Tax Candi

Growing up in a household with a bona-fide inventor (my dad's got a couple of patents), intellectual property has always held my interest. (In fact, you can see my published dabblings at 7 CHI.-KENT J. INTELL. PROP. 95.) So, I do love it when my outside hobbies collide with my professional interest. For example...

Nevada's Intellectual Property Tax Abatements

The state of Nevada is hoping to entice companies who develop and refine intellectual property into commercial products. The IP is limited to patents and copyrights (I'm assuming software) since development of trademarks is called "capitalism."

Companies have to commit to staying in Nevada for at least 5 years and have to provide employees with medical insurance. Eligible companies must also meet 2 of the following 3:

1. Must pay employees over or above the average statewide wage (currently, $20.05 per hour);
2. Create at least 10 new jobs within a year (and maintain them for 5 years); or
3. Make a capital investment of at least $500,000.

Companies meeting these requirements are eligible for a partial abatement of sales tax, modified business tax and personal property taxes. Careful though--if the company fails to meet the minimum criteria under it was approved, a clawback, with interest, is triggered.

Interested parties should contact the State of Nevada's Commission on Economic Development.

I recently caught "The American President" on TV -- it's a great movie for a lazy Sunday afternoon. My favorite scene comes early in the movie; President Shepherd develops a crush on Sydney Wade and wants to send her flowers, but not the typical roses. So he tries to send her the official flower of her home state Virginia, however no one can agree if a dogwood is a flower or a tree, but regardless the florist doesn't have those in stock. So, in the end, the President does the next best thing... he sends her a Virginia Ham. (This seems to make sense -- if flowers don't work, send meat.)

Anyways, that clip inspires today's post regarding...

Virginia's Enterprise Zone Program

Virginia's Enterprise Zone Program is administered by the Virginia Department of Housing and Community Development. The Program provides state incentives to encourage business development and expansion in targeted Enterprise Zones (EZ). Incentives offered through the EZ program include:

The EZ Job Creation Grant: Qualified businesses located in an EZ are eligible for cash grants based upon the number of permanent net new jobs created. (Eligible businesses must created over four new positions.) The amount of the grant is for each job (over four) per year is:

up to $500 per job per year for each job over the threshold that pays at least 175% of the federal minimum wage; or

up to $800 per job per year for each job over the threshold that pays at least 200% of the federal minimum wage.

The grant is limited to 350 jobs per year, for up to five years.

The Enterprise Zone Real Property Investment Grant: Qualified zone investors making qualified investment in industrial, commercial or mixed-use real property located within an EZ are eligible for a cash grant. The amount of grant is equal to 20% of the investment up to a maximum of:

$100,000 for companies investing less than $5 million in qualified property investments; or

$200,000 for companies investing $5 million or more in qualified property investments.

In order to qualify for grants, investment must be at least $50,000 for rehabilitation or expansion projects , and at least $250,000 for new construction.

I moved north to get away from the heat, but I completely forgot about the humidity factor. I can't imagine living in a state as warm as Arizona, but my family in Phoenix tells me it's bearable because it's a "dry heat." Who knows, but for those of you who like living close to the sun, I bring you...

Arizona's Enterprise Zone Program

The Enterprise Zone (EZ) Program encourages the creation of quality jobs and capital investment in distressed areas of the state. Corporations located in designated EZ may take a credit against their income tax for creating new jobs. Employers receive up to $3,000 of credit over a three-year period for each qualifying job. Businesses can claim up to 200 qualifying employees.

Let's run through the math.

$3,000 x 200 = $600,000.

The current program is authorized through June 30, 2011 and the credits have a 5-year carry forward.

Businesses located within an EZ are also eligible for property tax abatements up to 60%.

Interested businesses should contact the Arizona Department of Commerce or the specific EZ coordinator.

Happy First Day of Summer! In honor of Chicago's weather finally matching the season, let's take a look at one of the most interesting incentives Cook County offers.

The Cook County Assessor offers real property tax abatements to encourage new commercial construction projects. These abatements are subdivided into Class 7A (for projects with costs totalling under $2 million) and Class 7B (for projects with total development costs over $2 million).  Commercial property in Cook County is normally assessed at 25% of its market value, however projects receiving a Class 7 incentives will be assessed at reduced assessment levels.  Class 7 properties are assessed at 10% of fair market value for the first 10 years, 15% for the 11^th year, and 20% for the 12^th year.

For new construction or reoccupied abandoned property, the incentive will apply to the project in its entirety. Projects involving substantial rehabilitation of existing structures will only qualify for the added value which is attributable to the rehabilitation. The reduced assessment continues for 12 years from the date the new construction or substantial rehabilitation is completed or initially assessed.

The process to receive this incentive is rather involved--the property must be designated as an area in need of commercial redevelopment by the local municipal government, and the historical property taxes must demonstrate that the value of the property has decline or is not on par with the development of the surrounding area, among other requirements.   Cook County, ever the height of efficiency, subjects the application through numerous rounds of review.   However the property savings can be substantial for those projects which are awarded a Class 7 status.

If you're interested in this property tax abatement, be sure to check out the Class 7 bulletins.