Georgia Retraining Tax Credit Overview

The Georgia Employer’s Credit for Approved Employee Retraining (Credit Type Code 102) is for training employees on new technologies. These technologies can include new software, modifications, upgrades, new modules, and in-house developed applications. In many cases training on new equipment, business process changes such as Lean initiatives, ISO-9000 and quality management programs may qualify.
Key Points to Remember:
  • The tax credit is for up to $1,250 per qualified employee. For example, $62,500 tax credit for 50 qualified employees trained on a new business wide ERP software ($1,250 X 50 = $62,500 tax credit)
  • 3 years of potential – last year, this year and plans for next year.
  • $$ benefits go to any company or pass-through equity owners that pays Georgia income taxes.
  • Administered by The Technical College System of Georgia (TCSG), and must be approved by the local technical college Vice President of Economic Development (Program details click here).
Don’t forget to discuss these activities with your client’s accounting, IT, HR, operations and engineering contacts. We’ve found that most Georgia companies will qualify for this credit, so make sure you ask!
JimSig

Arizona Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions, or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Arizona, so we spoke with Jesse Broderick of Sumit Credits (link to site here), who provides tax credit services to several Arizona clients.  Also see Arizona economic development site, click here.
Arizona offers a wide selection of credits and incentives for new and existing businesses.  CNBC ranked Arizona #26 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey).  Arizona ranked next to last in education.
Incentives and Credits include:
  • Tax Credit for Hiring Recipients of TANF payments (piggybacks off of Federal Work Opportunity Tax Credit WOTC).
  • Quality Jobs Tax Credit offers up to $9,000 of Arizona income or premium tax credits spread over a three-year period for each net new quality job.
  • Qualified Facility Tax Credit offers a refundable income tax credit equal eligible companies making a Capital Investment to establish or expand a Qualified Facilities.
  • Research & Development Tax Credit provides an Arizona income tax credit for increased research and development activities conducted in this state.
  • Other Incentives — Pollution Control Tax Credit, Renewable Energy Tax Credits, Quality Jobs Tax Credit, and several others.

Compared to Georgia, Arizona has:

  • Slightly higher corporate and lower personal income tax rates
  • Comparable combined state and local tax burden
  • A slightly wider range of incentives

Often criticized for its hodge-podge assortment of tax credits, Arizona certainly offers potential, since you almost never know what activities your clients have that could generate $$ credits.

To summarize, Arizona is above average for business tax incentives, and in the wintertime, you can’t beat the weather!

DaleSig

 

Sellable Georgia Tax Credits

In case you didn’t know — Georgia has several sellable, transferable, or monetizable tax credits your clients may be able to utilize. These tax credits are typically used for entities or individuals with large Georgia income tax liabilities. So for tax planning, if you know the tax liability and filing deadlines, your client can buy the exact $ amount needed for the tax years needed.
Be careful though — these tax credits can get pretty complex, and many are hard to find. Often they are sold by brokers that have connections with the “producers” of the tax credits. The “producers” sell from an “inventory” of tax credits available for sale, or they may be bought on an exchange (click here for example). Look for these sellable Georgia tax credits:
  • Low Income Housing Credit (credit type code 109) – Used for financing the development of affordable rental housing for low-income households in Georgia
  • Historic Rehabilitation Credit (credit type code 121) – Rehabilitation of a certified structure or historic home in Georgia
  • Film Tax Credit (credit type code 122) – Produce films in Georgia. Starting July 1, 2017, there will be a new post-production film tax credit.
  • Land Conservation Credit (credit type code 124) – Federal conservation easement for land in Georgia.
  • Film Tax Credit for A Qualified Interactive Entertainment Production Company (credit type code 133) – Produce video games in Georgia

The “credit type code” listed will help with your tax planning analysis of prospective and existing clients. First, see if the client’s business can generate tax credits on their own (i.e., they retrained employees, added jobs, or invested in capital equipment). After you help them get those tax credits for their business, then fill in the remaining tax liability gap with the sellable Georgia tax credits. Good luck!

