Category: Training Incentives


State of Washington 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 the state of Washington, and their state economic development professionals gave us some details (Choose Washington incentives site click here).
For starters — CNBC ranked Washington #6 in their 2016 America’s Top States for Business survey (Georgia was #8 in the same survey). Pretty impressive!  In that same survey, Washington is ranked #1 for Technology and Innovation.
The State of Washington does not have a corporate or individual income tax, but it does have a business and occupation (B&O) tax measured on the value of products, gross proceeds, or gross income of the business.

Washington offers a WIDE range of incentives including B&O tax credits, Public Utility tax credits, and Sales and Use tax credits:

Compared to Georgia, Washington has:
  • NO corporate and NO personal income taxes, but
  • Corporate business and occupation B&O (gross receipts) tax
  • A far wider range of incentives
  • Pre-approval required for some but definitely not all incentives
To summarize, Washington is extremely competitive with other states for economic development incentives, plus it is truly a beautiful place to live and do business.

DaleSig

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

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

Logistics and Trucking Tax Credits

Georgia’s growing logistics, trucking and third party logistics (3PL) companies are making a big impact on the economy due to Georgia’s location, ports, highways and airports. Fortunately, the State of Georgia offers key tax credits to assist these companies with their growth and activities. These activities could qualify for the following Georgia tax credits:

  • Job Tax Credits – If the company has locations in Opportunity Zones, Military Zones, or Tier 1/Lower 40 counties. There may be additional job tax credits if the company is involved with distribution, wholesale or manufacturing.
  • 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:

  1. Enterprise management systems – order entry, billing, accounts receivable, and human resources such as Microsoft Dynamics, Sage software and SAP
  2. Warehouse management systems – order picking, replenishment, inventory management, and shipping, such as JDA software, Foxfire, and Ramp Systems
  3. Transportation management systems – booking, dispatch, and load management such as McCleod software, CarrierWeb, Profit Tools and Fleetmatics
  4. Hours of Service tracking and management systems such as Peoplenet
  5. On-board vehicle tracking, messaging, and log management systemssuch as Bigroad
  6. Fleet maintenance, tractor service systems and procedures such as Squarerigger

So find out what your logistics, trucking, and 3PL clients are planning next.  Now is a great time to reach out to your existing or prospective clients in these industries to discuss tax credits!

JimSig

Tax Credits for the Deal

Have you seen an increase lately in buyouts, mergers, and acquisitions in your market?  You may have been involved in deals with private equity groups buying local companies, hospitals buying physician practices, etc.

The buyout of a client can create uncertainty and turmoil in your business, as you well know.  But even in this environment, there are ways you can strengthen and build a client relationship, even if they will no longer be your client.

Often in the time leading up to a business sale, the buyer’s integration team works with the seller’s employees to install the buyer’s software, business processes and workflow.  Since the buyer doesn’t want to disrupt the seller’s business during transition, this installation may be done prior to the “official” sale date (when the seller’s employees are moved to the buyer’s payroll). During this time period, the seller’s employees are still employed by the seller. The seller is heavily involved with the training development and employee training. Luckily, these activities may qualify for a training tax credit or other incentive!  Depending on your client’s location, either the seller or the buyer could get a huge training or retraining state tax credit.

By letting your clients know about these tax credit opportunities, you will maintain your relationships with them and may be able to leverage new relationships with the buyer for additional business. Who knows, in three years, your main contact may leave the company and start another company (and engage you again).  Either way, that would be a good Deal!

 

JimSig

Catch Up Means Tax Credits

We are seeing many companies cautiously coming out of the recession. For example, architects, engineers and construction firms are finally getting new business. As things pick up, they are finding that their software (such as business-wide systems and project management, document management and CAD software) is out of date or no longer supported. In addition, their customers’ and suppliers’ requirements for electronic interfaces (for example, paperless contracts) and e-commerce are driving changes.Your customers are now having to play the “catch up” game to either get current on their installed versions or even buy new versions. These catch up activities may qualify for Retraining Tax Credits in Georgia since many of the company’s employees have to be retrained on the systems. Other states may offer incentives for these activities as well.

So get out there and identify those client activities that happened in 2013 or planned for 2014 that qualify for tax credits.  Your clients will appreciate your proactive followup!

JimSig

Healthcare: ICD-10 Update

It was recently announced that the ICD-10 mandate has been moved one year to Oct. 1, 2015. Your healthcare clients should use this delay to continue staff education efforts, to improve their clinical documentation processes, and to build a strong foundation for process improvement and downstream strategic initiatives (many of these activities may qualify for Retraining Tax Credits in Georgia). Adoption of ICD-10 remains a question of “when,” not “if.” The Retraining Tax Credit can provide $$ to help offset the costs, time and effort for ICD-10 (for more information click here).

Mississippi 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 Mississippi. I was able to attend the Mississippi Economic Development Council (MEDC) 2014 Winter Conference and learned some of their details (MEDC site clickhere).

Mississippi’s main tax credits and incentives cover new capital investments, new jobs, infrastructure, energy, R&D, and workforce training.  Local incentives can include property tax abatement.  Incentives and credits are also available to a wide range of targeted industries that include manufacturing, warehousing and distribution, aerospace, data centers, health care-related, broadband technology, motion picture production, headquarters facilities, and others.

Mississippi’s credits and incentives range in complexity and are typically more generous than other states (see Mississippi Development Authority site here)

  • Advantage Jobs Program provides for a rebate of a percentage of payroll for up to 10 years.
  • Jobs Tax Credits are tied to threshold levels determined by a county tier system.  These credits can can offset 50% of state income taxes, are available for a five year period, and have carryforwards up to 5 years.
  • Manufacturing Investment Tax Credits for existing firms offset up to 50% of state tax liability with a $1 million investment minimum, worth up to 5% of the investment.
  • Headquarters Tax Credits for relocating or expanding corporate headquarters.  Minimum 20 new jobs, can be carried forward up to 5 years.  Amount awarded depends on wage levels of new jobs up to $2,000 per position.
  • Skills Training Tax Credits available for businesses that provide training to employees and can offset up to 50% of state tax liability and carried forward up to 5 years.
  • Other incentives include tax credits for Clean Energy facilities and R&D Skills new positions, among others.
  • Workforce Training and Job Assistance Programs offer comprehensive workforce training, job recruiting, and many other programs (clickhere and here).
  • Local property and sales tax abatements are very generous and widely available, negotiated locally.

Compared to Georgia, Mississippi has:

  • A wider range of incentive and credits.
  • A wider range of companies eligible for most credits.   
  • A more complex assortment of qualifying activities and $$ incentive amounts.
  • Larger incentives that must be pre-approved and carefully planned.
  • Several other credits that can be taken after the fact and on amended tax returns.

To summarize, Mississippi is very competitive for new and expanding businesses, and on a per-capita basis attracts more new industry than most other states.

Do any of your clients have Mississippi connections?  If so, Mississippi economic developers will be very helpful in finding incentives.

DaleSig