Ask Margo: Frequently Asked Questions About Economic Incentives (III)

The posts of the past three weeks have included a list of questions/concerns I’ve received from a number of businesses enquiring about their incentive projects. I promised to provide some additional questions/concerns that you may be interested in. The following list encompasses questions I’ve received over the years, as well as others that may not have been asked yet, but will come up. If your burning question is not included, email them to me at info@marlynnconsulting.com and I will add your question to the list. If you haven't had the opportunity to review the previous blogs, I encourage you to check them out now.

Why is managing my incentive project so important?

In my experience, many businesses do not worry about their incentive projects until it’s time to submit their reports to the State for approval of their payments. The problem with this method is it does not give you an opportunity to make adjustments if you do not meet one or more of your project requirements at the end of the year. Usually, if you fail to meet one or more of your incentive commitments, you will not only lose the scheduled payment for that year. You will also forfeit any remaining payments under your incentive agreement.

Can I manage my incentive project on my own?

Sure you can! With some assistance, most businesses are capable of monitoring and reporting their incentive project commitments on their own. I would suggest, however, that the team working on your project participate in a training program to ensure that they know the specific requirements for your project. The State requires specific documentation to confirm that your business qualifies to receive a payment. To ensure timely review and approval of your payment, your team should be familiar with the types of documentation and the methods used by the State to analyze your requirements to confirm that you’ve met those requirements.

How would you help me manage my project?

A consultant assisting a business with management of its incentive project should perform periodic reviews of the business’ incentive obligations to ensure that the business is on track to meet those obligations. At Marlynn Consulting, we perform periodic analysis of your incentive requirements during the year and provide you with a report of our results. Our report also details any findings or recommendations that we believe will help you to meet your project goals.

Ask Margo: Frequently Asked Questions About Economic Incentives (Part II)

As I stated in last week's post, I’ve been receiving calls from a number of businesses enquiring about their incentive projects and voicing their concens. I promised to provide some additional questions/concerns that you may be interested in. Again, this post is a continuation of  Frequently Asked Questions.

The following list encompasses questions I’ve received over the years, as well as others that may not have been asked yet, but will come up. If your burning question is not included, email them to me at info@marlynnconsulting.com and I will add your question to the list.

What happens if I miss my QTI goals and don’t qualify for the scheduled payment?

Usually, if a company does not qualify for one of its payment, that business will LOSE its QTI project. What this means is that the business’ annual QTI claim application will be denied. You will not receive a payment for the year you miss one or more of your incentive commitments and you will also lose any remaining payments scheduled under your incentive agreement.

However, if the State has approved an Economic Recovery Extension (ERE), you may be provided an opportunity to apply for the extension if your project is denied.

What is an Economic Recovery Extension (ERE)?

Usually when there is an extreme economic downturn, the State’s Legislators approve an ERE to assist QTI Businesses whose project goals may have been negatively affected. The ERE allows a business that was unable to meet one or more of its job requirements to extend the project’s job commitments by one or two years.

My payment was denied, what happens now?

With most incentive programs, if a business’ scheduled payment is denied because it did not meet one or more of its project’s commitments, that business’ incentive project will be terminated. What this means is that business will not receive the payment for that year. Nor, will it receive any remaining payments scheduled under its incentive agreement.

The QTI program has a concession that allows you to extend your job requirements by one or two years. However, the extension is not always available. For the other programs, this extension is not an option. If your incentive requirements are not met, you will LOSE your project and forfeit ALL remaining scheduled payments.

What if I don’t qualify for my Quick Action Closing Fund payment?

The Closing Fund program is a little bit different than the QTI and other incentive programs, in that businesses approved for a Closing Fund project are paid at the beginning, once the project is approved. In this case, if your business does not meet one or more of its Closing Fund goals, you will be responsible for repaying the State a portion of the money you received – plus interest and penalty.

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 info@marlynnconsulting.com 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 31^st 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 1^st 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 1^st 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 info@marlynnconsulting.com.

Free programs help small Jacksonville businesses take next step | jacksonville.com

Free programs help small Jacksonville businesses take next step jacksonville.com