Georgia Retraining Tax Credit Overview

The Georgia Employer’s Credit for Approved Employee Retraining (Credit Type Code 102) is for training employees on new technologies. These technologies can include new software, modifications, upgrades, new modules, and in-house developed applications. In many cases training on new equipment, business process changes such as Lean initiatives, ISO-9000 and quality management programs may qualify.
Key Points to Remember:
  • The tax credit is for up to $1,250 per qualified employee. For example, $62,500 tax credit for 50 qualified employees trained on a new business wide ERP software ($1,250 X 50 = $62,500 tax credit)
  • 3 years of potential – last year, this year and plans for next year.
  • $$ benefits go to any company or pass-through equity owners that pays Georgia income taxes.
  • Administered by The Technical College System of Georgia (TCSG), and must be approved by the local technical college Vice President of Economic Development (Program details click here).
Don’t forget to discuss these activities with your client’s accounting, IT, HR, operations and engineering contacts. We’ve found that most Georgia companies will qualify for this credit, so make sure you ask!
JimSig

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

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

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 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

Michigan 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 Michigan, and their state economic development professionals gave us some details (Michigan Economic Development Corp. site click here).
Michigan offers a variety of credits and incentives for new and existing businesses.  CNBC ranked Michigan #22 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 reduce your clients’ tax liabilities:
The Michigan Business Development Program is an incentive program available from the Michigan Strategic Fund (MSF) and the Michigan Economic Development Corporation (MEDC), designed to provide grants, loans or other economic assistance to businesses for highly competitive projects in Michigan that create jobs and/or provide investment.

InvestMichigan! is a $300 million fund supporting companies in early and later stages of development. It comprises two parts. The Growth Capital Program targets lead and co-investment opportunities in venture capital and small buyout stage companies. The Michigan Opportunities Program targets lead investment opportunities in buyouts and growth equity investments in well established companies.
Agricultural Processing Renaissance Zones (APRZs) were created to promote agricultural processing operations in the State of Michigan and to enhance the industry overall. Can be located anywhere in Michigan.

Border County Incentives — Eligible new warehouse, distribution, or logistics facilities that locate in a county that borders another state or Canada may qualify for tax incentives.
Renaissance Zones® are regions of Michigan designated as virtually tax free for any business or resident presently in or moving to a zone. The zones provide selected communities with a market-based incentive of no state or local taxes to encourage new jobs and investment. There are additional specialized Renaissance Zones available for designation. These types of zones are facility or industry specific. Specialized zones are potentially available for firms doing business in the agricultural processing, renewable energy, forest products processing and tool and die industries.  Good luck with these!
Skilled Trades Training Fund (STTF) provides competitive awards for employer responsive-training that enhances talent, productivity, and employment retention, while increasing the quality and competitiveness of Michigan’s businesses.

Your clients will have to get pre-approval for almost any Michigan incentive, so plan early!  So to summarize, Michigan provides a fairly complicated, mixed bag of business incentives in a key Midwest 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

“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

Year End Tax Planning and Obamacare

Now that the October 15 tax deadline has passed, I hope you are rested and back to work! The next big things on your plate are year-end tax planning with your existing clients and reaching out to prospective clients.

While you discuss upcoming tax liabilities with a client, you can also point out how much they can save with tax credits. What does that have to do with Obamacare?

The bad news:  the ACA (Affordable Care Act) requires additional reporting by every company with 50 or more full time employees (called “Applicable Large Employer,” or ALE). Click here for details.

The good news: based on our experience with thousands of retraining tax credit (RTC) projects over the past 13 years, companies with 50+ employees almost always have qualifying activities for Retraining Tax Credits!

The following may help with your client discussions:
  • Last year: Any changes to their business or related software? How about head count increases? Any expansions, new locations or large capital expenditures?
  • This year: Same as above and any plans for November or December
  • Next year: What are they planning to do?

So you see, the Obamacare reporting requirements are a great leading indicator for tax credit opportunities.  Bottom line: ALE = $RTC. Good luck as you reach out, find out, and help out with tax credits.

JimSig

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

Healthcare: ICD-10 Update

According to the government’s CMS agency, there are less than 100 days before the ICD-10 mandate will begin on October 1, 2015 (see countdown page here ). To comply with this change, physician practices will need to upgrade software, change workflows, and retrain employees. Let your clients know that Georgia’s Retraining Tax Credit may be able to provide $$ to helpoffset the costs, time and effort for ICD-10.

