Category: News by Industry

Senate Finance Committee Votes to Pass Landmark Bill Extending over $200 Billion in Tax Incentives

On August 2, 2012, Congress voiced the sentiment of the American business owner by introducing major tax incentive legislation. The Family and Business Tax Cut Certainty Act of 2012 is bipartisan legislation extending dozens of tax- cuts that have expired or are scheduled to expire at the end of this year. This is the best news possible for millions of companies across the nation.

Highlights of the Bill

  • Renewal of the Section 41 Research & Development Tax Credit
  • Reinstatement of Hiring Incentives / Worker Opportunity Tax Credits
  • Updated Alternative Minimum Tax (AMT) relief
  • Property Cost Allocation Extensions – Qualified Leasehold Improvements
  • Updated Alternative Minimum Tax (AMT) relief
  • Energy Incentives

Research and Development Credit

The bill extends for two years, through 2013, the research tax credit equal to 20 percent of the amount by which a taxpayer’s qualified research expenses for a taxable year exceed its base amount for that year and provides an alternative simplified credit of 14 percent. The bill also modifies rules for taxpayers under common control and rules for computing the credit when a portion of a trade or business changes hands. Based on preliminary estimates, a two-year extension of this proposal is estimated to cost $14.3 billion over ten years.

Work opportunity tax credit

This bill extends for two years, through 2013, the provision that allows businesses to claim a work opportunity tax credit equal to 40 percent of the first $6,000 of wages paid to new hires of one of eight targeted groups. These groups include members of families receiving benefits under the Temporary Assistance to Needy Families (TANF) program, qualified ex-felons, designated community residents, vocational rehabilitation referrals, qualified summer youth employees, qualified food and nutrition recipients, qualified SSI recipients, and long-term family assistance recipients.

Empowerment zone tax incentives

The bill extends for two years the designation of certain economically depressed census tracts as Empowerment Zones. Businesses and individual residents within Empowerment Zones are eligible for special tax incentives.

Cost Allocation

15-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements. The bill extends for two years, through 2013, the temporary 15-year cost recovery period for certain leasehold, restaurant and retail improvements, and new restaurant buildings, which are placed in service before January 1, 2014. The extension is effective for qualified property placed in service after December 31, 2011.

Extend AMT relief to 2013

Currently, a taxpayer receives an exemption of $33,750 (individuals) and $45,000 (married filing jointly) under the AMT. Current law also does not allow nonrefundable personal credits against the AMT. The proposal increases the exemption amounts for 2012 to $50,600 (individuals) and $78,750 (married filing jointly). The modified proposal would also increase the exemption amounts for 2013 to $51,150 (individuals) and $79,850 (married filing jointly). The proposal also allows the nonrefundable personal credits against the AMT in both 2012 and 2013. The proposal is effective for taxable years beginning after December 31, 2011. Based on preliminary estimates, a two- year extension of this proposal is estimated to cost $132.2 billion over ten years.

Energy Investment Credit 

Under current law, facilities that produce electricity from solar facilities are eligible to take a thirty percent (30%) investment tax credit in the year that the facility is placed-in-service. Facilities that produce electricity from wind, closed-loop biomass, open-loop biomass, geothermal, small irrigation, hydropower, landfill gas, waste-to-energy, and marine renewable facilities are eligible for a production tax credit for electricity produced over a ten-year period. The investment tax credit is better for small and offshore wind facilities. The bill would allow facilities qualifying for the production tax credit to elect to take the investment tax credit in lieu of the production tax credit for facilities that begin construction by the end of 2013.

What does it all mean?

If you own a business or commercial real estate, it is time to review what credits are available to you. The Senate has enacted significant legislation that is geared toward providing incentives to U.S. based businesses. If you fall into this category, it is time to investigate this new bill in detail.

 

Specialized Tax Incentives for the Hotel & Motel Industry

Hotel owners have three major tax incentives available to them, yet most are not taking advantage and consequently losing money. The main three programs that most in this industry are missing out on are:

1) Engineering-based Property Cost Allocation
2) Energy EPAct / 179d
3) Property Tax Reduction

Engineering-based Cost Allocation

Engineering-based cost allocation identifies opportunities for federal, and in some cases, state tax advantages to owners of commercial industrial real estate by accelerating the depreciation on their property. As an expert in this field, we have performed several hundred studies for large and small hotels across the U.S.

