Tax Incentives Blog

The extender bill, which was created to enforce a two-year extension of numerous tax provisions, including the WOTC (Work Opportunity Tax Credit) Program, is still lingering in legislation. However, the extender bill is predicted to be passed by Congress by the end of the year, as it has historically been done.

At this point, you should still pre-screen all new hires for the tax credit so your WOTC program documentation is ready when you need it. This is also a great time to educate yourself on eligibility determinations.

A CPA firm had a client with an unexpected state tax liability. The firm was unsure of how to handle this delicate matter with the client, especially in terms of how to minimize the liability by utilizing available tax credits the client may qualify for.

If you’re considering expanding your business in another part of your current state, or into another state, you must consider what incentives are out there to help you make your growth goals happen.

Business expansion is expensive. You’re making an investment in a number of things, such as hiring people, buying equipment, constructing a building or leasing something new. You have to identify and recruit talent, and train these employees, which also takes a sizeable portion of your start-up costs. The total cost of expanding a business, however, should not incite you to second guess your decision.

The most prevalent tax credit to stimulate statewide growth in Illinois is the Economic Development For A Growing Economy (EDGE) program. This tax credit program was created to offer a special incentive that encourages companies to locate or expand operations in Illinois when there is active consideration of a competing location in another state.

Qualifying companies may receive a tax credit equal to the amount of the state income taxes withheld from the salaries of employees in the newly created jobs. The non-refundable tax credit may be used against corporate income taxes to be paid over a period not to exceed 10 years.

Volkswagen’s (VW) recent emissions-rigging scandal has its proverbial foot firmly rooted in the automaker’s use of a federal tax credit (the advanced lean-burn technology motor vehicle credit) intended for fuel-efficient cars.

On the heel of certain allegations came an admission from VW that they installed “defeat devices” in nearly 500,000 diesel vehicles in the U.S. that emit far more exhaust pollution than is legal. The automaker had installed the devices on as many as 11 million vehicles worldwide between 2009 through 2015.

In order to build your customer base and retain existing clients, your CPA firm should focus on continually improving your value proposition. One way to better serve your clients is to identify more opportunities for them to save on tax costs and generate revenue.

Are you actively pursuing tax savings strategies that accomplish these goals for your clients? If not, perhaps you’re lacking the tools to accurately determine what tax credit opportunities are realistic.

When you partner with an outsourced tax consultant, you receive tax credit software that assists you as you identify credits for your clients. The following advantages associated with tax credit software help your CPA firm provide better services:

The Texas Enterprise Zone Program is a corporate tax incentivethat offers a tax refundfor qualified employment-based expenditures. The purpose of the program is to encourage a partnership between local communities and the state. Together, they are able to promote job creation and capital investment in economically distressed areas of Texas.

In 2014, 48 Texas enterprise project applications were approved for an estimated capital investment of $7.3 billion in the state. The Texas Comptroller of Public Accounts reported that $42.2 million in tax refundswere issued the same year.

Clients increasingly expect their CPA firms to have knowledge on the subject of corporate tax credits and incentives. Heightened demand for tax services that help clients generate revenue and improve cash flow means you must work harder to satisfy client needs.

Failing to provide guidance in this area diminishes your competitive advantage in a market where CPA firms are doing everything possible to achieve their clients’ goals. However, tax rules are often complex and beyond the average CPA’s scope of expertise.

Partnering with an outsourced tax consultant gives you the tools you need to provide a fuller range of services to clients. When you gain control of your client base and maximize tax savings, you position your CPA firm as an industry leader. 

The Missouri Works Program is a state employment incentive that provides a benefit for the creation and retention of new, quality jobs by targeted business projects. This is a cash benefit, as opposed to an income tax credit.

CTI recently helped a manufacturing business capture a cash benefit from the Missouri Work Program. The manufacturer had approximately 1,500 total employees before their expansion project to build a new facility. Their expansion efforts resulted in approximately 900 new jobs.

The total benefit CTI’s client received from the Missouri Works Program was just shy of $2 million, which the manufacturer is set to receive over the next six years.

In addition to the more commonly known federal employment incentives, there are thousands of state and local programs available. These employment-based tax credits and incentives help boost economic growth by encouraging businesses to expand into designated areas and hire people with certain barriers to employment.

Due to the sheer number of programs offered (and the complex nature of meeting all the various requirements for eligibility), businesses face their own set of barriers for capturing employment incentives. Too often, it’s these barriers that prevent businesses from trying to capture the credits at all.