Georgia Manufacturer’s Investment Tax Credit Overview

The Georgia Manufacturer’s Investment Tax Credit (Credit Type Code 106) is a tax credit for a manufacturing or telecommunications company. It is based on the amount of additions to property, plant and equipment assets and the location of these assets. These assets can include costs of capitalized items and operating leases. Finally, the tax credit is earned the year after the assets are acquired (for example, plant expansion in 2016 and tax credit earned in 2017).

For this credit, the GA Department of Revenue (DOR) administers the program and the Department of Community Affairs (DCA) determines the location credit percentages. The percentages, and thus the potential credit amounts, can change each year. DCA releases the new tier rankings each December for the following year.

Key points to remember:
  • The tax credit amount is based on the costs and the county where the assets are located. For example, a $1,000,000 plant expansion in Gwinnett County (1% level) will generate a $10,000 tax credit in 2017. ($1,000,000 X 1%).
  • Right now you have five years of potential benefits to consider: 3 prior years, this year, and plans for next year.
  • Benefit $$s go to any company or pass-through equity owners that pay Georgia income taxes.
This tax credit could be a great option for your manufacturing or telecommunications clients. An expansion to a manufacturing plant could provide a lot of opportunity. For details, click here.
Thanks!

 

JimSig

Georgia 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.  But of course they still want us to keep them up to date on Georgia credits and incentives!
Recently our Georgia state economic development professionals gave us some details (Georgia.org Competitive Advantages site click here).
For starters — Georgia has moderate corporate and personal income tax rates.  CNBC ranked Georgia #2 in their 2017 America’s Top States for Business survey.  Several other publications rank Georgia at or near the top for business.  Pretty good.
Credits and Incentives include:

 

Job Tax Credit — Qualifying industries can earn as much as $4,000 per year for each new job created for up to five years. Job credit $$ amount depends on how many jobs are created and location.

 

Retraining Tax Credit — For retraining employees to use new equipment and technologies or learn new skills. Credit equals 50 percent of direct training expenses, up to $500 credit per full-time employee per training program, up to $1,250 per trained employee per year.
Investment Tax Credit — Companies in manufacturing or telecommunications support that have operated in Georgia for at least three years are eligible to earn investment tax credits of 1 percent to 8 percent of qualified capital investments of $50,000 or more.

Research And Development Tax Credit — Qualified research spending in Georgia may qualify for an R&D tax credit equal to a percentage of that spending increase.

Georgia offers other tax credits for Quality Jobs, Port Usage Bonus, Film, Television, and Digital Entertainment, and Musical production.
Georgia also offers Inventory Tax Exemptions as well as Sales and Use Tax Exemptions for machinery, equipment, repairs, raw materials, packaging, computer hardware and software, energy used in manufacturing, and several others.
Compared to other states, Georgia has:
  • Mid-range corporate (6%) and personal (6%) income tax rates
  • A wider range of incentives applying to a far wider range of firms
  • Pre-approval NOT required for most Georgia incentives
To summarize, Georgia is a great place to start and grow a business, whether it’s a start-up, a small to medium sized enterprise, or a Fortune 500 global leader.
So come get some of those Georgia incentives, y’all! 

DaleSig

Georgia Less Developed Census Tract Job Tax Credit Overview

The Georgia Less Developed Census Tract Job Tax Credit (Credit Type Code 103) is a special job tax credit for a business that meets the Georgia Business Enterprise NAICS requirements and adds at least 5 net new jobs in a designated location.  The company must offer group health insurance to all employees and meet other job tax credit requirements. The tax credit can be earned each year, up to five (5) years.  For this credit, the Department of Community Affairs (DCA) designates the eligible census tracts for the program.  Caution — these designated tracts can change each year, so be on the lookout in December when DCA releases the new tier rankings for the following year.
Key points to remember:
  • The tax credit is $3,500 per net new job. For example, $175,000 tax credit for 10 new jobs in a Less Developed Census Tract over a 5 year period ($3,500 X 10 X 5).
  • Right now you have three years of potential benefits to consider: last year, this year, and plans for next year.
  • Benefit $$s go to any company or pass-through equity owners that pay Georgia income taxes. As an alternative, the tax credit can be used against Georgia payroll withholding taxes.
Ask your clients about their expansion plans for existing and planned Georgia street address locations.  For example, locating a new call center in a Less Developed Census Tract may benefit your client this year (Click here for details).
Thanks!
JimSig

Be Careful With Tax Credits and Filing Deadlines!

