Category: Georgia


Georgia Port Activity Tax Credit Overview

The Georgia Port Activity Tax Credit (Credit Type Code 114) is a tax credit for a company that increases shipments through a Georgia port(such as Savannah or Brunswick). The Georgia Department of Revenue (DOR) administers the program.
Key points to remember:
  • The company must hold title to the item (that is, their name must be on the bill of lading) when it is imported or exported through the port).
  • The tax credit provides a bonus on top of the Job Tax Credit or the Investment Tax Credit.
  • Right now you have up to five years of potential benefits to consider: three prior years, the current year, and plans for next year.

A situation that could qualify, for example, could be a European based carpet yarn manufacturer begins shipping its semi-finished yarn to their new plant in Dalton, GA to be finished for their customers.

In summary, the Port Activity Tax Credit can be an “icing on the cake” bonus, but it may be confusing to determine if qualifications have been met. Your clients may be planning expansions to use Georgia ports and may need your help in identifying their potential net after tax benefit of the credit. For details, click here.

Thanks!
JimSig

2018 Georgia Job and Investment Tax Credit Tiers Available

Time-critical 2018 Job Tax Credit ranking details have been released by the Georgia Department of Community Affairs (click here).
Please 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. 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 no later than March 31, 2018 (to download form, click here).

So remember to review your clients’ plans for 2018. Job Tax Credits may be available if they plan to increase employment levels, open new or change locations in Georgia, or buy another company.  And it all depends on their location, location, location!

DaleSig

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

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

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

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

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

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

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

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

Tax Incentives “Below the Line”

Tax incentives that impact a company’s income taxes are considered “below the line.”  They are not part of the EBITDA calculation (Earnings Before Interest, Taxes, Depreciation, and Amortization) and only benefit income tax payers.  But tax payers may be the company itself (such as a C-Corp) or individual shareholders (pass-through entities).
Many tax incentives for companies are based on activities that the company has already done or plans to do.  Depending on the type of company and location, a company may be able to benefit from the following Federal and State tax incentives and related activities:

Federal

  • Research and Development Tax Credits — new products or new processes
  • Work Opportunity Tax Credits (WOTC) — hire new employees that have specific backgrounds
  • Section 179-D Deductions — energy incentives for buildings
  • Cost Segregation Studies — reclassify building costs of new construction

State (Georgia Example)

  • Research and Development Tax Credits — new products or new processes
  • Retraining Tax Credits — train existing employees
  • Job Tax Credits — new job additions
  • Investment Tax Credits — new land, buildings, and equipment

If your clients are paying income taxes, remember to review their current and planned activities to find their “below the line” tax incentives — they will thank you for helping them save money!

JimSig

Tax Incentives “Above the Line”

EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a critical measure of cash flow for many companies. Basically it is revenue less operating expenses.  Expenses considered “above the line” typically include operating, general and administrative, and selling expenses. They also include many taxes such as payroll withholding taxsales and use taxreal and personal property tax, government business license fees, and other local taxes. Note that income tax is not part of the EBITDA calculation and is not an “above the line” expense.
There are many state and local government taxes that may impact these expenses. You can help your clients increase their EBITDA by reviewing tax incentives and savings in the following areas:
  • Tax credits & withholding taxes – Instead of using tax credits against income taxes, some tax credits can be utilized against Georgia payroll withholding taxes. This includes the R&D credit, clean energy and some of the job tax credits (click here for details).
  • Real and personal property tax – Review accumulated depreciation schedules and business personal property tax returns for items no longer owned by the company. Also review for potential business inventory and freeport exemptions (click here for details).
  • Sales and use tax – Are all of the sales tax exemption certificates on file?  What about sales tax exemptions for energy used in manufacturing? (click here for details).
  • Georgia Enterprise Zone – Is the company moving to or expanding in a designed Georgia Enterprise Zone? This incentive may include local property tax exemptions and reductions in occupation taxes, regulatory fees, or local fees (click here for details).

So get started helping your clients find their “above the line” tax incentives — they will thank you for helping them save money AND increase EBITDA!

JimSig

2016 Annual Job Tax Credit Rankings

The 2016 Job Tax Credit ranking details have been released by the Georgia Department of Community Affairs (click here). Several things to keep in mind for your clients:
  • 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.
  • Notice Of Intent For Georgia Jobs Tax Credit can be filed to maintain your client’s tier, ranking, Military Zone, or Less Developed Census Tract designation for 3 years – the form must be filed by Feb. 15, 2016 (click here).

So make sure to review your clients’ plans for 2016. 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

Georgia DOR Session

We attended the annual Institute for Professionals in Taxation (IPT) Georgia DOR One day session in November. There has been several updates and changes at DOR. The following is an overview:
  • Lynne Riley, new DOR Commissioner: Her CPA background will help with tax policy and regulation.
  • Staci Guest, Chief Tax Officer: In this new position, she is handling many of the tasks previously done by Ed Many.
  • Ronald Johnson, Jr, Director of Taxpayer Services (his dad also worked at DOR): Introduced special contact paths for CPAs and tax preparers: revenue.incometaxcpa@dor.ga.gov and 404-417-2395
  • Tax Tribunal Judge Larry O’Neal: Reported on this lower cost & quicker way to dispute tax issues.  Most of the 3,000 cases are individual income tax issues.
  • John Foster, Income Tax Policy Manager:
    • The film tax credits are undergoing more scrutiny due to higher $ volume. Due to the large backlog of approvals and audits by the state, DOR employees are being added to this area.
    • There were several tax credit changes that will start in 2016. These changes include the Conservation Tax Credit ending in 2016 (HB 464) and the Historic Building Tax Credit adding a new job creation bonus (HB 308) (Click here ).
    • 2015 income tax forms are being changed to better administer tax credits. For example, pass-through entities (forms 600S & 700) will list each shareholder and tax credit amount. C corporations and individuals (forms 600 and 500) will list tax credits used and amount to be carried forward.
  • Information Technology: DOR’s new Integrated Tax System (ITS) is leveraging technology to streamline processes, strengthen compliance and provide better customer service. The Georgia Tax Center (GTC) is will be adding income tax and tax credits capabilities soon (click here). There will be a new Business Credit Manager who will handle submitting tax credits for pre-approval (such as the private school tax credit). Finally, there is a new app for your smart phone called “myGATax.”

If you haven’t already done so, NOW is a great time to reach out to your clients to let them know about the tax credit $$ waiting for them!

JimSig