Category: Job Tax Credit


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

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

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

Nebraska 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 Nebraska, and their state economic development professionals gave us some details (Nebraska incentives site click here).
Nebraska offers a small selection of credits and incentives for new and existing businesses.  CNBC ranked Nebraska #11 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey).    
Incentives and Credits include:
The Nebraska Advantage Package for new, expanding, or relocating businesses. Six tiers, varying benefits, must be qualifying business projects. Benefits include income tax, withholding tax, and sales tax reductions, depending on levels of investment and jobs created. Pretty complex process. An application must be submitted before the project begins.

Nebraska Advantage Research and Development Credit — Offers a refundable tax credit for qualified research and development activities undertaken by a business entity for 21 years. The credit is equal to 15 percent of the federal credit allowed under Section 41 of the Internal Revenue Code of 1986 for research and development.  Higher percentage for expenditures involving Nebraska colleges and universities.

Other Incentives
— Local tax abatement, workforce training, and several financing programs, depending on the project.

Compared to Georgia, Nebraska has:
  • Slightly lower corporate and comparable personal income tax rates
  • Comparable combined state and local tax burden
  • A narrower range of incentives
  • Pre-approval required for all incentives
To summarize, Nebraska is below average for business tax incentives in a central Midwest location.

DaleSig

Tax Credits Can Lead to Other Incentives

Many times a known tax credit can lead you to find more incentives for your client! These could include additional income tax credits, payroll tax credits, sales tax exemptions, property tax abatements, and non-tax cost reductions. For example, a manufacturing company utilized Federal and Georgia R&D tax credits for a new manufacturing process. This new manufacturing process will be moved from the client’s research area to their manufacturing area. Incentive activities for this move can potentially include:
  • Assets purchased (i.e., land, buildings and equipment): Georgia Investment Tax Credit, cost segregation study, Section 179, federal and state energy incentives, Georgia sales tax exemption for supplies/energy, and other incentives
  • New employees hired: Georgia Job Tax Credit and Federal Work Opportunity Tax Credit.
  • Existing employees trained: Georgia Retraining Tax Credit.
  • If this move includes a major expansion or new location: other state and local incentives may be available.
  • Other incentives: Some locations have non-tax related incentives such as the Tennessee Valley Authority for electric power cost reduction for employee head count increases (click here).

So remember — if your client is utilizing a tax credit, ask more questions to flesh out the details of the activities related to the tax credit.  And these activities can lead to more incentives today and tomorrow.

JimSig

Minnesota 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 Minnesota, and their state economic development professionals gave us some details (mn.gov incentives site click here).
Minnesota offers a good selection of credits and incentives for new and existing businesses.  CNBC ranked Minnesota #4 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). Rating heavily skewed by quality of life and education points!    
Incentives and Credits include:
Angel Tax Credit — Small businesses engaged in the research or development of qualifying high-technology can qualify for up to $1 million in credits.

Greater Minnesota Business Expansion Tax Credits — Sales tax exemptions of up to 12 years for specified job creation and wage levels.

Research and Development Tax Credit — 10% up to the first $2 million in eligible expenses, 2.5% above $2 million.

Border Cities Enterprise Zones — provides property tax credits, debt financing credit on new construction, sales tax credit on construction equipment and materials, and new or existing employee credits to qualifying businesses in the border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville.

SEED Capital Investment Program — tax incentives for innovative businesses located in the Minnesota border cities of Breckenridge, Dilworth, East Grand Forks, Moorhead, and Ortonville. Investors may receive a 45 percent tax credit on their investment, up to $112,500 per year.

Other Incentives — Emphasis local tax abatement and other financing programs depending on the project.

Compared to Georgia, Minnesota has:
  • Much higher corporate and higher personal income tax rates.
  • Higher combined state and local tax burden
  • A wider range of incentives.
  • Pre-approval required for most incentives
To summarize, Minnesota is above average for business tax incentives in a good Midwestern location.  And don’t forget that “quality of life,” whatever that means!