We recently had several cases that reminded us to tell you to be careful with tax credits and tax filing deadlines for pass-through entities (S-corporations, Partnerships and LLCs).
Example:  Your client’s equity owners may want their K-1 earlier in the year so they can file their individual tax return no later than the April 2018 tax deadline. However, your client may extend the corporate tax return to provide extra time to fund their retirement.

If the corporation receives a tax credit after the equity owners file their individual returns, an amended K-1 will need to be distributed and the equity owners will need to amend their individual tax returns. And that could cause some heartburn!  So remember, be careful with amending tax returns with tax credits!

JimSig

Hawaii 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 Hawaii, and their state economic development professionals gave us some details (Hawaii incentives site click here).
For starters — Hawaii has similar corporate income tax rates but additional onerous excise taxes and very high personal income tax rates.  CNBC ranked Hawaii #49 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey). 
Tax credits and incentives include:
MOTION PICTURE, DIGITAL MEDIA & FILM PRODUCTION INCOME TAX CREDIT – Based on Hawaii expenditures while producing a qualified film, television, commercial or digital media project.
ROYALTIES TAX EXEMPTION – Royalties derived from performing arts products are excluded from a Hawaii taxpayer’s income and not subject to state income tax.
HAWAII ENTERPRISE ZONES PARTNERSHIP – A joint state-county effort intended to stimulate-via tax and other incentives-certain types of business activity, job preservation and job creation in areas where they are most appropriate or most needed. Businesses can reduce state taxes and receive other county benefits for up to seven years by satisfying the EZ hiring and gross receipts requirements.
Foreign Trade Zone #9 -Duty-free treatment for items that are processed in FTZ and then re-exported. Duty payment is also deferred on items until they are brought out of the FTZ for sale in the U.S. market. It helps to offset customs advantages available to overseas producers who compete with domestic industry.
Compared to Georgia, Hawaii has:
  • Comparable corporate income tax rates, but not really, because they also collect additional General Excise Taxes
  • Much higher personal income tax rates
  • A far narrower range of incentives
  • Pre-approval required for all incentives
To summarize, Hawaii is one of the worst states for business.  But the weather is so nice you probably won’t care.  Aloha!

DaleSig

Georgia Military Zone Job Tax Credit Overview

The Georgia Military Zone Job Tax Credit (Credit Type Code 103) is a special job tax credit for any business adding at least 2 net new jobs in a designated location.  The company must offer group health insurance to all employees and meet other job tax credit requirements. In addition, the tax credit can be earned each year, up to five (5) years.  For this credit, the Department of Community Affairs (DCA) determines the census tracts that are eligible, AND the local government must request formal designation from DCA.   Caution — these designated tracts can change each year, so be on the lookout in December when DCA releases the new tier rankings for the following year.
Key points to remember:
  • The tax credit is $3,500 per net new job. For example, $175,000 tax credit for 10 new jobs in a Military Zone over a 5 year period($3,500 X 10 X 5)
  • Right now you have three years of potential benefits to consider: last year, this year, and plans for next year.
  • Benefit $$s go to any company or pass-through equity owners that pay Georgia income taxes. As an alternative, the tax credit can be used against Georgia payroll withholding taxes.
Review your clients’ existing and planned Georgia street address locations for potential.  For example, locating a new office in a Military Zone could benefits for your client this year (Click here for details).
Thanks!
JimSig

Alaska 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 Alaska, and their state economic development professionals gave us some details (Alaska incentives site click here).
For starters — Alaska has very high corporate income tax rates and NO personal income tax.  CNBC ranked Alaska #47 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey). 
Financing and tax credits include:

Ten types of loan funds, covering rural development, small business, commercial fishing, alternative energy, mariculture (what?), and micro loans.

Tax credits are extremely narrow and would only apply to taxes paid by corporations: Oil and Gas Exploration, Minerals Exploration, Film Production, and Education.  So not much.

Compared to Georgia, Alaska has:
  • Very high (up to 9.4%) corporate income tax rates
  • Zero (0.0%) personal income tax rates
  • A far far narrower range of incentives
  • Pre-approval required for all incentives
To summarize, for larger corporations, Alaska has very high taxes and very few incentives.  For pass-through entities, Alaska doesn’t need income tax incentives, because they have no personal income taxes.
Stay warm! 