Taxpayers are typically correct in depreciating personal property such as equipment and furniture over five or seven years, but they often neglect available federal and state tax benefits by erroneously depreciating their entire investment in constructing or acquiring a building over 39 years. To do this correctly, one must hire an experienced engineer with a thorough understanding of construction finance.  The engineer will review all blueprints, architectural drawings, and electrical plans to isolate structural and mechanical components from those that are considered personal property in addition to identifying architectural and engineering fees that can be segregated.  The resulting cost allocation report will allow a taxpayer to:

  • Adjust the timing of deductions thus maximizing tax savings
  • Create a complete audit trail to resolve any IRS inquiries
  • Capture immediate retroactive savings on qualifying properties
  • Reduce real estate tax liabilities significantly

Energy EPAct / 179d

The second program often missed by those in this Industry is Energy EPAct / 179d. This is a federal deduction available for energy efficiency items placed in service after January 1, 2006. If you upgraded lighting, HVAC, or any part of the building envelope with energy efficient items you are likely eligible for a deduction of up to $1.80 per square foot.

We recently completed a project on a 65,000 square foot Holiday Inn Express and were able to assist in capturing $1.20 per square foot. This resulted in a $78,000 federal deduction for the owner of the property!

Property Tax Reduction

Probably the most frustrating bill that comes each year (or in some cases, twice each year) is the property tax bill. As of this writing, our studies indicate the average Hotel in the United States is being overcharged by 15% on their property taxes. There are many reasons Hotels are overcharged but mainly it is the result of improper assessments by the municipality. If you are a Hotel owner and are paying property taxes over $50,000 per year, you should have a review completed on your facility. Reductions in this area are direct to your bottom line!

 

If you have not had a thorough review on your facility, especially as it relates to the areas of Property Cost Allocation, Energy EPAct, and Property Tax Reduction, you are likely losing money that should remain in your pocket.

Building, Purchasing or Renovating a Hotel or Motel? Read This First!

If you haven’t heard, property Cost Allocation (aka Cost Segregation) is back with a vengeance!

A cost segregation study is an essential fiduciary component when building, purchasing or renovating a hotel or motel.  Hotel owners and operators who do not work with a qualified expert to perform a cost segregation analysis will fail to take advantage of significant tax benefits!

What Benefits?

Cost Segregation is an engineering based tax analysis in which certain non-structural components of a building are broken out and allocated to a shorter life class thus depreciating them at an accelerated rate.  This process reduces a taxpayer’s federal and state taxable income.

Examples of personal property for hotels would include:  carpeting, most other flooring, decorative lighting, cabinetry, dedicated electrical and plumbing systems, power generators, security systems, wifi/internet cabling, parking lots, curbs, sidewalks, landscaping, fountains and more.

All hotels and motels have substantial areas requiring daily maintenance and frequent updating due to use.  For example entries, lobbies and hallways are notorious for having carpeting and flooring commonly replaced every 3 to 4 years.  Most depreciation schedules will reflect all assets being depreciated over 39 years because this is the simplest way, however not the method that provides the most befit to the owner or operator nor is it tax compliant.

Cost Segregation fixes this problem because it applies MACRS to those short life assets thus accelerating the depreciation and reducing the owner or operators income tax burden.  What is the benefit?

  • New purchase or construction will result in increased cash flow in the first 6 years
  • Owned for 5 or more years qualifies for all unrealized depreciation carried forward into the current tax year
  • Purchased or constructed from January 1, 1987 – all improvements and renovations will qualify based on individual completion dates

In most cases the ROI for hotel and motel owners engaging in cost segregation is very high.  Typically they can see a 200% return on investment.  The standard fee that a hotel or motel owner can expect to see when engaging a cost segregation firm should be between ten and twenty thousand dollars per building.  The fee is dependent on several factors:  size of property, quality of construction, location, availability of construction documents, closing statements and more.

In summary, a Cost Segregation Study performed on a hotel or motel can provide significant immediate and long-term tax savings. Even properties purchased years ago can capture benefit.  Any hotel or motel whether purchased, constructed or renovated costing in excess of $500,000 should consider this service.

