motion picture production company or an allied motion picture services company.
- Is a signatory to a collective bargaining agreement for one or more of its clients.
- Controls the payment of wages to the motion picture production workers and pays those wages from its own account or accounts.
- Is contractually obligated to pay wages to the motion picture production workers without regard to payment or reimbursement by the motion picture production company or allied motion picture services company.
- At least 80 percent of the wages paid by the MPPSC each calendar year are paid to workers associated between contracts with motion picture production companies and MPPSCs.
Section 679 of the CUIC allows an MPPSC to be treated as the employer of motion picture production workers when meeting these requirements. MPPSCs have additional filing and reporting requirements.
The following requirements must be met for an MPPSC to be treated as the employer:
- The MPPSC pays and controls the payment of wages of a motion picture production worker for services either to a motion picture production company or to an allied motion picture production company.
- Within 15 days after first paying wages, submits an Application to Be a Motion Picture Payroll Services Company (MPPSC) (DE 679) to EDD.
The DE 679 is not an application for an employer payroll tax account number. If you are a new employer, visit Am I Required to Register as an Employer? for information on how to get a payroll tax account number and enroll in e-Services for Business.
If you’re an MPPSC, you must report to EDD the total amount of payments made to loan-out companies performing services in California each quarter.
An MPPSC is required to report the following information for both the MPPSC and the loan-out company:
MPPSC
- Legal name
- Federal Employer ID Number (FEIN)
- CA Employer Account Number
- Year and Quarter of the report
- Address
Loan-Out Company
- Federal Employer Identification Number (FEIN)
- Legal name
- CA Employer Account Number
- Phone number
- Total amount of payments made
- Address
- Name of principal officer or member providing the service
- Social Security number of that person
Reporting Due Dates
You must start reporting beginning with the first calendar quarter of 2026. Reports are due on the first day of the month after each quarter ends. If your report is not submitted by the last day of that month, it’s considered late. If the due date falls on a Saturday, Sunday, or legal holiday, then the due date is extended to the next business day.
| Report Covering | Due Date | Delinquent if Not Filed By |
|---|---|---|
| January, February, March | April 1, 2026 | April 30, 2026 |
| April, May, June | July 1, 2026 | July 31, 2026 |
| July, August, September | October 1, 2026 | November 2, 2026 |
| October, November, December | January 1, 2027 | February 1, 2027 |
How to Submit Your Report
Online
Enter the information yourself or upload a spreadsheet (.csv) securely through e-Services for Business.
Visit Online Forms and Publications to download DE 422. The DE 422 form is not currently available but will be available soon.
Mail to:
Employment Development Department
P.O. Box 980148
West Sacramento, CA 95798-0148
Is there a penalty?
You may be charged a penalty if you:
- Don’t file the report.
- File it late, without good cause.
- Willfully or fraudulently fail to comply.
For additional information or assistance, call our Taxpayer Assistance Center at 1-888-745-3886.
Reporting Requirements FAQs
A loan-out company is a corporation, or a limited liability company (LLC) that is classified as a corporation for federal income tax purposes, and:
- The main business activity is the performance of personal services for a motion picture production company or allied motion picture services company.
- The person doing most of the work is an employee who also owns more than 10% of the company’s stock during the taxable year.
The loan-out company is the employer of the employee-owners or members who are engaged by the loan-out company to provide services to a motion picture production company or an allied motion picture services company.
An LLC must file an Entity Classification Election (Form 8832) or Election by a Small Business Corporation (Form 2553) with the IRS to make the election to be treated as a corporation for federal income tax reporting purposes. For more information, contact the Internal Revenue Service (IRS).
An MPPSC is a business that directly or through its affiliated entities meets all the following criteria:
- Is required by contract to provide the services of motion picture production workers to a motion picture production company or to an allied motion picture services company, or makes payments to a loan-out company as directed by a motion picture production company or an allied motion picture services company.
- Is a signatory to a collective bargaining agreement for one or more of its clients.
- Controls the payment of wages to the motion picture production workers and pays those wages from its own account or accounts.
- Is contractually obligated to pay wages to the motion picture production workers without regard to payment or reimbursement by the motion picture production company or allied motion picture services company.
- At least 80 percent of the wages paid by the MPPSC each calendar year are paid to workers associated between contracts with motion picture production companies and MPPSCs.
Section 679 of the CUIC allows an MPPSC to be treated as the employer of motion picture production workers when meeting these requirements. Refer to the Application to Be a Motion Picture Payroll Services Company (MPPSC) (DE 679) for more information.
Yes, if the company meets all the criteria to be an MPPSC, the MPPSC is allowed to be treated as the employer of the motion picture production workers. The MPPSC is to complete and file the Application to Be a Motion Picture Payroll Services Company (MPPSC) (DE 679) with EDD within 15 days after paying wages to workers. The DE 679 is not an application for an EDD payroll tax account number.
If you are a new employer, visit Am I Required to Register as an Employer? for information on how to get a payroll tax account number and enroll in e-Services for Business.
Yes, only payments for work performed in California should be reported on the Report of Payments to Loan-Out Company (DE 422) filed by the MPPSC. Payments for services performed outside of California do not need to be reported.
Yes, the DE 422 must list the total amount paid to the loan-out-company, including reimbursements.
If a foreign loan-out company is paid for work in California, should they be reported on the DE 422?
Yes, both domestic and foreign loan-out companies must be reported on the DE 422.
You will need to check with the California Secretary of State for business entity registration requirements. For income tax reporting requirements, contact the Internal Revenue Service and the Franchise Tax Board.
It is the employee-owner or member providing services to a motion picture production company and owns more than 10% of the company’s stock during the taxable year. Both are employees under the law.
- A principal officer is any officer of a corporation.
- A member for this purpose is any member of an LLC that is treated as a corporation for federal income tax purposes.
Online
You can enter the information yourself or upload a spreadsheet (.csv format) securely through e-Services for Business.
By Mail
Download the DE 422 for the Online Forms and Publications page, then mail it to:
Employment Development Department
P.O. Box 980148
West Sacramento, CA 95798-0148
This means you are not registered as an MPPSC. You must complete the Application to Be a Motion Picture Payroll Services Company (MPPSC) (DE 679) to register.
Yes, these forms are for different reporting requirements and you must file each one if you meet the requirements.
- The DE 422 reports payments made to loan-out companies.
- The Report of Independent Contractors (DE 542) reports compensation made to independent contractors. Visit Independent Contractor Reporting for more information on the DE 542 reporting requirements.
Yes, the MPPSC must still file the form. They should ask the loan-out company for all the required information and include the information provided, or that is available, on the DE 422.
Yes, a penalty may be charged if there is no good cause for filing the DE 422 with missing information or if the action was willful or fraudulent. It is the MPPSC’s responsibility to document the request for the information made to the loan-out company to support the MPPSC’s actions taken towards complying with the reporting requirements.
Go to California Legislative Information website to find the Unemployment Insurance Code (UIC) page.
Open the California UIC Table of Contents, choose Division 1, scroll to sections 1085-1098, and then find 1088.9.