Workforce incentives: 12 key states for growing your
Workforce incentives: 12 key states for growing your business May 5, 2015 2015 McGladrey LLP. All Rights Reserved. © 2012 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Presenters Mark Mitchell Senior Manager State and local tax Houston Maria Assalone Manager State and local tax New York Eric Levenhagen Supervisor State and local tax Indianapolis 1 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Agenda Topic Introduction 20 programs, 12 states Work Opportunity Tax Credit Tips and reminders 2 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Many types of business incentives available People incentives Investment incentives Operation incentives • Hiring tax credits and grants • Payroll tax rebates • Workforce training credits and cash grants • Retroactive • Prospective • Work Opportunity Tax Credit • Federal and state target zone credits • Income and franchise tax credits • Capital investment cash grants • R&D tax credit • Rehabilitation tax credit • Low income housing tax credit • New Markets Tax Credit • Renewable energy credits and incentives • Sales and use tax refunds or exemptions • Infrastructure assistance • Real and personal property tax abatements • Energy efficient commercial building deduction • Utility incentives Related cost reduction opportunities • Cost segregation • Tangible property regulations • Export incentives • Accounting method changes 3 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. People or workforce incentives Hiring tax credits and grants Payroll tax rebates Workforce training credits and cash grants - Retrospective Prospective Work Opportunity Tax Credit Federal and state target zone credits 4 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. 12 key states © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. California California Employment Training Panel Description Benefit Targets companies threatened by outof-state competition or that compete in the global economy Reimbursement for training Performance-based $1,800 funding cap per employee $18 to $26 per hour Employer matching component 6 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Nevada Silver State Works Description Multiple program options to hire and retain pre-screened qualified workers Company can only utilize one of the three available programs • Employer-based training • Employer incentive job program • Incentive-based employment Benefit Employer-based training – pays employee wages up to $200 per week for six weeks (maximum of $600) Employer incentive job program – provides up to a 50% wage reimbursement Incentive-based employment – offers a wage and training subsidy of up to $2,000 per employee 7 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Utah Economic Development Tax Increment Financing Description Benefit Competitive refundable tax credit Refundable Designed for companies that meet three key criteria • Hire at least 50 new employees • Meet specific wage thresholds • Demonstrate support from local community Up to 30% of new state revenues generated by the company Includes sales, corporate and withholding taxes paid to the state 8 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Oklahoma Training for Industry Program (TIP) Description Training reimbursement for companies that are creating jobs in Oklahoma Capital investment requirement Benefit Reimbursement for new hire training Amount is established on a case-bycase basis 9 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Oklahoma (cont.) Quality Jobs Program Description Benefit Incentive for new jobs in specific industries (based on NAICS) Payroll rebate paid on a quarterly basis for up to ten years Minimum payroll and county wage requirements Up to 6% of eligible wages 10 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Kansas Kansas Industrial Retraining Description Benefit Provides assistance to restructuring industries Typical funding of $300 to $500 per trainee Minimum of five existing employees likely to be displaced because of obsolete skills Requires at least a dollar-for-dollar match from the company (excludes inkind or indirect expenses) 11 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Kansas (cont.) Promoting Employment Across Kansas (PEAK) Description Incentive for new jobs in targeted areas and industries Benefit 95% of eligible payroll Retain (or refundable) up to 10 years Requires minimum healthcare Based on scope of jobs created and median annual wage 12 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Indiana Skills Enhancement Fund Training Grant Description Benefit Supports training and upgrading skills of employees Typically reimburses 50% of eligible training costs Tied to new capital investment Applies to two full calendar years from commencement of project 13 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Indiana (cont.) Economic Development for a Growing Economy Description Refundable income tax credit related to new jobs creation Not to exceed 100% of the expected increased tax withholdings generated Benefit Typically $5,000 per new job unless hourly wages are more than $20 above state average Credit certification is phased in annually for up to 10 years 14 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Florida Incumbent Worker Training and Quick Response Training Description Benefit Performance-based expense reimbursement grants Costs are reimbursed directly to the company Existing, for-profit businesses 50% employer match is required (75% match in rural areas) Reimbursements for skills upgrade training provided to currently employed, full-time workers Maximum $50,000 per grant, per company 15 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Florida (cont.) Qualified Target Industry Tax Refund Description Benefit Available to companies that create jobs above county average wage rate $3,000 or higher per net, new Florida full-time equivalent job created Can be applied to a variety of taxes • Corporate income • Sales • Property Actual benefit is based on location Requires pre-approval 16 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Georgia Retraining Tax Credit Description Training programs must be designed to enhance quality and productivity or teach certain software technologies Expenses must be approved by the Technical College System of Georgia Benefit 50% of direct training expenses Up to $500 credit per full-time employee, per training program Annual maximum of $1,250 per employee Any business that files an income tax return in Georgia is eligible 17 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Georgia (cont.) Quality Jobs Tax Credit Description Benefit Requires creation of at least 50 jobs in a 12-month