• Training development: pre-planning, training development time and related activities are major cost items that may count. This includes some costs of 3rd party vendors, consultants and in-house teams.
• Training location: Formal classroom training is not required. Many companies have leveraged web-based video training to allow employees to train on their own. In addition, in-house teams may travel to vendor locations and return to do internal train-the-trainer sessions for employees.
• Costs that are not eligible for the retraining tax credit include training space and employee-paid training.

Reach out to your clients, help them plan their training needs, and leverage the Retraining Tax Credit!

• HB 868 was signed as expected and makes welcome, albeit modest improvements to the Job, Quality Jobs, R&D, and Port Bonus credits.
• The governor signed HB 386 at the annual Georgia Manufacturing Appreciation Week luncheon (click here). This bill eliminates the state sales tax on energy used in manufacturing, mining, and agriculture.
• We heard from statewide economic developers recently that the tax credits have really helped attract new business to Georgia as well as helping to strengthen existing businesses.
• We also know that there are plans to strengthen the business-related tax credits in the 2013 session.

• Operating entity: where is the company’s operation? If it is a manufacturing company, which tax entity buys the raw materials and pays the employees and other related costs? For example, a real estate entity that leases land and buildings to a manufacturing entity cannot utilize the investment tax credit because it does not manufacture (even though both entities are owned by the same equity owners).
• C corporations: Georgia Form 600 allows the tax credits to be assigned to another “affiliated entity.” This can only be done in the current year and NOT amended returns. Assigning tax credits does not apply to pass-through entities that file Form 600S or 700.
• Tax structure conversion (that is, change tax structure, but keep the same EIN)

1. From C to S: tax credits carried forward by a C corporation can be distributed to S corporation equity owners via K-1 after the conversion.
2. From S to C: tax credits carried forward by equity owners cannot be assigned to the C corporation after the conversion.

• Blockers, roll-ups, tuck-ins, investment vehicles, and other complexities: check with Pamela Goshay at DOR (click here).

HB 868 (click here) –  With the House agreeing to Senate changes, legislation modifying job incentives and tax credit programs now heads to Governor Deal for his signature.

• For the Job Tax Credits, expanded eligible industries to include biomedical manufacturing and alternative energy products.  Also reduced job creation threshold in Tier 1 counties from 5 to 2.
• For Quality Jobs Tax Credits, expanded use to include military contractors.
• For R&D Tax Credits, allows all companies that qualify for the credit to use the payroll withholding provision.
• For the Port Tax Credit Bonus, allows the Bonus to be used in Less Developed Census Tracts, Military Zones and Opportunity Zones.

HB 386 (click here) – Although not directly affecting tax credits, another bill included some more goals of the Governor’s Competitiveness Initiative:

• Elimination of the state sales tax on energy used for manufacturing, mining, and agriculture
• Discretion in granting sales tax exemptions for construction of regionally significant projects
• Clarification of Georgia’s current on-line sales tax laws to include purchases from out-of-state companies, leveling the playing field for Georgia-based businesses

So after all the meetings, committees, speeches, lobbying, arm-twisting, and smoke-generation — NO FIRE!  We end up with a set of pretty minor tweaks to Georgia’s economic development policies.  But your clients can feel some relief — another session has ended with no harm done!

HIPAA 5010: Was March 31,2012, now delayed until June 30, 2012 (click here)

ICD-10: Was October 1, 2013, now delayed until ??? “Health and Human Services will announce a new compliance date moving forward.” (click here)

Meaningful Use: CMS and ONC intends to finalize the Stage 2 rules by midyear 2012. Stage 2 will begin in 2014 (click here )

• Job Tax Credit: Must be a Business Enterprise (Manufacturing, Telecommunications, Distribution, R&D, Processing, Tourism, Broadcasting, Services to elderly/disabled). If more than one business activity is conducted at your client’s location(s), only those jobs engaged in a qualifying activity will be eligible. But the jobs’ activities can help you find a hidden business enterprise inside (click here for a listing of Job Tax Credit qualifying NAICS codes).

• Investment Tax Credit: Must have manufacturing or telecommunications activity. The same principle applies — that is, your client may have multiple business activities at its locations (click here for a listing of Investment Tax Credit qualifying NAICS codes).

Here’s an example of a retail establishment that on the surface can only use the Retraining Tax Credit.  Their NAICS is 453998 – All Other Miscellaneous Store Retailers. However, behind the retail front they also engage in a manufacturing activity, NAICS 311800 – Bakeries and Tortilla Manufacturing. This manufacturing activity makes them eligible for multiple tax credits – Retraining, Job & Investment Tax Credits.

So if you have a new client, or if you need to energize your relationship with an old one, dig into their business activities to determine if their NAICS code is correct.  Or find one that was hidden in plain sight!  Ask your clients a few more questions during this tax season, and you may flesh out $$ today and in the future!

HB 868 - Representative Doug Collins of the 27th (Governor’s floor leader) and others amends Article 2 of Chapter 7 of Title 48 of OCGA relating to “imposition, computation, and exemptions from state income tax, so as to provide for the comprehensive revision of income tax credits for business enterprises located in less developed areas, designated by tiers, for business enterprises located in less developed areas consisting of contiguous census tracts, for existing manufacturing and telecommunications facilities located in certain tier counties, and for establishing new quality jobs or relocation quality jobs; and for other purposes.”

But this bill doesn’t represent all of the GCI recommendations:  thetwists and turns of the Ga General Assembly continue. The bill was voted out of subcommittee and slated for full Ways and Means as we write this. No revisions so far, which could come in the Senate.  The bill has to get passed by the full house by Day 30 to remain alive.

The other dynamic affecting passage of the bill in the House is a percolating effort to resurrect some of the Tax Council’s recommendations from last year. All things with fiscal impact to the state are related! So perhaps some clarity soon?  Certainly not a linear process around here.

The other GCI reccomendations are reportedly to be a part if a larger bill to be seen sometime this week. So look out for a complex procedureinvolving “bill substitution,” “vehicles,” “shells,” “content stripping,” and “new content!”  New content may involve things like the removal of sales tax on energy for manufacturers and some “untold goodies.”

Stay tuned!

• John Fox, CEO of Emory Healthcare: The business of healthcare isquickly moving to an outcome based pay for performance model, away from fees based on procedures. The new physicians entering the work force are looking for work-life balance, work environment and stability as key factors in their job search. He emphasized thatwe can’t continue with the current “Tower of Babel” approach of multiple EMRs (electronic medical records systems) that can’t talk with each other. He said that integration and cooperation will drive down cost by increasing patient quality and increasing efficiencies.

• Physician practices that are merging with other practices or selling to hospitals: There were several sessions about selling a practice and business valuation. The key drivers for added valuation (that is, above the classical EBITDA multiple) are how tightly integrated are the practice’s workflows and EMR, how well is patient quality tracked, and what other services are performed (such as physical therapy, CT, and other related services).

This was a great conference to hear speakers, meet healthcare CPAs, and stay abreast of the rapidly changing healthcare environment. We hope to see you there next year!