In an effort to offer our clients the highest level of service, PayPros is now offers tax incentive services through nationally recognized leaders who specialize in securing financial benefits for businesses through state and government programs. Our partners will perform a cost free analysis in an effort to identify any programs for which your company may qualify.
Not only do we offer the screening tools and credit calculations, but in order for your company to maximize your potential benefit your tax partner must do more. That is why we feel this service is so valuable, some highlights of our service screening services are:
Customizable screening options include:
- Live operator phone screening
- Conventional paper screening
- We help manage internal compliance
- Match screened new employees to actual new hires.
- Identify non-compliant areas, and work with them to make them compliant
- Educate hiring managers about the credit
- Make sure that supervisors are aware of employees’ eligibility so the company maximizes the credit.
- Identify how employer can target potentially certifiable job candidate pools.New Paragraph
- The Work Opportunity Tax Credit (WOTC):
A federal tax credit that reduces the federal tax liability of any for-profit employers. Employers can hire from eleven different targeted groups:
- Qualified Temporary Assistance to needy Families Recipients (TANF)
- Qualified Veterans/Disabled Veterans
- Unemployed Veterans
- Qualified Ex-felons
- Qualified Designated Community Residents (DCR) residing in an Empowerment Zone (EZ), Renewal Community (RC), or in a Rural Renewal County (RRC)
- Qualified Vocational Rehabilitation Agency Referrals
- Disconnected Youth
- Qualified Summer Youth (SY)
- Qualified Food Stamp Recipients (FS)
- Qualified Supplemental Security Income Recipients (SSI)
- Qualified Long-Term Family Assistance Recipients (LTFAR)
Maximum Credit Available:
- $1,200 for each new Summer Youth* hired
- $2,400 for each new Adult hired
- $4,800 for each new Disabled Veteran hired
- $9,000 for each new Long Term Family Assistance Recipient hired over a two year period
*The credit is based on 40% of up to $6,000 in qualified wages during the first year of employment. Summer Youth qualify for 40% of the first $3,000 in wages during the required working period of May 1 through September 15.
Minimum Employment or Retention Period:
All new employees must work a minimum of 120 hours and individuals hired as Summer Youth employees must work at least 90 days, between May 1 and September 15, before an employer is eligible to claim the tax credit. Recent program changes took place in 2007 that impacted multiple target groups. One such change was the consolidation of the Welfare-To-Work Tax credit program into the WOTC program to become known as Long-Term Family Assistance and a second change was the creation of the new Disabled Veteran target group that went into effect May 25, 2007. On February 17th as part of the American Recovery and Reinvestment Act (ARRA) of 2009 two new categories were created Unemployed Veterans and Disconnected Youth.
The WOTC Program has been reauthorized until August 31, 2011. Long-Term Family Assistance Recipients who began work after December 31, 2006 and before September 1, 2011, can earn employers up to $9,000 if they are a member of a family:
- That received TANF for at least 18 consecutive months before the hire date
- Whose TANF eligibility under federal or state law expired after August 5, 1997 (for applicants hired within two years after their eligibility expired)
- That received TANF for at least 18 months, beginning after August 5, 1997, and is hired not more than two years after that 18-month period
Disabled Veterans who began work after May 25, 2007 and before September 1, 2011, can earn employers up to $4,800 if they:
- Are entitled to compensation for a service-connected disability of at least 10%
- Have a hiring date which is not more than 1 year after having been discharged or released from active duty in the Armed Forces of the United States
- Have aggregate periods of unemployment during the 1 year period ending on the hiring date which equal or exceed 6 months
- Federal HUD Zone Tax Incentives, Empowerment Zones and Renewal Communities: Enterprise Zone (EZ) or Renewal Community (RC) Credits credit against Federal taxes for hiring and retaining employees who live and work in an EZ or RC zone. Please note: The EZ and RC Wage Credits cannot be taken for any individual employed at any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other gambling facility, or store whose principal business is the sale of alcoholic beverages for consumption off premises. The EZ and RC Wage Credits are not available for family members of the employer, including sons, daughters, parents, stepchildren, stepmothers, stepfathers, in-laws, and other persons treated as dependents under the tax code. Similar exclusions apply to 5 percent owners related to the employer and family members of majority shareholders or partners of the employer.
- HIRE Act (Hiring Incentives to Restore Employment): Often referred to as a job stimulus bill, the HIRE Act provides a payroll tax exemption to employers who hire unemployed workers after February 3, 2010 and before January 1, 2011. The individual was employed for no more than 40 hours in the last 60 day period ending on the date that the individual was hired. The new hire needs to fill out an affidavit indicating that they were unemployed and sign it under penalties of perjury. The individual was not employed to replace another employee unless the other employee resigned voluntarily or was terminated for cause. The new employee cannot be a relative of any owner who has 50 or more percent ownership. The tax break applies to wages paid with respect to employment on the day after the HIRE Act become law through the end of 2010. Also in the HIRE Act, a new hire retention credit of up to $1,000 per individual is available for employers who retain these previously unemployed workers for at least 52 weeks in a row.
- New Hire Retention Credit (Section 102): Under Section 102 of the HIRE Act, if the qualified individual is retained by the employer for 52 consecutive weeks, the employer is entitled to a new hire retention credit of up to $1,000 per individual. The credit is equal to the lesser of 6.2 percent of wages or $1,000. In other words, if wages are at least $16,129.03, then the new hire retention credit is $1,000. Otherwise, it is 6.2 percent of wages. During the last 26 weeks of that period, the qualified individual must have wages that are at least 80 percent of the wages for the first 26 weeks.
