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Issue No. 4 incentis group Newsletter
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Nov./Dec. 2009
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Greetings!
Welcome to the incentis group Newsletter, the bi-monthly publication designed to keep
you, our valued business partners, in-the-know on developments in the incentives and credits
arena and incentis group projects and
services and aware of changes in the economic development industry that may benefit your
projects. We hope you find this issue contains information useful in your project
planning.
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The Value of a Tax Burden Analysis
For those considering investment in
a new region, state or city, expansion at an existing site or evaluating the
true value of incentive and credit offers, the State and Local Tax
Burden and Incentives Analysis (TBA) services provided by incentis
group can provide clarity to the complex financial and tax implications
of potential investments. A customized TBA can help you to identify the low cost location for investment
in addition to helping you gain valuable negotiating ground for incentive
packages by showing state and local officials the gaps between competing
locations that can be filled by incentive offers.
The process of completing a
customized Tax Burden and Incentives Analysis is thorough
and complex and tailored specifically to our client's specific investment
scenarios. The process includes:
- Identifying Company, Project and Site Specific variables and assumptions
- Estimating the state and local tax liabilities
that a company would incur by undertaking a project
a specific location, prior to and after the inclusion of incentives and
credits.
- Comparing the tax burden and impact
of incentives and credits between potential project locations so that the
company can better understand the tax advantages and true value of
incentives at each location under consideration.
- Updating the impact of incentives
and credits as negotiations with public officials progress.
Typically the final output of our
TBA will present the estimated tax burden and incentives
impacts of doing business at several competing locations over a 10-20 year
period. The length of these analyses help to even out the long-term and
short-term tax liabilities and incentives benefits that a
company may face over time. The TBA typically evaluates the following
taxes:
State and Local Taxes
- State
Income/Franchise Tax
- Unemployment
Insurance
- Workers
Compensation
- Property
Taxes - Real and Personal
- Sales
and Use Tax
- Utility
Tax
- Local Income/Net
Profit Tax
Our
experience tells us that companies large and small find that our TBA
services invaluable when making multifaceted investment decisions. For
further information on our Tax Burden Analysis expertise or the value it will
add to your decision making process, please contact Rita Williams at
513-651-6786 or Rita.Williams@incentisgroup.com.
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incentis group Success
A company considering investment in a new distribution center
enlisted the assistance of incentis group with exciting results. The sizable investment was eventually made
in Wisconsin and created 300 new jobs. The project was awarded a $25,000,000 tax
increment financing bond as well as a $4,000,000 local infrastructure grant, a
$750,000 State forgivable loan and $250,000 in tax credits. The value of the incentives was greater than 40%+
of the project investment. This project
represents the value of the services incentis group offers as well as the
lengths to which communities and states will go to secure job creation and
investment in their area.
For
information on the services provided during this project or to learn more about
incentives in your area, please contact James Gomochak at 312-421-3482 or
JGomochak@incentisgroup.com.
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The Impact of Changes to Compliance Standards
In 2009, the State of Ohio enacted Statute
125.112 which established a new step in the Compliance process for recipients
of incentives from the Ohio Department of Development. Recently, companies were formally notified of
this new step through a letter from the Ohio Attorney General's Office. The letter requests that the recipient log-on
to the Attorney General's website and complete a survey for all awards granted
between July 1, 2004 and June 30, 2009.
Additional notifications are expected for awards granted after June 30,
2009 through the present and continuously, going forward for all new
awards. The 60-question survey requires
companies to provided information specific to each grant, credit, award or
assistance received from the State within the specified timeframe. Information includes but is not limited to:
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Type
and Value of Awards
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Value
Received to Date
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Reporting
Requirements
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Job
Creation and Capital Improvement Requirements
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Job
Creation and Capital Investment to Date
Much of the
information is similar to the information submitted to the Ohio Department of
Development through their pre-existing compliance reporting requirements.
The programs that this will impact include:
- Ohio Job Creation Tax Credits
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Rapid
Outreach Grants
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Training
grants directly administered by ODOD
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Other
grant programs
-
Loan
funds
As a result of the statutory requirements, the information
provided will be compiled and reported back to the state legislature. We believe this additional reporting
requirement may influence a companies' decisions regarding the acceptance of
awards as it makes the task of remaining in compliance with the award
agreements more burdensome than in the past and perhaps than in other states.
In addition to the impact this additional reporting
may have on existing users of State development incentives, this reporting may
also impact the future of these programs.
It appears that Ohio,
like many other States, is looking deeper at its incentive programs to see how
much value is derived from the programs for the State in terms of job creation
and economic growth in comparison to the cost to the State of providing these
benefits.
Similar scrutiny of incentives is being undertaken in
other states. Just last month Colorado lawmakers held
a debate on the continuing use of incentives to entice business
investment. The Governor of Colorado has
proposed cutting back several incentive programs, some permanently, others
temporarily, in order to generate over $130 million in increased tax
revenue. This might help secure the State's
budget but will certainly impact businesses considering investment in the state and the
communities desperate for new jobs and new capital investment.
Additionally, other States including Michigan
and Iowa have
increased compliance standards as they review incentive awards.
Although
it appears some states are increasing the time and effort burden of companies
to comply with the incentives reporting, we believe that the compliance process
can be managed in a manner that allows companies to enjoy the benefits of
incentives without greatly increasing the cost of compliance. IncentiCare, our incentives compliance
division, can assist your company in dealing with the complex incentives
compliance issues at the state and local level.
For more information, please contact James Gomochak at 312-421-3482 or JGomochak@incentisgroup.com
or Jessica Thompson at 513-651-6781 or JeThompson@incenitsgroup.com.
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Message from the CEO
We are at the end of another year; a year that I believe you
will agree has been one of the most challenging years that all of us in
business have faced. For many business
managers, it has meant much greater than normal planning and effort. It has also required more scrutiny of
capital investment, employee levels, and rationalization of facilities and
operations, the items that drive incentives and credits opportunities.
In speaking with many of our clients, we have been told that
although managing this year has been extremely challenging, it has also made
their companies more competitive and better positioned for the future. There is a growing optimism among our clients
that an economic recovery is underway and that they are ready to engage
opportunities in the coming year.
We hope that each of your businesses is positioned for success
in the New Year. May you have a
prosperous and blessed 2010.
Larry Kramer
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incentis group is a national
firm of incentives and credit professionals who provides incentive and
credit negotiations on behalf of
Companies that are making acquisitions, routine capital investments,
hiring/training employees, expanding/downsizing facilities and other
activities in the United States,
Canada
and other parts of the world. If
your business is growing or experiencing changes, you may be eligible
for incentives,
credits and other benefits from your Federal, State and Local
Government.
Additional
services offered by incentis group can be located on our web site www.incentisgroup.com or by contacting
our Vice President of Business Development, Karen Warren at 561-493-9558.
Sincerely,
Incentis Group
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