 

JimSig

Utah Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions, or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Utah, and their state economic development professionals gave us some details (Utah economic development site click here).
Utah offers a paltry selection of credits and incentives for new and existing businesses, and very few companies actually utilize the incentives.  However, CNBC ranked Utah #1 (!!) in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey).  They ranked high in most survey categories, but those did not include incentives offered.   
Incentives and Credits include:
EDTIF Tax Credit — a post-performance, refundable tax credit with rebates for up to 30% of new state revenues (sales, corporate and withholding taxes paid to the state) over the life of the project (typically 5-10 years). Available to companies seeking relocation or expansion of operations to the State of Utah, and must be a competitive project.
Life Science and Technology Tax Credits — for qualifying life science and technology  investors.  Eligible investors may submit applications to GOED for tax credits drawn from $300,000 of funds expressly set aside by the Legislature.

Other Incentives — Some local exemptions and credits, recycling, and other limited incentive programs.

Compared to Georgia, Utah has:
  • About the same corporate and personal income tax rates.
  • Comparable combined state and local tax burden
  • A far narrower range of incentives.
  • Pre-approval required for all incentives
All Utah state incentives are awarded on a “post-performance” basis: companies must meet specific, pre-approved milestones, including generation of new state tax revenue, before incentives are disbursed.

To summarize, Utah is below average for business tax incentives, but if you love to ski, you can’t beat the location!

DaleSig

Tell Me Again How I Talk to My Clients About Tax Credits?

This keeps coming up, so let’s talk about it again!  CPAs frequently ask us about situations where they have never discussed tax credits with existing clients. This can be awkward, since your clients depend on your advice about all tax matters, business and personal. Sometimes we hear our clients ask us “why didn’t my CPA tell me about these tax credits?”Ouch.  So how should you handle this? Here are some ideas based on our discussions with CPAs and our clients:
 
BE PROACTIVE
  • Reach out to clients and let them know there are many incentives out there (the fall-on-your-sword approach). Tell them that these incentives can be complex and political, but you want to focus on assistance you can provide going forward. It may be better to tell your clients NOW and take the heat, rather than have one of your competitors tell them!
  • To start, send them an article about a tax credit they may be able to use.  Easy way — just click on the AlphaMail archive here, search, browse, select the article, and forward the page.
BE REACTIVE!

Sometimes the proactive approach won’t work.  In that case:

  • Wait until they bring it up (the let-sleeping-dogs-lie approach). Some clients may not want to be bothered with incentives or other tax details. But remember, these clients may hear about tax credits anyway from a competitor, at the country club, in a newspaper article, or even from their spouse! You need to be prepared to reply just in case.
  • Same as above — send them an articleEasy way — just click on the AlphaMail archive  here, search, browse, select the article, and forward the page.

Either way, don’t overlook tax credits! Discuss your clients’ business plans. Their qualifying activities can provide the tax credits that will strengthen your relationships.

JimSig

California Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in California, and their state economic development professionals gave us some details (CA business portal site click here).
California offers a narrow selection of credits and incentives for new and existing businesses.  CNBC ranked California #32 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey).  Predictably, California was ranked #49 in Cost of Doing Business! 
Incentives and Credits include:
California Competes –  The California Competes Tax Credit is an income tax credit available to companies that want to come to California or stay and grow in California.
New Employment Credit – The New Employment Credit is an income tax credit available to companies that hire full-time employees within designated geographic areas.
Employment Training Panel – – The Employment Training Panel (ETP) provides funding to employers for training associated with upgrading the skills of their workers.
Other Incentives — Some local exemptions and credits, Green Business, and other special and assorted incentive programs.
Compared to Georgia, California has:
  • Much higher corporate and higher personal income tax rates.
  • Higher combined state and local tax burden
  • A far narrower range of incentives.
  • Pre-approval required for all incentives
To summarize, California is below average for business tax incentives, but you can’t beat the West Coast location!

DaleSig

After Tax Season: Tax Credit Reviews!

