Oklahoma 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 Oklahoma. I was able to speak with some Oklahoma economic development professionals and learned some of their details (Oklahoma Dept. of Commerce site click here).

Oklahoma’s main tax credits and incentives are meant to encourage new jobs and investment within the state.  Incentives and credits are available to a wide range of industries that include manufacturing, distribution, logistics, information technology, and others.

Oklahoma’s credits and incentives range in complexity and are typically on par with other states.

Oklahoma’s incentives cover a wide range of income, sales, property, and energy taxes as well as grants and awards.

Quality Jobs Program – provides qualifying businesses creating quality jobs a special cash-back incentive to locate or expand in Oklahoma.

Investment/New Jobs Tax Credit Package – primarily for manufacturers, provides a five-year tax credit for investments or new jobs.

Quality Jobs + Investment Tax Credits – for large manufacturing projects

21st Century Quality Jobs – targets high-wage jobs in knowledge-based service industries.  Good thing we’re in the 21st century!

Small Employer Quality Jobs – provides quarterly incentive payments to a qualifying small employer (90 employees or less) up to 5% of new taxable payroll for up to 7 years. Qualifying companies must also attain 75% out of state sales and pay 110% of average county wages.

Training for Industry Program (TIP) – no-cost/low-cost training for new or growing companies that create jobs.  Similar to other states.

Five-Year Ad Valorem Tax Exemption – for manufacturing, research and development, warehouse and distribution, certain computer/data processing services, wind power, refineries, and aircraft repair.

Other incentives include sales tax exemptions for manufacturers, freeport inventory benefits, industrial access road assistance, foreign trade zones, and a variety of state and local financing programs

Compared to Georgia, Oklahoma has:

  • A similar range of incentive and credits.
  • A narrower range of companies eligible for credits.
  • More limited qualifying activities and $$ incentive amounts.
  • Most incentives must be pre-approved and carefully planned.

To summarize, Oklahoma is competitive with surrounding states.

Do any of your clients have Oklahoma connections?  If so, check out Oklahoma’s opportunities, and everything will be OK!


North Carolina 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 North Carolina, and we spoke with several North Carolina local and state-level economic developers.  What we found was quite surprising.

North Carolina’s main economic development tax credits covering new capital investments and new jobs ended 12/31/13 (!!!).  The legislature decided to lower overall business and personal tax rates and simplify the overall state tax environment as their main economic development strategy.

As of 1/1/14, North Carolina’s credits and incentives are less complicated than many states, but are now far less generous. 

  • One North Carolina Fund: Potential for discretionary grants. It is funded in part by state government and matched locally (county/city). It requires increased headcount (for new or existing businesses) and at least $3 million in capital investment (land, building, or equipment). Click here for more info.
  • Customized Training Program:  no cost to company, provided by local community college (click here).
  • Other incentives include a tax credit for Research and Development, one for Interactive Digital projects, and an Incumbent Workforce Development Program Grant up to $40K cap per company (clickhere).

Compared to Georgia, North Carolina has:

  • A far narrower range of targeted incentives and credits.
  • A narrower range of companies eligible for incentives.    
  • A simple approach to determining company qualifying activities and $$ incentive amounts, what few there are.

To summarize, North Carolina is making a bold bet that lower rates and a simpler tax structure are more effective than credits and incentives for promoting the state’s economic development.

Economic developers and policymakers across the nation will be watching how this approach turns out.  We’ll keep you posted!


ACA and Net After Tax Credit Savings

We have heard a lot of concern about the new ACA healthcare program (also known as the Affordable Care Act, Obamacare, and other names) that starts in 2014. Many companies are considering big employee changes, such as reducing headcount, moving employees to part-time basis, and leveraging staffing firms/independent contractors. But be careful — these changes could negatively impact your clients’ tax credits and their net after tax savings.

