Category: Quality Jobs Tax Credit

Deferred Tax Assets & Credits

With the economy recovering in some areas, companies are starting to re-invest in their operations. These investments (such as software upgrades and head count increases) may qualify for state tax credits. Unfortunately, some companies may not have the income tax liability capacities for these tax credits in the near term. But in many cases, state tax credits earned can be carried forward (up to 10 years) and may show up as Deferred Tax Assets on the balance sheet.

Depending on a company’s tax structure, there may be benefits to these carried forward tax credits:

  • C Corporation: the tax credits will increase the company’s assets on the balance sheet. This will be beneficial to investors and bankers that consider assets for valuation purposes. In addition, acquiring companies may be able to leverage these tax credits in the future.
  • Pass-through (such as S Corporation , LLC, LLP, and others): individual equity participants could benefit from personal “deferred tax assets” that could be utilized to off-set future income tax liabilities (i.e., spouse income increases, their business is sold, and other items). Include this in discussions with the client’s wealth management team.

So remember to reach out to your clients to discuss their company and personal asset planning. A deferred tax credit today may cover a tax liability tomorrow!


Job Tax Credit Proposed Rules

Georgia DOR will be holding three tax credit-related hearings in August:

  • August 2, 10:00 AM — Proposed Amendment to Rule 560-7-8-.42 “Tax Credit for Qualified Research Expenses.”  Reflects significant changes enacted in the 2012 Session and provides detailed guidance for your clients seeking credits for qualified research expenses.
  • August 9, 10:00 AM — Proposed Amendment to Rule 560-7-8-.51 “Quality Jobs Tax Credit.”  Explains and clarifies changes enacted in 2012 Session. Definitely check this out for your clients with job increases of 50 or more.
  • August 13, 10:00 AM — Proposed Amendment to Rule 560-7-8-.36 “Job Tax Credit Description and Definitions.”  Clarifies 2012 change of Tier 1 threshold from 5 to 2 jobs, increases Withholding Credit DOR review period from 90 to 120 days.  Check this out especially for your clients with small increases (2 or more jobs!) in Tier 1 counties.

All hearings will be held at DOR Headquarters, 1800 Century Blvd. NE, Atlanta, GA  30345.  Click here for link to notices.