period $2,500 to $5,000 per job created within seven years Each job must pay wages at least 110% of county average wage Benefit is based on how far above the county average wage each new job pays (110% to 200%) 18 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. West Virginia Governor’s Guaranteed Work Force Program Description New and expanding projects must create a minimum of 10 net new jobs within 12 months Existing projects must be in business at least one year and meet specific training criteria Benefit Lesser of 100% of training expense or $2,000 per employee Based on: • Wages and benefits • Number of employees • Number to be trained Operates on a reimbursement basis 19 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. West Virginia (cont.) Economic Opportunity Tax Credit Description Credit on qualified investments Must create a minimum of 20 net new jobs Credit can offset up to 100 percent of personal income tax attributable to qualified investment over a 10-year period Benefit Percentages vary based on number of net new jobs created • 30% for 520 jobs • 25% for 280-519 jobs • 20% percent for 20-279 jobs Taken proportionally over 10 years 20 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Virginia Workforce Retraining Program Description Requires new capital investment Must demonstrate integration of new technology into production processes, changing product lines in keeping with marketplace demands Benefit Provides services and funding to assist in upgrading the skills of existing workers Amount determined on a case-by-case basis 21 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Virginia (cont.) Virginia Economic Development Incentive Grant Description Benefit Discretionary, performance cash grant Paid in 5 equal annual installments Job creation requirements • 200-plus jobs for populations less than 300,000 • 400-plus jobs for populations over 300,0000 Payments begin in third year after capital investment and job creation Focused on significant headquarter, administrative or service sector expansions Capital investment required 22 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. New Jersey Skills4Jersey Description Benefit Training grant funds are available to New Jersey employers Reimbursement of costs, capped at $1,000 per employee Upgrade the skills of current employees or train new employees Companies may receive up to $100,000 total for training expenses Focused on retaining highly skilled and high-wage jobs in the state 23 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. New Jersey (cont.) Grow NJ Assistance Program Description Tax credit Creation of at least 10 new jobs and minimum investment of $20/square foot Investment must occur in qualified incentive area Benefit $5,000 to $15,000 per year for each new or retained job Rates vary by incentive location Additional $5,000 per job, per year when meeting additional scoring criteria 24 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Connecticut Human Capital Credit Description Tax credit for investments in training of employees in the skills required to do perform duties in Connecticut Benefit Credit is equal to 5% of the amount incurred for human capital investment Expenses considered: • Training materials • Instructor fees • Course registration fees • Related travel (within state) 25 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. 1 federal program to know © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Work Opportunity Tax Credit (WOTC) Federal income tax benefit administered by the states Provides up to $9,600 federal tax credit per eligible employee Credit amount is based on type of employee and wages A few state programs mirror the federal program The WOTC program is currently suspended for the 2015 tax year. 27 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. WOTC planning Qualifying hires do not need to be part of a capital investment strategy Company must identify eligible hires within 28-day qualification period A consistent, confidential screening process will help maximize potential credit Qualified employees must work a minimum of 120 hours to be considered eligible for the credit 28 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. WOTC targeted groups Long-term family assistance recipients Qualified recipients of Temporary Assistance for Needy Families (TANF) Qualified veterans Qualified ex-felons Designated community residents Vocational rehabilitation referrals Summer youth employees Supplemental Nutrition Assistance Program (SNAP) recipients Supplemental Security Income (SSI) recipients 29 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Tips and reminders © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Why aren’t all companies taking advantage of available workforce incentives? × Lack of awareness–not all opportunities are widely publicized × Inaccurate or incomplete documentation × Overpromises on investments or jobs–potential for missed goals × Failure to timely and accurately comply with reporting and maintenance procedures × Assumption of ineligibility 31 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Best practices Research continually to stay aware of programs Know the qualifiers and understand the commitment For incentives related to capital investment, start conversations early Establish a process for qualifying jobs or training expenses…or partner with someone who can provide a process 32 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Thank you! Mark Mitchell 713.625.3500 [email protected] Maria Assalone 212.372.1451 [email protected] Eric Levenhagen 317.805.6242 [email protected] 33 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. Upcoming tax webcasts May 2015 Mon 4 Tue 5 Wed Thu Fri 6 7 8 13 14 15 TODAY Workforce incentives: 12 key states for growing your business 11 12 Estate and succession planning ideas for 2015 1-2 p.m. Eastern 18 19 20 21 22 Tax-related items on the Congressional agenda and what you need to know 1-2 p.m. Eastern www.mcgladrey.com/events 34 © ©2012 2015 McGladrey McGladrey LLP. LLP. All All Rights Rights Reserved. Reserved. This document contains general information, may be based on authorities that are subject to change, and is not a substitute for professional advice or services. This document does not constitute assurance, tax, consulting, business, financial, investment, legal or other professional advice, and you should consult a qualified professional advisor before taking any action based on the information herein. McGladrey LLP, its affiliates and related entities are not responsible for any loss resulting from or relating to reliance on this document by any person. 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