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Retention Credit – “It’s not SALY”

retention-credits-not-salyTax return preparers know the shortcut in preparing current year returns, called “SALY”. SALY stands for “same as last year”. The SALY shortcut provides a quick method to review a tax return before filing using the prior year return as a guide. While the numbers from year to year are most certainly different, for the most part the annual transaction cycle is repetitive – and the look and feel of the return is similar from year to year.

Understanding the propensity of tax preparers to rely on SALY, certain tax credits or exemptions lasting only a short period of time are often overlooked – because frankly we find an over reliance on SALY. Such is the case with the retention credit, one of two “gimmies” as part of the HIRE Act. If the reader is unfamiliar with the retention credit, a one-time federal credit for hiring and retaining unemployed workers in 2010, read on.

Hidden Retention Credits

To some extent, we believe an over reliance on SALY led to employers often failing to claim the retention credit. The retention credit awarded employers a credit of up to $1,000 for each unemployed worker the employer hired in 2010 and retained for a year. But the retention credit was only available in 2011. A preparer using a 2010 SALY reference point would not see a retention credit – and therefore more likely overlook the opportunity for 2011. Moreover, the payroll tax exemption part of the HIRE Act was for calendar year 2010 leading many employers to “forget” about the 2011 income tax credit.

Barnwell has assisted several large companies in either working up the retention credit on an amended return, or in many cases “truing up” the credit. For various reasons in instances where the credit is not “missed” we find, more often than not, that the retention credit is under claimed. Reasons for this vary, including the omission of divisions, incomplete “survey” activity, and failure to claim the retention credit on WOTC-eligible employees.

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Filed Under: Client Results

In Summary, Barnwell Consulting, LLC can:

  • Find state income/franchise tax refunds and have collected millions of dollars in cash refunds
  • Assist with altering corporate structure when good business purpose exists, to help lower state income tax liabilities
  • Assist with FIN 48 accruals, but more importantly with strategies to resolve FIN 48 uncertainty projects that help companies lower the state effective tax rate.
  • Handle complex income and sales/use tax audits and have been successful in eliminating or reducing material assessments
  • Assist clients with SALT issues in acquisitions and divestitures
  • Identify credits and incentives, which fall into two broad categories, statutory and negotiated. With respect to the former, we see our job less as identifying statutory credits – and more focused on whether our client has fully recognized the credit, and obtained the maximum possible benefit.
  • Client Results

    Retention Credit – “It’s not SALY”

    Georgia Tax Credit for Training Employees

    $40 Million City Incentive Contract

    $2 Million Refund of California Franchise Taxes

    Florida $4.5 Million Corporate Income Tax Refund

    $2.8 Million Settlement Award of California Franchise Tax from Settlement Board

    $270,000 in “Quick Hit” Georgia Sales Tax Savings

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    In most of these cases we turned these big wins into deeper relationships and were able to identify additional opportunities. We are grateful to the companies that share their facts with us; a core value of our firm is to invest in gaining contextual knowledge. These examples tell the story: there are hidden opportunities in the state and local tax area for large companies. The trick is to know how to find them, and then how to pull the trigger to lock in the value.

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      Published Articles

      • The Sales Factor – Top Five Issues Taxpayers Need to Consider
      • State Income Tax Uncertainty Under FIN 48
      • Addback: It’s Payback Time
      • State Tax Planning – What’s Left
      • Is State Tax Planning Still Viable
      • Sales & Use Taxes Corralling the Runaway Sales Tax Auditor
      • Captive Concepts in State Tax Planning

      Services

      • Strategic Reduction of State and Local Taxes
      • State and Federal Interest Review and Recovery Engagement (“SAFIRRE”)
      • Income and Franchise Tax Strategy and Planning
      • Recovery, Including Reverse Audits
      • ASC 740-10 Mitigation and Consulting
      • State and Local Credits and Incentives
      • Economic Development Negotiations For State and Local Incentives
      • Motor Fuels Tax
      • Sales and Use Tax Planning and Compliance
      • Property Tax Appeals, Abatements, and Compliance
      • Should My Company Collect Sales Tax? When? Where? How?
      • Business License Compliance
      • Employee Retention Credit

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      "We analyze specific fact patterns to bring targeted strategies to companies."

      Learn More About Barnwell Consulting

      Consulting Services

      • State and Local Tax Consulting
      • Income Tax / Franchise Tax
      • Recovery - Reverse Audits
      • State and Local Credits and Incentives
      • ASC 740-10
      • Economic Development
      • Sales and Use Tax Consulting
      • Property Tax Appeals and Abatements
      • SAFIRRE
      • Employee Retention Credit

      675 Seminole Avenue, Suite T04
      Atlanta, Georgia 30307

      404-637-0940

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