This Tax season is getting started with the annual goat rodeo of collecting and reviewing client data. You have probably already mailed, emailed, called, and reminded your clients that “it’s that time again.” Well, so that you won’t sound like a dentist (as in, “this won’t hurt too much”), make this a more cheerful experience by asking your clients about their activities that may qualify for tax credits (click here for the Alpharesults Tax Credit Summary).
The Georgia Department of Community Affairs (DCA) has just released the 2012 Tier Rankings (click here) used for Job and Investment Credits.
2008 and 2010 are almost gone for amending tax returns for the Retraining and Job tax credits.
Year-end planning for your clients (and prospective clients) is a great time to discuss these prior year opportunities.
You will want to include a review of the following for 2008 and 2010:
This is a quick way to strengthen your business advisory role with your clients. If you find tax credit potential $$, your client will thank you for the nice $$ check they receive from DOR!
I recently spoke with Guy Griswold, President of Blue Ridge Strategies, a Georgia-based public affairs firm (check them out here). We are working with his firm on legislative areas that impact tax credits, and he gave me a great synopsis of the GCI and progress to date:
Governor Deal chartered the Georgia Competitiveness Initiative (GCI) as a joint effort of the Georgia Department of Economic Development and the Georgia Chamber of Commerce.
GCI’s mission is to bring state and local governments and the business community together to develop a long-term strategy for economic development and business prosperity for our state.
GCI has completed its circuit of 12 listening sessions across the state, with its last meeting held on August 31st in West Point.
We have worked throughout the process to ensure preservation of Retraining and Jobs Tax Credits, and we will continue to promote the benefits that these credits have brought Georgia companies.
The Carl Vinson Institute of Government (part of UGA) is compiling all of the input and feedback from the 12 listening sessions for use by the Initiative Committee members as they begin developing their recommendations, which are expected to be released by the beginning of 2012 in concert with the start of Georgia’s legislative session.
If you have specific examples of how tax credits have helped your business or the business of your clients grow, we would like to include those in our discussions with committee members.
Thanks, Guy!
Here is the rule for 2009, 2010 and 2011: your clients can only amend up to one year after the return was due or extended.
Suggestions:
The number of tax credit Opportunity Zones has been increased by DCA (click here). It was announced recently that the City of Atlanta has been approved for some new zones.
This tax credit can get complex, since the local Opportunity Zone contact person, DCA, and DOR have to be in the loop for approval. If the tax credit is going to be utilized against payroll withholding taxes, another level of complexity is added. These tax credit $$ can really add up – but proceed with caution!
Now that tax season is here, the fun begins. Clients are probably dumping their tax documents (electronically and physically) at your office and asking when their tax returns will be completed. As you dig through all of the details, you discover some changes the client forgot to mention that will impact their taxes.
We had a similar situation recently. The client’s tax structure changed – they converted from a C corporation to an ESOP (100% S corporation), so they no longer pay income taxes. The client didn’t tell us about this change. Meanwhile, the client spent time and resources to collect their state tax credit documentation. As usual, we helped them get the tax credit certification and delivered it to their CPA. The CPA didn’t know what was going on since he had already talked with the client about the change. The client forgot that paying no taxes meant that they could not use tax credits.
If your clients have utilized tax credits in the past, you need to help them understand (and beg for no surprises!) their potential to utilize the tax credits in the future. Major changes in tax (such as tax structure, future NOLs, equity ownership and other items) can have a major impact on the ability to use tax credits (and save your client time and resources).
The 2011 Job Tax Credit tier rankings have been published by the Department of Community Affairs / DCA (click here ).
If your client’s tier ranking or less developed census tract listing changed for the worse, make sure you submit the Notice Of Intent no later than February 15, 2011 (click here).
Going forward, remember to advise your clients who are adding jobs to be aware of the threshold levels so they add at least the minimum number of jobs to qualify for the credit.
An unfortunate part of business success is having an income tax liability. And despite your best efforts of tax planning and advice, your clients may still have to pay taxes. But that’s good, because tax liability is an indication of revenues, profits and business success, right?
We heard an interesting story about a a highly successful multi-million dollar a year business owned by a man with an eighth grade education. One of our friends heard him say, “I just love to pay taxes.”
The business owner went on to explain that he was perfectly happy to pay his obligations, because he knew he had already done everything he could legally and morally to keep his tax payments to a minimum.
Got any clients like that? Maybe not very many, but your year-end and 2011 tax planning is a great time to discuss opportunities to reduce taxes with all of your clients.
Some ideas to explore with your clients include:
Get your clients talking about their business (including prior years and plans for the future). There may be hidden gems of potential tax $$ savings that you can uncover for your clients!
There has been a lot of confusion about the changes made in the 2009 tax credit laws. One big item that many of you have asked about involves the “look back” changes affecting when you can amend prior year returns for Retraining (RTC) and Job (JTC) tax credits. The period was reduced from 3 years to one year.
The key driver is the activity and the tax year when it occurred.
The activity could be:
The tax year in which the activity occurred will determine how long the tax return can be amended for RTC and JTC purposes:
When things slow down after tax season and year-end tax planning begins, make sure you talk with your clients about 2009 RTC and JTC activities — before the tax credit $$ are gone!
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