Now that the April 18 tax deadline has passed, it’s a great time to review the tax credits that your clients are using (or NOT using). Schedule After Tax Season Reviews for client analysis, planning and follow up during the slow summer months.
ANALYSIS – Start with your tax software. By leveraging the software’s report writer and data analytics, you may be able to find a lot of opportunities. Here are a few areas to analyze:
  • Which of your corporate clients are using tax credits?
  • What about the individuals that receive K-1s from companies that are not your clients?
  • What about other incentives such as cost segregation and Section 179-D ?
PLANNING – Now develop a plan to follow up with your clients for the following situations:
  • Using credits – If the corporate or individual clients are using tax credits, how has their experience been? What other credits should they be considering? What are their plans for 2017 and beyond?
  • Not using credits – If the client is not using tax credits, you need to find out why. What assistance can your firm or other 3rd party firms provide?

FOLLOW UP – For each client, schedule an in-person meeting! It’s a great opening to review the custom analysis you prepared and discuss opportunities for tax credits and other incentives. Most importantly, it will strengthen your relationship with your client and may bring more $$ business to your firm.

JimSig

State of Washington Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in the state of Washington, and their state economic development professionals gave us some details (Choose Washington incentives site click here).
For starters — CNBC ranked Washington #6 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). Pretty impressive!  In that same survey, Washington is ranked #1 for Technology and Innovation.
The State of Washington does not have a corporate or individual income tax, but it does have a business and occupation (B&O) tax measured on the value of products, gross proceeds, or gross income of the business.

Washington offers a WIDE range of incentives including B&O tax credits, Public Utility tax credits, and Sales and Use tax credits:

Compared to Georgia, Washington has:
  • NO corporate and NO personal income taxes, but
  • Corporate business and occupation B&O (gross receipts) tax
  • A far wider range of incentives
  • Pre-approval required for some but definitely not all incentives
To summarize, Washington is extremely competitive with other states for economic development incentives, plus it is truly a beautiful place to live and do business.

DaleSig

Beating the Buzzer with Tax Credits

March Madness for college basketball and Tax Season for CPAs will be ending soon. In basketball, everyone can hear the loud buzzer at the end of the game. But in the game of filing taxes, it may be harder to know if you beat the buzzer! Knowing when returns get “officially” filed is especially critical for amending prior year returns with tax credits. And if you miss the date, the tax credit may be gone forever.
For example, a Georgia job tax credit may be filed on an amended return within one year of the original, timely filed return.  Many times the difficulty in identifying the filing date involves the difference between the date you sent the tax return vs. the date DOR acknowledged receipt of the tax return. DOR has details about filing tax returns and due dates (click here). In addition, DOR has made changes for the 2016 tax filing (click here).
Here are some things to keep in mind about identifying “official” tax filing dates:
  • For eFile, your tax software should provide the date. As an example, the software should provide the Federal (IRS) Form 9325 data (click here).
  • For manual filing, make sure you send the return via USPS Domestic Return Receipt (green card or online track). Return Receipt saves the day when DOR has no record of receiving the tax return (this does happen!).
  • For clients that want to review the tax return and manually file it themselves, request that they send the return to DOR via USPS Domestic Return Receipt (green card or online track) and send you a copy of the returned green card or tracking result.
  • The Georgia Tax Center may provide the details needed (click here).

For tax credits that involve amending prior year returns, make sure that your team, the client and any third party tax credit providers know the “official” tax filing deadline date. Also be sure ask your client if they are working on any tax credits on their own. Your attention to these details will make sure that your clients beat that tax filing date buzzer!

JimSig

Idaho Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Idaho, and their state economic development professionals gave us some details (Idaho incentives site click here).
For starters — CNBC ranked Idaho #15 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). In that same survey, Idaho is ranked #49 for Education and #28 in Workforce, so those kept them from being near the top.
Idaho Tax Reimbursement Incentive:
  • tax credit of up to 30% on income, payroll, and sales taxes for up to 15 years.
  • broad range of industries including aerospace, agriculture, food processing, and high-tech
  • open to existing Idaho businesses looking to expand and businesses new to Idaho.
  • Companies in rural areas must create 20 new jobs, and those in urban centers must create 50.

