Welcome to Alpha-Mail, the monthly newsletter about tax credits and incentives for tax professionals.

This month, learn how changes to your clients' revenue recognition process can generate tax credits.  Also, some of you may have clients with operations in Alabama, so be sure to see our overview of Alabama credits and incentives. We hope you can use this information to strengthen your client relationships! 

Thank you for reading Alpha-Mail -- please click reply to tell us what you think.

All the best, 

 Dale Stapler    Jim Tinsley
     Alpharesults, LLC 

It's funny how your audit practice can get involved with tax credits. We recently attended the GSCPA Southeastern Accounting Show (click here). An interesting sessions was on the new FASB five step model for revenue recognition audit rules, presented by Chris Rouse of Windham Brannon. Even though these standards will not be effective until Dec. 2017 for non-public companies, auditors and their clients need to start analyzing business process, systems, and workflow changes soon to prepare. These changes will require employee training and may provide an opportunity for a retraining tax credit. Here is an overview:

• Auditors need to understand how the client's business operates today & its plans for the future.
• Requirements such as "probability-weighted estimates" and other historical data-intensive analysis may require new software (and employee training) to collect and analyze revenue and related data.
• Key processes and controls that support the client's internal control structure would need to be updated, and their IT systems and manual processes that support the accumulation and reporting of data would need to be modified (more employee training).
• Your firm may be able to proactively consult with your clients in reviewing, gap analysis, planning and implementing these changes (and provide training to employees).

As we mentioned last month, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.

We were recently asked about credits and incentive in Alabama. I spoke with Linda Swann and Pete Schaum of the Alabama Dept. of Commerce (click here), and learned some of their details. 

Alabama's tax credits and incentives cover new capital investments, new jobs, property and sales tax abatements, workforce training, R&D activities, energy saving activities, and other categories.  Incentives and credits are available to a fairly wide range of targeted industries that include manufacturing, warehousing, R&D, information technology, mining, telecom, and others, including cotton ginning!  

Alabama's credits and incentives are pretty complicated -- multiple categories and exceptions mean that each "project" will turn out to be effectively unique. 

• Capital Investment tax credits are blended with job increases and are tied to threshold levels, which are lower for Favored Geographic Areas.  Base wage requirements also apply.  These credits can go up to 5% of initial costs and last up to 20 years.  Great benefits for just the right situation, but watch out for the exceptions!   
• Local property and sales tax abatements are very generous and widely available, but come with strings and exceptions  
• Credits, services, and reimbursements are available for increasing employment by 10+ jobs and contracting with AIDT (click here for info) 
• Enterprize Zone credits and exemptions involving a complex requirement and approval process administered by the Alabama Dept. of Economic and Community Affairs ADECA (click here).       

 Compared to Georgia, Alabama has:

• Lower (net effective) corporate and personal tax rates, but still enough that state tax credits are beneficial to business owners.
• A broader range of companies eligible for major credits, and a narrower range for smaller credit categories, especially training credits 
• More exceptions and gotchas when planning company qualifying activities 
• Few, if any, credits or incentives without some form of state pre-approval 

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.