We recently attended the Georgia Chamber of Commerce’s conference on the new Federal Healthcare program (click here for upcoming sessions). Watch out for these state tax credit variables:

  • Number of employees – different programs for small groups (49 or fewer employees) and large groups (50 or more employees), based on Full Time Equivalent (FTE) employees.
  • Employee – employees that work 30 hours/week or more must be offered coverage.
  • Unknowns – lots of unknowns such as affiliated service group impact, common law employee clarification, and play-or-pay penalties.
  • Federal Small Business Health Care Tax Credits –  may be available (company has 24 or fewer full-time employees and less than $50,000 in average employee wages, click here )

The following Georgia tax credits may apply to your clients’ employees:

  • Retraining Tax Credit – Each employee must average 24 hours/week or more and can include regular and leased employees
  • Job Tax Credit (including Opportunity Zones, Less Developed Census Tracts and other) – Each employee must average 35 hours/week or more and can include regular and leased employees

Your clients may think they are saving $ by making these changes, but their net after tax credit savings may not justify the changes! For example, if employees are reduced to less than 30 hours/week, the Job Tax Credit can’t be utilized, since the total head count for employees (35 hours/week) goes below the Job Tax Credit head count minimum threshold. Pretty confusing! So get on top of this now, and reach out to your clients to discuss these issues.



Alternative Funding for Your Clients

We recently attended The Georgia Financing Roundtable conference sponsored by the Council of Development Finance Agencies (CDFA, click here). This session highlighted federal, state, local, and private alternative financing tools available to economic development groups to assist companies with job growth. These alternatives include bonds, grants, tax credits, EB-5 financing and equity funding sources. There are a lot of alternatives available, especially for economically distressed and rural areas. Here is an overview:

  • Invest Atlanta – Major push for downtown Atlanta for assisting start-ups, strengthening exports, and increasing foreign direct investments.
  • Georgia – The Department of Community Affairs (DCA) provides grants and Industrial Development Bonds as well as providing guidelines for Job and Opportunity Zone tax credits (click here for DCA overview). Also, the 2014 legislature will consider the proposed Downtown Renaissance Tax Credits to redevelop downtown areas (HB 128 click here)
  • Federal – Due to the budget, sequester, and other issues, federal incentives may be reduced over time. However, several programs are still available including new market tax credits, EB-5 program, and USDA rural development programs.
  • Summary – Alternative financing tools are utilized less than 5% of the time in local economic development efforts. But creative financing could be utilized a lot more to obtain funds for economic development. For example, a new economic development project may be financed with “Capital Stacking.” This approach may combine tax exempt bonds, EB-5 equity, and tax credits to finance a new project.

So reach out to your economic development organizations to find alternative funding for your clients.  You can help to spur local job growth, benefiting your clients and your community!



Legislative Update

The Georgia Legislature is about to wrap up this year’s session, and there have been few changes that relate to business incentives or tax credits. But an interesting one is for the Opportunity Zones. SB 137makes changes that allow Opportunity Zones to be designated by the commissioners of the departments of Economic Development and Community Affairs — IF they agree! (click here for details)


Legislative Update

We’ve been checking our sources and can report no major changes are planned for Georgia’s corporate income tax credits.  We attended the recent 2013 Georgia Chamber “Eggs and Issues” breakfast, the Georgia Economic Developer’s Association Legislative Luncheon, and we discussed current legislation with representatives of the Georgia Department of Economic Development.

Bottom line:  No plans for significant changes to tax credits.  Some new credits will be proposed for development in historic downtown districts as well as some new wrinkles for angel investors and clean energy initiatives, but that’s it.

That being said — things can change during the legislative session. We will keep you posted.



Using Tax Credits Against Withholding Taxes?

There are now SIX Georgia income tax credits that can be utilized against Georgia payroll withholding taxes in lieu of income taxes. In 2012, several changes were made, including the addition of the Job Tax Credit (for certified competitive projects).