DaleSig

Oregon 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 Oregon, and their state economic development professionals gave us some details (business oregon site click here).
Oregon offers a substantial and varied collection of credits and incentives for new and existing businesses.  CNBC ranked Oregon #21 in their 2015 America’s Top States for Business survey (Georgia was #5 in the same survey).  Read below and see how many of these could be Above the Line:

Enterprise Zones – In exchange for investing and hiring in an enterprise zone, businesses receive exemption from local property taxes on new plant and equipment for at least three years (but up to five years) in the standard program. In addition, many zones can offer special incentives for investments in qualifying rural facilities or in electronic commerce operations.

Strategic Investment Program – The Strategic Investment Program exempts a portion of very large capital investments from property taxes for 15 years. The program is available statewide.

Construction-in-Process – Unfinished facility improvements may be exempt from local property taxes for up to two years while under construction.

Food Processing Machinery and Equipment (M&E) – For five years after it is newly placed in service, qualified M&E is exempt from property taxes if certified by the Oregon Department of Agriculture.

Electronic Commerce – Investment tax credit equals 25% of the cost incurred by an authorized business for capital assets used in electronic-commerce operations inside one of several enterprise zones.

Qualified Research Activities Credits – Corporate credit for qualified research and basic research conducted each year in Oregon, as a state-level extension to the federal program.

Oregon Investment Advantage – This program helps businesses start or locate new types of operations in a number of Oregon counties by providing an income tax subtraction, potentially eliminating state income tax liabilityon the operations for several years after they begin.

Oregon Business Expansion Program – This is a cash-based forgivable loanequivalent to the estimated increase in personal income tax revenue from new hiring.

Small Manufacturing Business Expansion Program – This is a cash-based forgivable loan for small manufacturing businesses’ expansion projects.

Film & Video Incentives – Rebate on 20% of the production’s Oregon-based goods and services.  Additional cash payment of up to 16.2% of wages paid to production personnel.  Unlike other states’ programs, these incentives are cash-based as opposed to tax credits. This simplifies and speeds up the process.

To summarize, Oregon is above average for business tax incentives in a great Pacific Northwest location.

DaleSig

Pattern Recognition for Tax Credits

Your tax software may be able to help you find patterns in your client’s tax data that could uncover tax credits! During tax season, everyone is busy collecting and reviewing client tax data. After it has been reviewed, this data is entered into the tax software, and the software usually helps guide you through the steps required to file the tax returns.

But before the tax return is finalized, don’t forget to check for potential tax credits. Since tax credits are based on your client’s activities, it may not be immediately apparent, but their tax data could contain key indicators of tax credit qualifying activities.

Here are a few tax categories that could include indicators of potential tax credit activities:
  • Salaries and wages
  • Rents and operating leases
  • Depreciation, Section 179 deductions & bonus depreciation
  • Other deductions such as computer expenses, professional services, consulting, and outside services
  • “Other costs”

Your tax software’s reporting and business analytics capabilities may be able to assist with your analysis of current year and prior years.  For example, look at a 4-year trend of Section 179 items (such as equipment or software). Any slow steady growth, large blips or increases, or unusual trends?  A year-to-year increase of 20% or more may be worth drilling down into the details for further review. If you find something, talk with your client and ask a few questions! What about that employee training (Retraining Tax Credit or training grant program)? Was that large purchase used for manufacturing (Investment tax credits)?

Your client will thank you for recognizing their patterns — and for not being just another “tax return filer” outfit.

JimSig

Indiana 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 Indiana, and their state economic development professionals gave us some details (Indiana EDC site click here).
Indiana offers a decent collection of credits and incentives for new and existing businesses.  CNBC ranked Indiana #13 in their 2015 America’s Top States for Business survey (Georgia was #5 in the same survey).    
Incentives and Credits include:

Economic Development for a Growing Economy Tax Credit (EDGE):

Based on employment, the credit is calculated as a percentage of the expected increased tax withholdings generated from new jobs created by a company.  This credit can be claimed regardless of whether the company has a state income tax liability or not.