- Employment Network Ticket to Work Services: During our Work Opportunity Tax Credit Screening we are also looking for potential Employment Network eligible new hires who will qualify for the Ticket to Work Program. The new hire must earn at least $720 monthly for the first nine months and $1,000 monthly from month ten through sixty. The employer is only compensated for the time in which the employee works for the employer for up to 5 years. There is no recapture or penalties for terminating employment. There is no cap to the amount that payments received under the program. As long as the employee meets the minimum income requirements the employer can expect to receive the following:
- Refund reviews $425 after first month,
- $425 after first three months,
- $425 after first six months,
- $425 after first nine months,
- $125 monthly from month 10 to 60.
Employment Network Payments does not affect WOTC credit calculations or reduce the amount of credit available to be utilized. The opposite is true, employees that have received Employment Network eligibility are given a ticket to work and automatically qualify for WOTC.
- Indian Tax Credit:
Employees that are certified members of an approved Native American tribe or the spouse of a certified member are qualifying employees. The employee must live on or “near” the reservation and perform the majority of the work on the reservation and has worked for a minimum of one year. The company must be non-Indian or non-Tribal owned business and located on the reservation. The maximum annual credit available is $4,000 per eligible employee.
- Sales and Use Tax:
Our review process will help determine whether or not you have paid more than your fair share. While taxing authorities allow for exemptions for many purchases related to manufacturing activities, the maze of laws and the day-to-day challenges in paying suppliers often results in companies significantly overpaying sales tax. Our refund review is focused on recovering sales and use tax overpayments and most importantly, helping you improve future compliance.
Our sales and use tax professionals stay current with the constantly changing state and local sales tax regulations. Using this knowledge, we provide quality, value-added state and local sales tax consulting services to meet your needs. We customize our services to meet the needs of your business and offer a variety of sales and use tax consulting services including but not limited to:
- Refund reviews
- Audit representation and defense
- Self-managed/internal audits/reviews
- Tax guides and manuals
- Nexus studies; Dispute/notice resolution
- Letter rulings; Tax planning
- Exemption certificate management
- Process improvements
- Sampling analysis and evaluations
- Predominate use studies for utilities
- Cost Segregation Studies:
Green Building Energy Efficiency Tax Deductions (Section 179D):
The Energy Policy Act of 2005 added section 179D to the Internal Revenue Code. Section 179D permits a deduction for the costs of installing certain energy efficient building systems in commercial buildings.
To claim the deduction, a taxpayer must obtain a certification of energy savings. The certification process must be performed by a qualified firm or individual that performed an on-site inspection of the building. The energy savings must be calculated using qualified software from the Treasury Department’s list of certified software programs. Our staff includes engineers that are qualified and certified to perform Green Building studies.
Green Building 179D Energy Efficiency Tax Deductions:
A tax deduction of up to $1.80 per square foot is available for improving the energy efficiency of existing commercial buildings or designing high efficiency into new buildings. Investments that appreciably reduce the heating, cooling, water heating and interior lighting energy cost of new or existing commercial buildings are eligible for a tax deduction.
Overview of the Green Building Study Process:
- Review specifications and determine if building qualifies
- Site visit
- Certified engineer performs the energy modeling and analysis
- The study is completed and turned over to the building owner and their financial adviser
- US Importers Tax Incentive (IC-DISC): IC-DISC is an acronym for Interest Charge – Domestic International Sales Corporation. It is the last remaining export incentive available to U.S. exporters. It has been around in its current form since 1984, but did not become popular until the Jobs and Growth Tax Relief Reconciliation Act of 2003 lowered the capital gains tax rate making it much more attractive for exporters.
It is a domestic ‘paper’ entity that does not require employees, offices, or tangible assets. To be an IC-DISC, a corporation must be organized under the laws of a State or the District of Columbia and elects to be treated as an IC-DISC and is governed under Internal Revenue Code §§991-997.
Which Companies Qualify?
The different entity types that can use the IC-DISC include flow-through entities (S-Corps, partnerships, LLCs, etc.); and closely-held C-Corps. It’s important to note that you do not have to be the manufacturer of any products to take advantage of IC-DISC – you qualify if you export domestically produced products.
The industries that have taken advantage of IC-DISC include:
- Software Companies
- Engineering/Architectural firms working on buildings/structures in
- Foreign locations
IC-DISC is only viable and valuable to the shareholders if the following criteria apply:
- Minimum annual gross export revenues of $2,000,000 (direct or indirectly)
- Minimum annual net export revenues of $500,000 (direct or indirectly)
- Significant tax liability on current or projected revenues
What are the benefits? An IC-Disc Example:
Step #1: The exporting company creates a tax-exempt IC-DISC. The IC-DISC is a “paper” entity that does not require office space, employees, or tangible assets. In this example, the IC-DISC is set-up under the ownership of the individual shareholders of the exporting company.
Step #2: The exporting company pays the IC-DISC a commission. The IC-DISC commission may be determined as the greater of 50% of export net income or 4% of export gross receipts. The commission may be increased even more in certain instances.
Step #3: The exporting company deducts the commission amount paid to the IC-DISC from its ordinary income taxed at 35%. The commission income for the IC-DISC is deferred from current taxation.
Step #4: When the IC-DISC pays dividends to its shareholders, the shareholders pay dividend income tax, currently at a rate of 15%.
Step #5: The net effect is a 20% tax savings on the IC-DISC commission
As with many tax incentives, there is a chance for an IRS audit. In the event of an audit, our fee for a study includes 40 hours of audit support. We feel comfortable in providing audit support because our engineers are experienced and follow all the rules and regulations as required by the IRS. In addition we feel our studies will withstand IRS scrutiny because we follow the methodologies recommended by the IRS.