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Alpha-Mail 
The Tax Professional's Guide to Georgia Tax Credits, Courtesy of Alpharesults
Vol. II No. 5 May 2008
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Hello!
Welcome to Alpha-Mail, the monthly newsletter about Georgia tax credits for Georgia tax
professionals.
In this month's issue, learn about the new tax credit for private schools and students -- and what it could mean for your clients. Also, learn how you can unlock withholding tax credits for some of your clients with an alternative to professional employer organizations (PEOs). And thank you for reading Alpha-Mail -- please click reply to tell us what you think.
All the best, 
Dale Stapler Jim Tinsley
Alpharesults, LLC
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New Private School Tax Credit
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Governor Perdue signed House Bill 1133, which will create, for the first time in Georgia's history, a tax credit program allowing students to receive scholarships to attend the private schools of their choice. This could impact tens of thousands of Georgia schoolchildren. And for CPAs, it could impact thousands of clients!
HB 1133 provides for the creation of Student Scholarship Organizations (SSOs) that may receive donations from individuals and companies interested in providing students with scholarships to attend private schools. For contributions made to SSOs, the legislation allows state income tax credits for:
- Individuals up to $1,000 for single or $2,500 for married couple
- Corporations up to 75% of annual state tax liability
- 5 year carry forward
- Must be pre-approved by DOR to utilize -- even for individuals!
- Total of $50 million per year available for the entire state.
DOR and the Department of Education will provide the regulations and details. One interesting requirement is that each SSO must receive an annual audit by a CPA firm. And for your clients, how will you handle this potential mountain of paperwork? We'll have to wait until they give us some regulations! Stay tuned . . . The law became effective for tax years beginning January 1, 2008. To find out more about HB 1133 click here.
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Unlock Withholding Tax Credits with PEO Alternative
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As you may already know, Georgia provides job tax credits for growing companies. Companies located in Tier 1 counties and designated less developed areas may also utilize a payroll withholding option tax credit that is applied against their state payroll withholding taxes. This withholding credit option can amount to huge savings (over 100%) in a company's payroll withholding taxes. Refer to the brand new regulations here.
Due to cost savings for workers' compensation insurance and other reasons, many companies lease their employees from a professional employer organization (PEO). Structurally, a PEO requires the employees to be paid by an entity with a different tax ID number from the employer's.
Unfortunately, to utilize the withholding tax credit option, the employees must be paid under the same tax ID number as the employer's tax ID number, so with a PEO, the company CANNOT utilize the JTC withholding tax credit option.
However, there may be potential to leverage the cost savings of a PEO plus utilize the withholding tax credit for even more savings. Ed Brantly, HR Outsourcing, Inc. (link to their site here) told us about how an Administrative Service Organization (ASO) enables a company to pay employees under its own tax ID number. In the HR area, ASOs are also sometimes known as HROs (Human Resource Organizations).
Jim Cichanski, President of FlexHR (check out their site here), explained to me recently how their HRO service could provide the same cost savings, protections, and benefits of a PEO, plus give the company a robust HR capability, and allow for the utilization of Georgia's withholding tax credit option. For your clients currently using PEOs who are candidates for the withholding tax credit, you should check out the ASO and HRO options offered by human resource services firms.
Is this too obscure? Not for your clients in Tier 1 counties and less developed areas. And did you know that designated less developed areas can be found all over the state, including all major metro areas plus several others? You may be surprised if you look here.
Bottom line -- if you have clients who are growing, you need to investigate their state tax credit options! We recently found one 100-employee financial services firm in a Metro Atlanta less developed area over $120,000 in withholding tax credits. The owner was very happy!
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About Us
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Alpharesults has assembled a team with the specialized knowledge and approach required to obtain Georgia income tax credits. We are not a public accounting firm. Rather, our services complement those of public accounting firms and do not create conflicted loyalties, because our professionals do not perform attestation work or other external audit functions.
We focus on small to medium-sized businesses and work exclusively in Georgia with a wide variety of in-state and out-of-state accounting firms. For more information on our services, follow this link.
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