Idaho 3% Investment Tax Credit:  all new depreciable, tangible, personal property (machinery and equipment) used in Idaho.

Workforce Development Training Reimbursements:  Receive up to $3,000 per job for training new or current full time employees.

Idaho Business Advantage:  $500K investment with 10 new high wage jobs can generate another set of income tax credits, property tax exemptions, and sales tax rebates.

Compared to Georgia, Idaho has:
  • Higher corporate and higher personal income tax rates
  • A slightly narrower range of incentives
  • Pre-approval required for all incentives
To summarize, Idaho is competitive with other states for income tax credits and other incentives, plus you can’t beat the beautiful Northwest location.

DaleSig

Who’s That Knocking on Your Client’s Door About Tax Credits?

Warning!  Your clients may be reaching out to you during this crazy tax season asking about tax credits that they have heard about. Where did they hear about these? Here are a few real world examples:
  • Location-based incentives: State and local tax credits are constantly changing. For example, Georgia’s Clayton County has been designated a Job Tax Credit Tier 1/Bottom 40 in 2017. This means ANY business can get job credits with an increase of only 2 jobs.  As a result, many tax credit firms are aggressively contacting all businesses in the county and may be pushing YOUR CLIENTS to sign their agreements now.
  • R&D tax credit: federal and state R&D tax credit changes may now benefit your clients. Previous limitations due to AMT and income tax liability may no longer apply (click here ). All of a sudden, your clients are being blasted by the numerous tax credit firms that specialize in R&D credits.
  • Industry vertical: Your clients may have heard about special incentives at industry events they attended. For example, your general contractor client may have heard that their new design and build services may qualify for the Section 179 D and other incentives.

How can you control who is knocking on your client’s door? It may be difficult, but giving them a “heads up” via your website, newsletters, and other sources will help.  Be sure to emphasize how important it is for BOTH of you to track and monitor their tax credits.

So remember, be proactive with your clients before they hear those knocks on their doors!  You will have happier clients and won’t get the dreaded “why didn’t you tell me about this?” questions after it’s too late!

JimSig

Wyoming Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Wyoming, and their state economic development professionals gave us some details (Wyoming incentives site click here).
For starters — Wyoming has no corporate state income tax, no personal state income tax, no inventory tax, no franchise tax, no occupation tax, and no value-added tax — so like we saw with South Dakota, income tax credits are not applicable!  CNBC ranked Wyoming #13 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey).
Financing and Other Incentives include:
Sales Tax Exemptions for manufacturing machinery, electricity used in manufacturing, and certain data center equipment and system purchases.

Managed Data Center Cost Reduction Grant Program reimburses the accrued utility expenses for power or broadband up to a maximum grant award of $2.25 million.

Loan Programs include Wyoming Partnership Bridge Loan, Wyoming Partnership Guaranteed Loan Program, and the Economic Development Large Project Loan Program.

Workforce Development Training Grants provide up to $2,000 per trainee per fiscal year for Wyoming businesses with existing employees who need a skill upgrade or retraining in their current occupations. Business Training Grants for New Positions provide between $1,000 to $4,000 per trainee per fiscal year depending on the employee’s full-time status and wage amount.
Compared to Georgia, Wyoming has:
  • 0.0% corporate and 0.0% personal income tax rates!
  • Much lower combined state and local tax burden
  • A narrower range of incentives
  • Pre-approval required for all incentives
To summarize, Wyoming doesn’t need income tax incentives, because they don’t have income taxes.

DaleSig

2017 Georgia Job and Investment Tax Credit Tiers Available

Time-critical 2017 Job Tax Credit ranking details have been released by the Georgia Department of Community Affairs (click here ). Also, note:
  • The ranking changes apply to Job Tax Credits and Investment Tax Credits.
  • Changes may adversely impact your clients’ Job Tax Credits based on their County Tier, overall ranking (Bottom 40), Less Developed Census Tract, or Military Zone.
  • No impact on Opportunity Zone tax credits this year. However, zones may be added, expanded or removed during the year (click here).
  • A Notice Of Intent may need to be filed to maintain your client’s tier, zone, or Less Developed Census Tract designation – the form must be filed by Feb. 15, 2017 (click here).