 

Specialized Tax Incentives for the Medical & Health Care Industry

If you have yet to hear; Local, State, and Federal Governments have been feverishly enacting numerous incentives to help stimulate business economies. Due to the high tax brackets of most medical practitioners, these incentives are now an essential part of the tax planning process. If you haven’t had a thorough review of your qualifications for incentives, keep reading.

How Much Money is Available?
The average available benefit for a small practice with their own building is $160,000.

Who Qualifies?
The following is a list of common qualified practitioners:

  • Physicians
  • Dentists & Orthodontists
  • Dermatology & Skin Care
  • Vision & Eye Care
  • General Practicioners
  • Surgeons
  • Therapists
  • Medical Imaging

How Do I Qualify?
You may qualify if you meet any of the following:

  • Own Commercial Property
  • Directly Employ U.S. Staff
  • Pay Real or Personal Property Tax
  • Pay State or Federal Income Tax
  • Perform Energy Efficiency Upgrades
  • Upgraded Equipment Purchases

How Do I Learn More?
If you would like a thorough analysis of incentive dollars available for you, please contact us today.

Flint Journal: Company Helping Find Stimulus Money, Tax Breaks for Local Businesses

FLINT, Michigan — A Flint company that helps local businesses qualify for government stimulus money is doing so well that it plans to hire about 100 employees in the next year.

Growth Management Group managing partner Ryan Maddock said the company, at G-3490 Miller Road, directs businesses to stimulus act provisions that have secured an average of $200,000 for establishments in Genesee County.

Rowe Professional Services Company is one company that has benefitted. Rowe Controller Douglas Kline said his company claimed tax breaks on its building, at 540 S. Saginaw St., provided through a cost segregation plan that “takes this big monster of a building and breaks it down into components.”

Depreciation on the building has been calculated and the company receives lower tax bills for years to come, Kline said. He could not provide specific figures on tax breaks for the $23 million project, calling the breaks “beneficial.”

Growth Management Group also found tax breaks during a research and development study for Rowe. Kline said tax law changes in 2009 allowed the company to refile its tax returns for 2006, 2007, 2008 and 2009, and it will do so for the 2010 tax year for some “very significant tax credits” on federal income tax returns.

The management group has worked “hand-in-hand” with Rowe’s accounting firm, and Kline said the business has been “really pleased with the results.”

Maddock said several of the breaks come through three main stimulus plans, including the Hiring Incentives to Restore Employment Act, which allows an employer to take a tax credit of up to $1,000 per worker hired between Feb. 3, 2010, and Jan. 1, 2011. The act also offers up to $250,000 for small businesses to write off equipment investments.

The Small Business Jobs Act has allowed more than 1 million companies to receive stimulus money, the biggest stimulus expansion since 1981, said Maddock, who pointed out that a stimulus act of some kind has been done every year in Michigan and nationwide since the early 1980s.

The SBJA, providing eight tax cuts and $30 billion in small-business lending, applies only to businesses that have $50 million or less in annual sales. Companies can apply for funds retroactively back to 2007.

A commercial property owner’s benefit is open to anyone who purchases a commercial property for $650,000 or up, or has done at least $250,000 in renovations within the past 20 years.

Lawrence Moon Funeral homes, with locations in Saginaw, Flint and Pontiac, has received such money. One of the misconceptions people have about the money, Maddock said, is that the benefits come “with a lot of strings attached.”

Business is going so well for Growth Management Group that it will move to the former Diplomat Pharmacy headquarters at the corner of Corunna and Elms roads in the next 45 days, Maddock said.

He said he hopes to add more than 100 Flint-area employees at the new location in the next 12 months, with positions in sales, customer service, law and engineering. Pay will range by position and experience.

Growth Management Group does charge for its services, between 10 and 33 percent of the benefit garnered. And while the funding is referred to as stimulus, Maddock said the laws are giving back to those who have invested in the community.

“This is a reward for work that you’ve already done,” Maddock said. “You are honestly getting some of your own money back.”

The above article was reposted from The Flint Journal.
Original Article By:  Roberto Acosta 


Two of the Biggest Tax Breaks for the Restaurant Industry

Two of the biggest tax provisions that affect the restaurant industry are the 15-Year Restaurant Depreciation and the Worker Opportunity Tax Credit.