Utilizing the tax credits against withholding taxes can be complex and confusing. There are very strict deadlines for filing notices, applications, income tax returns and other documents. Another important issue — your client’s payroll provider must be (or become) knowledgeable about the details of applying the tax credit against withholding taxes. Click here for the Notice of Intent for claiming the tax credit against withholding taxes).

If your client does not have Georgia income tax liability, then utilizing against withholding taxes is a great option in the right situation.



Legislative Update

Now that the Legislature is through for another year, the rest of us can relax a little, and the State can get back to business as usual.  Governor Deal has spent the last month signing bills and cleaning up after the legislators:

  • HB 868 was signed as expected and makes welcome, albeit modest improvements to the Job, Quality Jobs, R&D, and Port Bonus credits.
  • The governor signed HB 386 at the annual Georgia Manufacturing Appreciation Week luncheon (click here). This bill eliminates the state sales tax on energy used in manufacturing, mining, and agriculture.
  • We heard from statewide economic developers recently that the tax credits have really helped attract new business to Georgia as well as helping to strengthen existing businesses.
  • We also know that there are plans to strengthen the business-related tax credits in the 2013 session.


Where There’s Smoke . . .

Well, the Legislature wrapped it up last night, and your clients’ tax credits stayed pretty much the same, with a few minor improvements for some of your clients.  Here’s a summary:

HB 868 (click here) –  With the House agreeing to Senate changes, legislation modifying job incentives and tax credit programs now heads to Governor Deal for his signature.

  • For the Job Tax Credits, expanded eligible industries to include biomedical manufacturing and alternative energy products.  Also reduced job creation threshold in Tier 1 counties from 5 to 2.
  • For Quality Jobs Tax Credits, expanded use to include military contractors.
  • For R&D Tax Credits, allows all companies that qualify for the credit to use the payroll withholding provision.
  • For the Port Tax Credit Bonus, allows the Bonus to be used in Less Developed Census Tracts, Military Zones and Opportunity Zones.

HB 386 (click here) – Although not directly affecting tax credits, another bill included some more goals of the Governor’s Competitiveness Initiative:

  • Elimination of the state sales tax on energy used for manufacturing, mining, and agriculture
  • Discretion in granting sales tax exemptions for construction of regionally significant projects
  • Clarification of Georgia’s current on-line sales tax laws to include purchases from out-of-state companies, leveling the playing field for Georgia-based businesses

So after all the meetings, committees, speeches, lobbying, arm-twisting, and smoke-generation — NO FIRE!  We end up with a set of pretty minor tweaks to Georgia’s economic development policies.  But your clients can feel some relief — another session has ended with no harm done!



Tax Credit Legislative Update

So far, the recommendations of the Georgia Competitiveness Initiative have surfaced in one bill, with more activity to come.  Here’s a summary:

HB 868 – Representative Doug Collins of the 27th (Governor’s floor leader) and others amends Article 2 of Chapter 7 of Title 48 of OCGA relating to “imposition, computation, and exemptions from state income tax, so as to provide for the comprehensive revision of income tax credits for business enterprises located in less developed areas, designated by tiers, for business enterprises located in less developed areas consisting of contiguous census tracts, for existing manufacturing and telecommunications facilities located in certain tier counties, and for establishing new quality jobs or relocation quality jobs; and for other purposes.”

But this bill doesn’t represent all of the GCI recommendations:  thetwists and turns of the Ga General Assembly continue. The bill was voted out of subcommittee and slated for full Ways and Means as we write this. No revisions so far, which could come in the Senate.  The bill has to get passed by the full house by Day 30 to remain alive.

The other dynamic affecting passage of the bill in the House is a percolating effort to resurrect some of the Tax Council’s recommendations from last year. All things with fiscal impact to the state are related! So perhaps some clarity soon?  Certainly not a linear process around here.