DaleSig

Georgia Opportunity Zone Job Tax Credit Overview

The Georgia Opportunity Zone Job Tax Credit (Credit Type Code 103) is a special job tax credit for any business adding at least 2 net new jobs in a designated location.  The company must offer group health insurance to all employees and meet other job tax credit requirements. In addition, the tax credit can be earned each year, up to five (5) years.  This credit is administered by the local government and the Department of Community Affairs (DCA).
Key Points to Remember:
  • The tax credit is $3,500 per net new job. For example, $175,000 tax credit for 10 new jobs in an Opportunity Zone over a 5 year period($3,500 X 10 X 5)
  • Right now you have three years of potential benefits to consider: last year, this year, and plans for next year.
  • Be on the lookout, because the designated Opportunity Zones may be introduced throughout the year.  For example, the Forest Park (Clayton County) zone was started April 25, 2017.
  • Benefit $$s go to any company or pass-through equity owners that pay Georgia income taxes. As an alternative, the tax credit can be used against Georgia payroll withholding taxes.
Remember to check your clients’ existing and planned Georgia street address locations for potential.  For example, locating a new branch at the right location could yield tremendous $$ benefits for your client (Click here for details).

Thanks!

JimSig

Nevada 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 Nevada, so we spoke with economic development professionals in Carson City.  Also see Nevada’s economic development site (click here).
Nevada has no corporate or personal income taxes, so they can’t offer income tax credits!  Otherwise, Nevada offers a meager selection of incentives for new and existing businesses.  CNBC ranked Nevada #39 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey).  Nevada’s worst categories were Education (No. 50) and Technology/Innovation (No. 50).
Incentives include:
    • Sales and use tax abatement on qualified capital equipment purchases, with reductions in the rate to as low as 2%.
    • Modified Business Tax abatement of 50 percent of the 1.475% rate on quarterly wages exceeding $50,000
    • Personal Property Tax abatement not to exceed 50% over a maximum of 10 years.
    • Silver State Works Employee Hiring Incentive

Compared to Georgia, Nevada has:

    • 0.0% corporate and 0.0% personal income tax rates!
    • Much lower combined state and local tax burden
    • far narrower range of incentives
    • Pre-approval required for all incentives
To summarize, Nevada is far below average for business tax incentives,but if you like a dry desert climate, with lots of other attractions, you may hit the jackpot!

DaleSig … Continue reading

Georgia Job Tax Credit Overview

The Georgia Employer’s Jobs Tax Credit (Credit Type Code 103) is for adding net new jobs in Georgia. The minimum number of new jobs to qualify depends on the county where the company is located. For example, Clayton County’s minimum net new jobs to qualify in 2017 is two (2).  The company must offer group health insurance to all employees and meet other job tax credit requirements. In addition, the tax credit can be earned each year, up to five (5) years.
Key Points to Remember:
  • The tax credit is up to $4,000 per net new job. For example, $200,000 tax credit for 10 new jobs in Clayton County over a 5 year period ($4,000 X 10 X 5)
  • Right now you have three years of potential benefits to consider: last year, this year, and plans for next year.
  • Benefit $ to any company or pass-through equity owners that pay Georgia income taxes. In certain situations, the tax credit can be used against Georgia payroll withholding tax instead of Georgia income tax.  Administered by the Department of Community Affairs (DCA).
Don’t forget to discuss these activities with your client’s Payroll, HR, and Accounting  contacts.  For program details, click here.  Good luck!

JimSig

New Mexico 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 New Mexico, so we spoke with economic development professionals in Albuquerque.  Also see New Mexico’s economic development site, click here.
New Mexico offers a meager selection of credits and incentives for new and existing businesses.  CNBC ranked New Mexico #42 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey).  New Mexico’s worst categories were Education (No. 45) and Business Friendliness (No. 45).
Incentives and Credits include:
Rural Jobs Tax Credit — Qualified employers locating in a rural area and approved for the program are eligible to receive a tax credit (6.25% of the first $16,000 in wages) for up to four consecutive years.
Manufacturers’ Investment Tax Credit equal to 5.125% of the value of qualified equipment and other property used in operations to be applied against compensating, gross receipts or withholding tax. Other limits and conditions apply.
Technology Jobs Tax Credit is available for 5% of qualified research expenditures (10% in rural areas). May be taken against gross receipts tax, compensating tax or state payroll tax, and may be carried forward. An additional 5% may be applied against state income tax if base payroll expenses are increased by at least $75,000 per $1,000,000 of expenditures claimed.
Other Incentives — The Job Training Investment Program (JTIP) provides companies with reimbursement for training costs associated for newly created jobs. Reimbursements typically range from 50%-80% of employee wages and travel expenses, depending on several factors.
Compared to Georgia, New Mexico has:
  • Comparable corporate and lower personal income tax rates.
  • Comparable combined state and local tax burden
  • A more narrow range of incentives.
To summarize, New Mexico is below average for business tax incentives,but if you like a dry desert climate with very cool mountains, you’re in luck!

DaleSig

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