Both tax provisions expired at the end of 2011 but look like they are back with the initial passing Family and Business Tax Cut Certainty Act.

The National Restaurant Association mounted a wide scale campaign to inform Congress of the importance to provide tax certainty to restaurateurs.

15-year Depreciation

Simply put this provision allows a taxpayer to allocate the costs of an asset over the period in which they are used.  The 15-year Depreciation provision allows leasehold improvements, restaurant improvements and new restaurant construction, and retail improvements to be depreciated over 15 years rather than the standard 39-year recovery period that would normally apply to nonresidential real property.

Due to the nature of the industry restaurant buildings experience daily wear and tear that many industries do not.  As a result of this increased wear and tear, most restaurants remodel or update their buildings every six to eight years.  Thus, the 15 year provision more accurately fits the recovery timeframe.

Benefits of the 15-year Depreciation provision:

  • Reduces cost of capital expenditures
  • Increases cash flow
  • Allows hiring more employees
  • Allows capital expenditures to expand business
  • Reinvestment in construction & renovations positively affects the economy

Worker Opportunity Tax Credit

This tax credit is made available to employers who hire individuals from several targeted groups facing significant barriers to employment.

Examples of WOTC-target groups:

  • Veterans receiving food stamps or are unemployed suffering a service related disability
  • Former Felons
  • Disconnected Youth
  • Family Members receiving TANF

Currently the restaurant industry employees over 13 million people nationwide.  Many of these individuals were hired specifically due to the WOTC act being in place.   The WOTC provision allows workers who may not have been able to, move into self-sufficiency by earning a steady income and becoming contributing taxpayers.

Hiring from the group of qualified job seekers via the WOTC provision can mean direct federal tax savings to your business ranging from $1,200 to $9,000 per qualifying employee.  Restaurants tend to experience better than average qualification rates in state and federal hiring credit programs.  Hundreds of thousands of dollars are provided via this provision annually.

Who Qualifies for Tax Incentives and Stimulus Money?

We hear a lot about stimulus money these days. We hear who is getting it and what kind of positive things it is doing for the nation. Those stimulus dollars, however, should be working to benefit more local, small to mid-sized businesses. If you fall into this category, your money is likely going to someone else’s business; potentially your competition.

Wading through government forms, even on the simplest level, can be aggravating and time consuming. The idea of ‘free money’ from the government can also be a very scary prospect for skeptical investors and business owners. But there are people out there who have spent a great deal of time learning how these programs work to provide businesses with opportunities that can be extremely beneficial.

Ryan Maddock and Jeremy Harrison of Growth Management Group (GMG) lead a small but growing team of dedicated, positive and knowledgeable staff members that help business owners bridge the daunting gap between not having stimulus money and having it. These funds are not the same as grants which typically need to be used for ultra-specific purposes. Stimulus money can, in many cases, be used as discretionary funds. This frees up the business owner to use the funds as his or her vision sees fit whether it is for new software, equipment, tax offsets, etc. Manufacturing firms in the area, businesses in other states, hotels, restaurants such as Leo’s Coney Island and even Lawrence Moon Funeral Home have capitalized on stimulus money through GMG’s services.

There are currently four programs in full swing for a variety of businesses; manufacturing across the U.S. and in some cases Canada, commercial property owners who have purchased their property within the last twenty years, the HIRE act which pays employers that hire 25 new employees a year (that includes turnaround) and energy credits/energy incentives which is a program that will probably evolve further. Currently the Obama administration has set aside 60 billion dollars for renewable energy. While these programs do have other stipulations and guidelines, GMG has been successfully wading through paperwork for clients in 38 states. Ryan pointed out that stimulus funds have been around since the 1980’s. These programs usually morph into new programs over time and they’re not going anywhere.

If you’re wondering why you’ve not heard much about the eligibility for these funds that is simple to explain; the federal government isn’t always that great at advertising and marketing. As a result, ninety-two percent of companies that qualified for these funds last year didn’t access them and the eight percent that did, were larger companies who tend to have an easier time accessing these sorts of programs

Staying on top of the changes in federal programs is crucial to the success of the service offered by GMG. Fees are based on a percentage of funds obtained, not a flat or hourly rate which business owners have to come out of pocket for. And in many instances, the funds can be applied retroactively from as far back as 2006.

