Given the multi-jurisdictional posture of most companies in the United States, the opportunity for credits and incentives is vast but complex. We find that companies often are not claiming credits because they are unaware of the credits or the cost of identifying the opportunity is perceived to outweigh the benefits. We also may add value by increasing a credit already taken.
In many cases, the company’s perspective on this issue is correct – the credits are small or require so much detail that obtaining them is cost prohibitive. The challenge is to know which credits and incentives are worth the effort.
Statutory credits are those that are provided by law and include credits for increases in employment, training or investments in property to name a few. Incentives are inducements offered by the jurisdiction to the company to entice them to locate in their jurisdictions. Incentives may come in the form or grants, low interest loans, infrastructure improvements, and tax abatements. Incentives are generally negotiated for while credits are there for the asking.
Our experience in multistate taxation allows us to determine which credits or incentives will be best utilized by the company. For example, obtaining a jobs tax credit that reduces tax liability in the state may be great on the surface but if the company will never use the credit due to lack of taxable income then the benefit is not there and the effort to obtain the credit may be wasted.
Our service includes reviewing the company’s posture to determine if the company qualifies for credits, gathering the information necessary to determine the credit, preparing the forms necessary to claim the credit including amended income tax returns, and following through with questions and correspondence to ensure the benefit of the credit is received.
With incentives, our personnel work closely with the company for potential expansion plans and serve as a liaison between the company and the government jurisdiction to negotiate incentives that are beneficial for the company. This process requires us to work very closely with appropriate company personnel and government representatives.
