Business Incentive Opportunities

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Business Incentive Opportunities
January 28, 2004
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Forward Thinking

• While most tax activities are concerned with
  audits involving previous years and current
  compliance, incentives are usually focused on
  capital improvement plans ranging from the
  present to several years in the future.

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Common Incentive Programs

• Enterprise Zones of all types and Tiers
• Investment Tax Credits
• Research and Development Tax Credits
• Property Tax Abatements
• Follow up Compliance Reporting
• Employee Wage Tax Credits

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Does My Company Qualify?

• Four Key Questions
• How much and where are capital improvements
  planned for 2004 and in the next few years?
  
• How many existing employees do you have on the
  site targeted for improvement?
  
• Any new jobs in the coming year? (In Texas, its
  ok if there is none.)
  
• What is the companys expected tax liability (all
  types)?

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Business Incentives

• What this does for you and your department
• Leads to refund annuity in future years.
• Keeps your department involved with incentive
  planning for future investment decisions.
  
• Shifts the focus away from your department as
  being a cost center.

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Involvement with the 78th Legislature

• Assisted in the drafting of SB 275, HB 104, SB
  403 and HB 2424.
  
• Testimony before the Texas House of
  Representatives, Economic Development Committee
  on HB 104, March 2003.
  
• Testimony before the Texas Senate Committee on
  Intergovernmental Affairs on SB 403, March 2003.
  

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78th Legislative Highlights

• Economic development function transferred to the
  Governors office (GOEDT).
  
• Re-defined Enterprise Zone as an area with 20 or
  more poverty.
  
• Created incentive opportunities for businesses
  that are located outside of an Enterprise Zone.
  
• Sales and use tax refund cap set to 7,500 per
  job with a 3.75 million maximum per business
  project for new or retained jobs.
  
• Created new job retention provision for
  retooling.
  

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New Texas Criteria
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Enterprise Zone Compliance

• 25 of new hires (35 if outside of a zone) must
  be economically disadvantaged
  
• Unemployed for preceding 3 months
• Receiving public assistance
• Earns less than 80 of the median area income
• Lives in an Enterprise Zone of the local
  governing body
  
• Handicapped
• Eligible for Work Opportunity Tax Credit

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Texas Retention Criteria

• The permanent employees of the business will be
  permanently laid off or
  
• The business will close down permanently or
• The business will relocate out-of-state or
• The business facility has been legitimately
  destroyed or impaired because of fire, flood,
  tornado, hurricane, or any other natural
  disaster or

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Texas Retention Criteria

• A 10 increase in the production capacity

OR
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Texas Retention Criteria
A 10 decrease in over all cost-per-unit
OR
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Texas Retention Incentives

• Texas has just adopted an even more aggressive
  retention provision for re-tooling
  
• The business facility is both adding a new
  business line or product and deleting or
  decreasing an existing business line or product,
  and the designation will prevent the facilitys
  net production capacity from decreasing.
• From CSSB 275, 78th Session, Texas
  Legislature

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What Can I Expect?
Submit Job Certification Applications to GOEDT
for Review/Approval
Submit Applications to GOEDT for Review/Approval
Prepare Job Certification Applications
30 Days
90 Days
Review of Job Certification varies from 60-180
days with GOEDT workload and staffing
Prepare and submit Refund Applications and
Schedule of Refund Items
Negotiate and prepare invoice pull list for audit
Prepare and submit Annual Re-certification Form
Receive refund check
90 Days
90 Days
Repeat annually until entire refund cap is
approved and received
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New Area Designations

• There are 4 times each year a company may apply
  for enterprise zone benefits
  
• September 1st, December 1st, March 1st
• and July 1st.
• Some recent designations include

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2004 SIA Counties

• Comptroller Strayhorn has identified 68 counties
  as strategic investment areas.
  
• SIA credits require 10 new jobs and at least 1
  million in investment.
  

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States with Retention Incentives
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Michigan Retention Incentives

• Distressed Business Credit
• Business with more than 150 jobs and reducing
  workforce by 30 or more.
  
• Qualifies for 25 wage tax credit.
• Retention Credit
• Eligible business that makes a capital investment
  of at least 100 million.
  
• Maintains at least 1,500 jobs at the facility.
• Designed to keep the refrigerator manufacturer
  Electrolux from moving.
  
• Both effective December 29, 2003.

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Pennsylvania Retention Incentives

• Pennsylvanias Keystone Opportunity and Expansion
  Zones offer incentives to business that either
  expand employment by 20 or make capital
  investments of at least 10 of the gross revenues
  of the business in the previous year.

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Wisconsin Retention Provisions

• Wisconsin requires that a manufacturing
  business
  
• Retains 100 of its full time jobs in Wisconsin
  
  
• Invests at least 2 of its depreciable assets in
  Wisconsin facilities
  
• Maintains at least 5 million average annual
  investment in Wisconsin, or other criteria.

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Ohio Job Retention Credits

• Provides corporate franchise or state income tax
  credit for businesses that commit to retain a
  significant number of full-time jobs.
  
• Businesses that currently employ at least 1,000
  full-time employees and make a fixed investment
  of at least 200 million.
  
• New wage tax credit, up to 75 of withholdings.

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Does My Company Qualify?

• Four Key Questions Revisited
• How much and where are capital improvements
  planned for 2004 and in the next few years?
  
• How many existing employees do you have on the
  site targeted for improvement?
  
• Any new jobs in the coming year? (In Texas, its
  ok if there is none.)
  
• What is the companys expected tax liability (all
  types)?

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• Questions Welcome
• This presentation may be found _at_
• www.ryanco.com