So remember to review your clients’ plans for 2017. Job Tax Credits may be available if they plan to increase employment levels, open new or change locations in Georgia, or buy another company.

JimSig

North Dakota Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in North Dakota, and their state economic development professionals gave us some details (North Dakota incentives site click here).
For starters — CNBC ranked North Dakota #12 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). In that same survey, however, North Dakota is ranked #29 for Cost of Doing Business.  They rely heavily on the oil and gas industry, as you probably already know.  Also, just a nit, but their economic development web site is the worst I have seen so far.  One can barely make heads or tails out of it!
Financing and Other Incentives include:
  • Five-year corporate income tax exemption for new or expanding primary sector business
  • Investment tax credits for business investors
  • Sales and use tax exemptions on manufacturing/computer/telecommunication equipment
  • Utilities are not taxed in North Dakota
  • Up to five-year 100% property tax exemption
  • North Dakota Development Fund – gap financing loan and equity program
  • Research North Dakota – grant funds for conducting R&D in partnership with North Dakota universities
  • Workforce 2020 – grant program for training new technologies and processes
  • New Jobs Training Program – grant program reimbursing employee withholding taxes
Compared to Georgia, North Dakota has:
  • 4.31% corporate and 2.9% top personal income tax rates
  • Nearly the same combined state and local tax burden
  • A far narrower range of incentives
  • Pre-approval required for all incentives
To summarize, North Dakota doesn’t rely on income tax incentives very much, but perhaps they should consider doing so if they want to attract a wider variety of industries!

DaleSig

Job Tax Credit Changes

As you are doing year-end tax planning with your clients, make sure you discuss job tax credit potential for 2016. Here are several Georgia changes in 2016 that may apply to their businesses:
  • New Job Tax Credit regulations to clarify terminology and calculations (for new regulations, click here).
  • New Opportunity Zones started in 2016 include Baldwin, Lake City, and Savannah (for complete list, click here).
  • The new DCA contact for job tax credits is Tricia DePadro – Program Manager, Tax Credit Program, 404-679-1585, tricia.depadro@dca.ga.gov . Dawn Sturbaum has retired.
  • New Parolee Job Tax Credit – This is a new tax credit that starts January 1, 2017. A company can claim up to $50,000 per year for hiring qualified parolees. There is a 3 year carry forward (for regulations, click here).

Review your clients’ potential for 2016. Job Tax Credits may be available if they increased employment levels, opened new locations in Georgia, or bought another company.  And that’s how changes to tax credits can increase value $$ in your client relationships!

JimSig

South Dakota Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in South Dakota, and their state economic development professionals gave us some details (South Dakota incentives site click here).
For starters — South Dakota has no corporate income tax, no personal income tax, no personal property tax, and no business inventory tax — so income tax credits are not applicable!  CNBC ranked South Dakota #19 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). In that same survey, however, South Dakota is ranked #4 for Cost of Doing Business.
Financing and Other Incentives include:
Revolving Economic Development & Initiative (REDI) Fund, Economic Development Finance Authority (EDFA), South Dakota Microloan, South Dakota Works, Reinvestment Payment Program, and South Dakota Jobs Program.

R&D New Frontiers assists companies in offsetting R&D costs associated with gaining regulatory approval of products.  Also Proof of Concept Fund, Dakota Seeds (skilled employees), and Workforce Development Program, a matching grant program to spur technology-related training efforts.

Compared to Georgia, South Dakota has:
  • 0.0% corporate and 0.0% personal income tax rates!
  • Much lower combined state and local tax burden
  • A narrower range of incentives
  • Pre-approval required for all incentives
To summarize, South Dakota doesn’t need income tax incentives, because they don’t have income taxes.

DaleSig