Worried about how your CPA feels about these “too good to be true” stimulus dollars? GMG works with local CPA firms so they understand the hesitancy that comes along with these types of government programs and are able to alleviate those fears. Do you feel a sense of malaise when it comes to paying taxes? There’s good news for you too. Since stimulus funds are made up of tax dollars, this might be your chance to cash in on all the money you’ve doled out over the years to upgrade your business.

See Full Article as Featured in Downtown Revival Magazine.   Click Here

2012 Tax Incentives for Manufacturers

The U.S.’s tax system is uncompetitive and makes it difficult for manufacturers to stay competitive.  Currently the United States has the number 1 Corporate Tax Rate.  However, tax incentives and credits have been put in place that allow manufacturers to reinvest, create and retain jobs to become more competitive.

The National Association of Manufacturers advocates strongly on behalf of the manufacturing industry nationwide to renew and extend tax credits that directly affect your industry.  According to their recent Statement to the Subcommittee on Select Revenue Measures dated June 8, 2012, “Renewing the tax extenders will provide a bridge of certainty and predictability for manufacturers.”

On Friday, August 3, 2012 the Senate Finance Committee approved the Family and Business Tax Cut Certainty Act.  This act extends more than 40 programs including the R&D tax credit and the WOTC tax credit through 2013.

The U.S. offers some of the world’s richest tax incentives, but chances are your organization is not taking advantage of them and getting the cash you deserve.   Working with an established cost recovery firm with it’s staff of engineers and attorneys specializing in tax and IP will maximize the credits you qualify for and, most importantly, provide a defense for those credits.

Specialized Tax Incentives for Restaurants

You are a small business owner who owns and operates a restaurant. Your time is consumed with ensuring tables are turned and your business is moving forward.  You do not have time to research specialized tax incentives let alone determine if you qualify.  You are not uncommon.

Below is a brief summary of tax incentives you may be missing out on:

  • Commercial Building Tax Deduction
    Tax deduction for expenses incurred for energy efficient building expenditures
  • Engineering-based Property Cost Allocation
    Recover costs through deprecation of tangible property used in the operation of a restaurant business.Qualified Items Include: Beverage Equipment, Storage Area, Furnishings, Bar Area, Flooring, Lighting, Wiring, Sound System, and Kitchen Area
  • Employee Tax Credits
    Local, State, and Federal Incentives to hire and retain employees. Available credits up to $9,000 per qualified new hire.Credits are available for employees in the following categories: Those living in Empowerment Zones, Young Adults, Wounded or Disabled Veterans, Food Stamp Recipients, and those receiving Supplemental Security Income
  • Commercial Property Tax Reduction
    Reduction available on both Personal and Real Property Taxes paid.
  • Section 179
    Can take an increase in deduction up to $35,000 of the cost of eligible equipment purchases

The above is merely a brief list of some of incentives you could benefit from if you are a restaurant owner.  The easiest way to determine your qualification is to ask an expert.

The Medical Industry and Tax Credits

What if you were told that you as a Health Care Provider could receive funds for medical equipment, devices, computers, furniture, and other office or medical equipment?  You would ask, “How?’.  It is a simple process of taking advantage of tax incentives and credits made available specifically to your industry.

The most immediate reply to this statement is, “If it is that simple, why have I not heard about this before?”.  Simply put, tax incentives and credits are confusing and most CPA’s are unable to fully capture the available incentives and credits for their clients.

Successful health care providers, from individual practices to large entities, are constantly faced with the decision of when and how to invest in their own businesses.  The most important factor being, the total cost of the investment, including the potential tax benefits.

Tax Incentives / Credits Every Medical Facility Owner Should Consider

  • Cost Segregation
  • Section 179 D
  • Property Tax
  • Historical Tax Credits
  • Section 45L Tax Credit
  • R&D Tax Credits
  • Hiring Tax Credits

This is just a short list of possible tax incentives and credits available to Health Care Providers.  The easiest way to determine if your organization would qualify for tax incentives or credits is to ask an expert.