Wednesday, April 27, 2011

Do Florida's corporate tax breaks pay off in jobs?

OK. I know that I've posted something for the week. But I found this article in my search on economic incentives. Thought it was worth sharing, although I don't agree with all of the assumptions. As a professional working with economic incentives for ten years, I realize that although some businesses have already made up in their minds that they will expand/relocate in Florida, the incentives help to close the deal for others who have not fully made a final decision. Economic incentives help persuade companies to choose Florida over other alternatives, like Georgia, Alabama and South Carolina.

Do Florida's corporate tax breaks pay off in jobs?

Ask Margo: Frequently Asked Questions about economic incentives (Part I)

Recently, I’ve been receiving a number of calls from businesses that are participating in Florida incentives. Some of their concerns have been related to what needs to be done to qualify for their payments, how to prepare for their reporting requirements and, what happens if they are unable to meet the schedule requirements?
My guess is if some businesses have asked these questions, there may be others who have the same concerns. As a result, I thought it would be fitting to answer some of these questions here. The following list encompasses questions I’ve received as well as others that may not have been asked yet, but will come up. If your burning question is not included, email your questions to me at and I will add your question to the list. To avoid information overload, I will present these questions in a series of posts. So, I urge you to return next week. 

My QTI project has been approved! Now what? What’s the NEXT step?
Congratulations! You’ve worked hard to negotiate your incentive project. You should give your team a pat on the back for a job well done. The NEXT type in the incentive process is to prove to the State that you meet the requirements to receive your payment. However, before you can do that effectively, I strongly suggest you make the decision to assign someone to manage the project on your behalf. If you choose to use a consultant for this process, you should find someone who is an expert on economic incentives, and who is familiar with the compliance management process. Be aware that most Incentive Consultants ONLY prepare their client’s annual reporting because it is profitable for them. If you choose to utilize your team, you need to participate in a training program that will provide you with the tools needed to successfully manage and report your project commitments.

Why is it taking so long to receive my payment?
Many businesses ask this question after their claims have been submitted to the State’s agent for review and approval. Unfortunately, the payment process takes some time. Project claim applications and supporting documents are due to the State’s agent by January 31st of each year. The agent is responsible for analyzing your incentive claim application and support documents to confirm that you satisfy your incentive project commitments in order to receive your payment.

The State’s fiscal year begins July 1st of each year. As such, the State cannot make a payment until the funds are available. In addition, the State CANNOT make a payment until it has received the local match (usually 20%) from the participating local government. For example, if a business submitted its claim in January 2011 (the State’s 2011/2012 fiscal year), the State will receive most of the local match payments in the local governments corresponding 2011/2012 fiscal year, which begins October 1st each year. What this means: if your County or City chooses to make its payment in October is, the State will process your payment once it receives the County or City’s local match payment. Therefore, it is safe to say that most businesses do not receive their scheduled payments until the last quarter of each year.

Stay tuned to next week's update of FAQ. As always, if you have any questions about tax incentives, feel free to contact me at

Thursday, April 14, 2011

Community Contribution Tax Credit

The Community Contribution Tax Credit Program (CCTCP) encourage Florida corporations to make donations toward community development and low income housing projects.

Florida Corporations that make donations to approved community development projects may receive a tax credit equal to 50 percent of the value of the donation.  Businesses may take the credit on Florida corporate income tax, franchise tax, or insurance premium tax.

Who qualifies as a sponsor?
§  A Sponsor MUST meet one of the following criteria:
o   Community Action Program
o   Community Development/Redevelopment Agency
o   Neighborhood Housing Services Corporation
o   Local Housing Authority
o   Historic Preservation District Agency or Organization
o   Regional Workforce Development Board (formerly Private Industry Council)
o   Direct-Support Organization (DSO)
o   Enterprise Zone Development Agency
o   Non-profit corporation affiliated with economic/community development efforts
o   Unit of Local/State Government
o   School Board

§  Donate to a project to construct, improve, or substantially rehabilitate housing, commercial, industrial, or public facilities, or to promote entrepreneurial or job development opportunities for low-income persons.

§  Donate to an eligible project in an area designated as a Florida Enterprise Zone.  [A project designed to construct or rehabilitate housing for low-income persons does not have to be located in an Enterprise Zone].

Who is eligible?
Any corporation paying Florida corporate income tax, franchise tax or insurance premium tax is eligible to receive a tax credit up to 50 percent of the value of donations to approved community development projects.

What is an eligible contribution?
Cash, property, and goods donated to approved sponsors are eligible for the credit.

How much credit can a business receive?
A business is eligible to receive credits of up to $200,000 per tax year.  Unused credits may be carried over for up to 5 years.

Monday, April 4, 2011

It's That Time Again!! Are You Tracking Your Incentive commitments?

Businesses participating in Florida's Economic Incentive Programs like QTI (Qualified Target Industry Tax Refund), BRF (Brownfield Redevelopment Tax Refund), or CITC (Capital Investment Tax Credit) are encouraged to monitor their incentive obligations.

You may be thinking that your commitments aren't required until December 2011.  And yes, that is true.  But, let's say that you wait until December to figure out if you've met your obligations. What if you are short on the required average wage? Are you prepared to LOSE your project because you did not meet the wage requirement? That's probably not the option you'll want to take! 
  • Have you considered analyzing your jobs and wage data to determine if you are on track to successfully achieving your incentive compliance goals?
  • What about your taxes? Have you considered monitoring your tax data now to avoid being OVERWHELMED at the end of the year?
Insider TIP: If you haven’t started monitoring your compliance commitments, don’t fret. You still have time.  Begin analyzing your first quarter's jobs, wage and tax goals NOW to determine if you are on track for meeting those goals.
I strongly urge that you DON'T WAIT UNTIL YEAR END TO DO THIS! Be proactive.

You may ask what is the benefit of managing your incentive goals throughout the year? My answer to that question is simply: If you monitor your project goals and determine that you are not on track for meeting one/more of those goals, you have an opportunity to make adjustments before it's too late.

Unfortunately, the reality is that most businesses do not track their incentive goals until the end of the year. For some businesses, this may be ok. However, for others, this may be to their detriment. Do you really want to take this chance?

To find out how to analyze your payroll and tax data to determine if you are on track for receiving a tax refund next year, email me at