Contractors & Tax Credits

Weak recovery or not, seems like contracting and construction company activities have really picked up lately. And with increased business, these companies are now finally upgrading their software, training their employees, and adding more jobs. And guess what?  These activities may qualify for Georgia tax credits:

  • Job Tax Credits – Contractors and construction companies 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:

  1. Business management and project control – main business systems for operating the company, including accounting, estimating, costing, and project management. Examples include Viewpoint, Timberline/SAGE, Deltek or other software packages.
  2. Customer relationship management systems (CRM) – similar to Salesforce.com for the business development team.
  3. Mobile technologies: for field superintendents, project managers, technicians and others that use mobile devices/tablets such as Apple’s iPad.
  4. Document imaging: for paperless contracts, agreements, invoices and document management.
  5. Computer assisted systems: CAD, building information modeling (BIM, virtual construction systems, and others.
  6. LEAN initiatives: Six Sigma, 5-S and other business process and work flow productivity changes.

If your existing or prospective client is a contractor or a construction company, tax credits can be a tremendous benefit for activities last year, this year and next year. Reach out to these companies to let them know about the potential $$ waiting for them!

 

JimSig

Get Two Years of Tax Credits Instead of One!

Your Georgia clients may be able to get two years of Retraining Tax Credits if they start now. Since this tax credit is capped at $1,250 per employee per tax year, they may start their software roll out now, begin the initial training in 2014 (first tax year), then complete the training in 2015 (second tax year).

Here are some ideas that may help:

  1. Potential training in 2014 (initial training):
    • Overview & introduction to all employees, with coffee & donuts
    • Major business processes affected by the new system(s) – customer records, project management, financial control
    • Departmental platforms/changes
  2. Potential training in 2015 (more specific to your client’s business processes):
    • For employee’s job or task areas, such as accounting, order entry, and customer service
    • Job-specific training; for example, accounts receivable, accounts payable, and journal entry.
    • Software add-ons and specialized modules affecting individual teams.

Your client and their software vendor may be planning the implementation right now, so your input sooner rather than later will go a long way towards helping them double their benefits from tax credits. Instead of getting $1,250 per employee, why not have better-trained employees and get $2,500 per employee in tax credits??

 

JimSig

Kentucky 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 Kentucky. I was able to speak with some Kentucky economic development professionals and learned some details (Kentucky Cabinet for Economic Development’s Think Kentucky site click here).

Kentucky’s main tax credits and incentives are meant to encourage new jobs and investments within the state.  Incentives and credits are available to a decent range of targeted industries that include manufacturing, energy, technology, motion picture production, headquarters facilities, and others.

Kentucky’s credits and incentives range in complexity and are typically more generous than other states.

  • Kentucky Business Investment Program (KBI) – Up to 100% tax credit or wage assessment up to 5% of gross wages for projects creating 10 new jobs and $100,000 investment.
  • Kentucky Reinvestment Act (KRA) – Provides up to 50% of project costs and 100% of job skills upgrade costs for investments by manufacturers of $2.5 million (plus other qualifications) for up to 10 years.
  • Kentucky Enterprise Initiative Act (KEIA) – Sales and use tax refunds for minimum investments of $500,000 on materials, equipment, and IT.
  • Skills Training Investment Credit – Tax credit for existing companies, providing up to 50% of approved costs for occupational and skills upgrade training, limited to $500 per Kentucky resident not to exceed $100,000 per company per biennium.
  • Other incentives include tax credits, grants, loans, and reimbursements for “environmental stewardship,” industrial revitalization, research and development, alternative fuel development, and small business investments, among others.
  • Bluegrass State Skills Corporation (BSSC) – A leading workforce training program, BSSC provides grants for training and employment services for new, expanding, and existing companies (click here).

Compared to Georgia, Kentucky has:

  • Similar tax rates and structure
  • A similar range of incentives and credits.
  • A somewhat smaller range of companies eligible for most credits.
  • Similar qualifying activities and somewhat smaller incentive $$ amounts.
  • more hands-on approach to working with companies and projects.
  • BIG DIFFERENCE – most incentives must be pre-approved and carefully planned.

To summarize, Kentucky is very competitive with surrounding states. However, prospective and existing Kentucky businesses must get permission from the state to receive benefits from most of the credits and incentive programs.

Do any of your clients have Kentucky connections?  If so, check out the Blue Grass State’s opportunities.

DaleSig

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