The other GCI reccomendations are reportedly to be a part if a larger bill to be seen sometime this week. So look out for a complex procedureinvolving “bill substitution,” “vehicles,” “shells,” “content stripping,” and “new content!”  New content may involve things like the removal of sales tax on energy for manufacturers and some “untold goodies.”

Stay tuned!


Georgia Competitiveness Initiative Final Report

The GCI Final Report is out (get the report here).  It is pretty much a broad-brush policy document — sounds good, but nothing specific.  What does that mean for your clients?

It means we have to wait a little while longer to find out what gets translated into legislation.  As we said last month, that’s what they call making sausage!  

Here’s a summary of tax credit policy items in the report –

  • Modify existing incentive and tax credit programs in a way thatencourages existing business growth, provides additional incentives for investment in rural communities, and allows flexibility.  Also includes generic language about modernizing and expanding incentive programs.
  • Extend the existing Angel Investor Tax Credit by five years to 2018
  • Allow for the use of federal grant funds to directly assist small businesses seeking to export goods
  • Expand Opportunity Zone program to make it more useful in rural areas
  • Improve the existing tourism development incentive to encourage increased travel, retail, and hospitality investment in Georgia

We will keep you updated throughout the 2012 Session!



Georgia Competitiveness Initiative Progress

GCI is in its Quiet Phase — in other words, either they are writing their report due 12/31 or they decided to take the holidays off!

No, hopefully they are putting the finishing touches on the report this week and we should all see something in early January.  After that, it goes to our policy makers to be converted into legislation.  That’s what they call making sausage!  

Here’s what we think they want to do –

  1. Make targeted changes to tax policy, but no wholesale tax reformin this election year
  2. Maintain statutory incentive tax credits, but make some of them more effective for economic development and job creation
  3. Add State discretionary incentives to help close economic development deals for Georgia

Earlier this month, I attended the State Legislature’s “Special Joint Committee on Georgia Revenue Structure” hearing at the Capitol.  Called at the last minute, only about half of the members attended, so nothing got done, at least on the surface!

We will keep you updated throughout the 2012 Session!


Competitiveness Initiative Update

This is the quiet time of the process, on the surface, but the real work is happening right now within the Georgia Chamber’s Government Affairs Council. They are responsible for developing the core recommendations of the Initiative’s strategy report.

You may want to attend the 2011 Georgia Chamber Tax Forum on November 3. This session will include the Chamber’s tax legislative initiatives and a preview of the 2012 legislative session. Hope to see you there! (click here)

Competitiveness Initiative Update

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!

Competitiveness Initiative Update August 2011

We are almost done with the 12 GA Competitive Initiative (GCI) meetings around the state! At most sessions there are 200 or more attendees, but most of them are from education, government and economic development (not many from private businesses). Lots of ideas have surfaced, but so far they need more specific solutions.

A reminder — the GCI is NOT a legislative mandate like it was for last year’s Tax Reform study, but recently Chris Clark, CEO Georgia Chamber of Commerce, said during his speech – “the goal of GCI is to create a jobs agenda for legislation. We will push this through the General Assembly in 2012.”

We will keep you posted as the sessions wind up and specifics begin to be developed. Don’t hesitate to contact your representative or senator as the 2012 session approaches. They can’t address your needs if you don’t let them know what those needs are!!



Competitiveness Initiative Update

We have now attended the first 5 of 12 GA Competitive Initiative (GCI) meetings around the state.  The sessions are averaging around 200+ attendees, but so far continue to be attended by mainly education, government and economic development people (not many from private businesses).  Some specific policy ideas are getting through, although it is pretty hard for the GCI organizers to herd the cats!

The five-hour meeting format with facilitated sessions around 6 topical areas is okay in theory, but it is pretty hard for any of our clients to find that much time away from business.  We are looking for ways to get their opinions heard anyway, either remotely or electronically, and will let you know specifics when we know more.

To participate in any of the remaining sessions, registration is required (click here).  Hopefully we will see you at one of the sessions!