Skills Enhancement Fund (SEF):

Designed to help tailor a workforce that meets a company’s needs. The grant reimburses a portion (typically 50%) of eligible training costs over a period of two full calendar years from the commencement of the project. Eligible expenses include everything except: Orientation Related To New Hires and Federally Mandated Safety Training (OSHA).

Hoosier Business Investment Tax Credit (HBI):

Corporate income tax credit calculated as a percentage of the eligible capital investment needed to support the project. Eligible capital investment includes new machinery and building costs associated with the project. In order to claim this credit, a company must have a state corporate income tax liability.

Headquarters Relocation Tax Credit (HRTC):

HRTC provides a tax credit to corporations that relocate their headquarters to Indiana. The credit equals half the moving costs and is assessed against the corporation’s state tax liability.

Industrial Recovery Tax Credit:

Provides an incentive for companies to invest in facilities requiring significant rehabilitation or remodeling expense. The tax credit amount depends on the age of the facility being rehabilitated. Eligible sites must have been in service at least 15 years, with at least 5,000 interior square meters of space that has been at least 75% percent vacant for one year or more.

Research & Development Incentives:

Two tax incentives targeted at encouraging investments in research and development. Taxpayers may receive a credit against their Indiana state income tax liability calculated as a percentage of qualified research expenses. In addition, taxpayers may be refunded sales tax paid on purchases of qualified research and development equipment.
Compared to Georgia, Indiana has:
  • Slightly higher corporate but far lower personal income tax rates.
  • Higher combined state and local tax burden
  • A narrower range of incentives.
  • Pre-approval required for all incentives
To summarize, Indiana is about average for business tax incentives in a central Midwest location.

DaleSig

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

“Professional” Tax Credits!

Did you know that your professional service firm clients could get Georgia tax credits?  Here’s why — more than ever, professional service firms are continually updating and adding new technologies. Your clients that provide Advertising, Architectural, Consulting, Accounting (including yours!), Engineering, Insurance Agency, Law, Marketing, Public Relations, Software Development, Training, Wealth Management, and others, could be eligible:
  • Job Tax Credits – For firms adding employees and located in Opportunity Zones, Military Zones, or Tier 1/Lower 40 counties.
  • Retraining Tax Credits – For training existing employees on new technologies that include new software, upgrades, additional modules, customized systems and business process changes.
 The following areas offer great potential for Retraining Tax Credits:
  • Business management systems – main business systems for operating the firm, such as Deltek Vision, SAGE, Aderant, Epic, or other software, including annual updates
  • Customer relationship management systems (CRM) – for business development, lead generation, prospective client tracking, and new client intake such as Salesforce.com
  • Document management systems – for paperless operations and workflow
  • Specialized systems – CAD, design, project management, engineering analysis, tax, audit, case management, time & material tracking, portfolio analysis and other software
  • Lean Office – similar to Lean Manufacturing initiatives for quality, cost and customer service improvements.
  • Marketing systems – website, social media, LinkedIn, Twitter and other e-commerce systems

Reach out to your professional service firm clients to let them know about the potential $$ waiting for them!

JimSig

Maine 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 Maine, and their state economic development professionals gave us some details (Maine Economic and Community Development site click here).
Maine offers a good mix of tax credits and reimbursements for new and existing businesses, but other factors hurt their overall competitive position for business.  CNBC ranked Maine #44 in their 2015 America’s Top States for Business survey (Georgia was #5 in the same survey).    
Credits and reimbursements include:
Employment Tax Increment Financing — new or growing Maine businesses can save up to 80% of withholding taxes for new employees for as long as 10 years depending on location and industry.

Pine Tree Development Zone — For businesses involved in Biotechnology, Aquaculture and Marine Technology, Composite Materials Technology, Environmental Technology, Advanced Technologies for Forestry and Agriculture, Manufacturing and Precision Manufacturing, Information Technology, and Financial Services.  Significant corporate income tax credits for hiring new employees.

Business Equipment Tax Relief — 100% tax exemption from personal property taxes on eligible business equipment.

Technology Tax Credits — allow companies involved in manufacturing and certain research-driven activities to take advantage of significant credits and tax exemptions for everything from electricity cost to specialized equipment purchases and other expenses involved in R & D.

