Tax Candi

I've been to Boston twice -- Once was a near-death experience as my mother and I tried to navigate the "Big Dig," and the second time, I spent 8 hours trying (unsuccessfully) to locate USS Constitution. And yet, for some reason think I could easily fall in love with Boston...

So, on that note, let's talk about Massachusetts' Economic Opportunity Area Credit.

As a part of the Commonwealth’s Economic Development Incentive Program, eligible businesses may claim a credit for a percentage of the cost of any property used exclusively for a certified project within an Economic Opportunity Area (EOA).  Companies are required to create new jobs and make substantial capital investment within Massachusetts

Here are a couple of important program parameters:

An EOA is an area within a designated Economic Target Area (ETA) that is in particular need for economic development.

The credit amount is equal to 5% of the cost of any eligible property.

A “certified project” is a project approved by the Economic Assistance Coordinating Council for participation in the economic development incentive program.

The credit may not reduce the tax below the greater of the minimum excise tax or 50% of the taxpayer’s excise tax before credits. The credit term may run up to 5 years, and the carryforward is 10 years.

Eligible companies recieve the credit through application and negotiations with the Massachusetts Office of Business Development.

Time to take a break from the middle of the country and head for the beauty of the Pacific Northwest. If you're in the Midwest, get a taste of Oregon's splendor at the newly remolded Shedd Aquarium exhibit, though it doesn't hold a candle to the real thing.

As if the breath-taking scenery isn't enough, Oregon has an attractive two-pronged Enterprise Zone (EZ) program.

The standard EZ program allows eligible (generally non-retail) businesses relocating to or expanding within an EZ receive a total exemption from the property taxes normally assessed personal property for up to five years. As well, additional EZ may be available through local economic development agencies.   Although EZ benefits are most commonly awarded to industrial-based businesses, other businesses may be eligible based on capital investment and job creation.

However, to entice Silicon Valley to come north (or is it the tech companies surrounding Microsoft to come south?) Oregon created specialized EZs known as the Electronic Commerce Zones (ECZ).

Several of Oregon's enterprise zones have received special status to encourage investment in electronic commerce. ECZ's most significant feature is that qualifying businesses may receive a credit against their annual state income or corporate excise tax liability. The credit equals 25% of that tax year's investment capital investment costs  for operations related to electronic commerce.   ECZ credits are limited to the lesser of $2 million or the state tax liability. This state tax credit is in addition to the standard enterprise zone exemption from local property taxes inside the zone.

Sometimes my posts are inspired by food cravings.  Today's is inspired by KFC's new grilled chicken--because if Sandra Lee says it's good, then it has to be!  (Quick Question:  Who is the other guy?)

Anyways, today we're visiting the Bluegrass State and discussing the Kentucky Economic Opportunity Zone (KEOZ) program. 

The KEOZ focuses on development of areas with high unemployment and poverty levels. Eligible companies include new or expanded manufacturing, service, or technology industries, which must invest at least $100,000 in the project and create at least 10 new full-time jobs for residents of the zone. Service and technology businesses can recoup 50% of eligible relocation and start-up costs up to $20,000 in eligible costs (or in other words, $10,000 in tax credits, per job created) and 50% of annual occupancy costs of the facility. The company may also collect a job development assessment fee of up to 5% of the gross wages of each employee whose job is created by the approved project and who is subject to Kentucky income taxes. Unused credits may be carried forward for the term of the agreement.

Interested companies should apply to the Kentucky Economic Development Finance Authority (KEDFA).

In my prior experience, Kentucky is a great state to work with and they have a very robust incentives program, so look for many more Kentucky-related postings to come!

New York always seems to put its own spin on everything, from fashion to pizza. So why should business incentives be any different? Wanting to stand out from the myriad Enterprise Zone programs, the Empire State created the....

Empire Zone Program

The Empire Zone program offers a number of incentives, from real property tax abatements to sales tax exemptions to income tax reductions.  Like most other "EZ" programs, the centerpiece of the program is the Wage Tax Credit.  Businesses located within an Empire Zone can qualify for a wage tax credit for qualifying full-time employees. This tax credit may also be applied against the franchise tax on business corporations, banking corporations, and insurance corporations.

There are two tiers for the tax credit amount:

1) Up to $1,500 for each full-time employee who received empire zone wages for over half the taxable year, or

2) Up to $3,000 for employees that fall into certain target groups and receive an hourly wage that is at least 135% of the minimum wage.

This credit is allowed for up to five consecutive years.

In order to receive this credit, companies must be located within an Empire Zone and then apply for "certification" through the local zone coordinator.

While New York has had great success with the Empire Zone program, the economic downturn and subsequent budgetary constraints forced the state to close 10 of its EZs in May.  The program is scheduled to sunset next year, so lawmakers are debating its survival.  In other words, get in while the gettin's good!

To kick off this blog about Credit & Incentives, I’ll begin with a tax credit of my current home state… So without further ado...

The Illinois EDGE

The Economic Development for a Growing Economy (“EDGE)” program offers a tax credit to encourage companies to locate or expand operations in Illinois. Eligible companies must make capital investments of at least $5 million and create at least 25 new (to Illinois) full-time jobs. (Companies with less than 100 employees need only invest $1 million and create 5 jobs.) Note: Especially in this current economy, the EDGE credit may be available to companies needing assistance to retain jobs already in the state.

The amount of the credit is negotiated on a case-by-case basis and may equal to the state income withholdings of the new employees. While non-refundable, the credit may be taken for up to ten years.

Companies receiving a tax credit under the EDGE Program must file (lengthy) annual reports. Interested companies must file an application with the Illinois Department of Commerce and Economic Opportunity.