Compared to Georgia, Maine has:
  • Higher corporate and personal income tax rates.
  • A narrower range of incentives.
  • Pre-approvals required for all incentives
To summarize, Maine is below average for business tax incentives, but their upper Eastern Seaboard location could provide advantages, depending on logistical needs.
Do any of your clients have Maine connections?  If so, you will need to start collecting information and planning early!

DaleSig

Hungry for Tax Credits?

Georgia offers several tax credits for poultry, pork, sausage, vegetable, pecan, peanuts, Ag business and other food processors. Their activities that may qualify for the following Georgia tax credits:
  • Job Tax Credits – For distribution, manufacturing, or wholesale operations, or if the company has locations in Opportunity Zones, Military Zones, or Tier 1/Lower 40 counties.
  • Investment Tax Credits – Qualified manufacturing operations may benefit from capital expenditure and operating lease investments for investment tax credits, which can include land, buildings, equipment and packing sheds.
  • Retraining Tax Credits – For training existing employees on new technologies that include new software, upgrades, additional modules, customized systems and business process changes.
Here are more details for those Retraining Tax Credits:
  • Enterprise Resource Planning systems (ERP) – order entry, billing, accounts receivable, and human resources such as Microsoft Dynamics, Just Food ERP, Sage software, Vicinity Manufacturing software and SAP
  • Customer Relationship Management systems (CRM) – sales management, lead tracking, customer service and marketing, such as Salesforce.com and other systems
  • Warehouse management systems (WMS) – order picking, replenishment, inventory management, and shipping, such as JDA software, Foxfire, and Ramp Systems
  • Equipment – equipment for cleaning, cutting, cooking, packaging, bailing and other processes
  • Programs and initiatives – SQF 2000, ISO-9000, HAACP, HARPC, GMP and others
  • LEAN Manufacturing and workflow changes – business process and workflow changes for quality, costs, on-time delivery and other initiatives.

Help your food processor clients satisfy their hunger for tax credits. Reach out and let them know about the potential $$ waiting for them!

JimSig

Delaware 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 Delaware. Some state economic development professionals outlined some of their details (Delaware Economic Development Office site click here).
Delaware offers several tax credits, grants and loan programs along with technical assistance programs that are available to both new and existing businesses.  CNBC ranked Delaware #38 for the cost of doing business in their 2014 America’s Top States for Business survey (Georgia was #1 in the same survey).    
Incentives and credits include:

Job Creation Tax Credit: Allows for eligible businesses engaged in qualified activities to receive tax credits against corporate or personal income taxes, gross receipts tax, and public utility tax. The business must hire five or more qualified employees, make an investment of at least $200,000 ($40,000 per qualified employee) and operate in a qualified facility.

Research and Development Tax Credit: Qualified businesses with research and development expenses are eligible for Delaware research and development tax credits for the taxable year up to 50 percent of the Delaware income tax liability.  Amount doubled for smaller businesses.

Clean Energy Technology Device Manufacturers’ Tax Credit: Applicable to clean energy technology device manufacturers of solar power devices, fuel cells, wind power devices and geothermal power devices. Those eligible can qualify for tax credits of $750 for each qualified employee.

Business Finder’s Fee Tax Credit: Incentivizes existing Delaware businesses to leverage relationships with suppliers, customers and other businesses to relocate to Delaware. Both the existing Delaware business and new relocating business are eligible for tax credits.  $500 per job for three years.

Other incentives include Veterans Opportunity Credits, Industrial Public Utility Tax Rebates, and a variety of loan programs, grant programs, workforce training grants, and property tax incentives.

Compared to Georgia, Delaware has:
  • Higher corporate and personal income tax rates.
  • A narrower range of incentives.
  • Pre-approvals required for many incentives
To summarize, Delaware is not as competitive as Georgia for business tax incentives.  But their Eastern Seaboard location could provide advantages, depending on logistical needs.
Do any of your clients have Delaware connections?  If so, get busy collecting information and planning early to maximize their incentive potential!

DaleSig