Tag: Cost Savings

What the Last 5 Presidencies Have In Common and How It Affects Every Manufacturer In America

Believe it or not, there is at least one thing that the last five Presidential Administrations have unilaterally supported, and we can feel quite certain the next will as well.

There is a little known tax credit that is part of Section 41 of the Internal Revenue Code, allowing manufacturers to reclaim a small portion of their annual payroll simply by performing activities manufacturing companies are already doing as part of daily operations.

This credit may be the only thing both sides of the aisle can actually agree on.   It has bipartisan support in both houses, backing of the Obama Administration, and has been renewed by every single Presidential Administration over the last 32 years.  How can there be such a disconnect between what may be the only thing the last five presidencies have in common?

A lot of the confusion is in the name.  Many manufacturers don’t believe they do “R&D” because they don’t have a traditional R&D department.  The IRS definition of R&D is quite different than yours or mine.    It often includes activities such as:

  • Manufacturing
  • Fabrication
  • Engineering
  • New Product & Process Development
  • Developing New Concepts or Technologies
  • Design – Layout, Schematics, AutoCAD
  • Prototyping or Modeling
  • Testing / Quality Assurance:  ISA 900X, UL, Sigma Six, etc.
  • Integration of new machinery (CNC, SLA, SLE, etc.) into existing processing
  • Software Development or Improvement
  • Automating or Streamlining Internal Processes
  • Developing Tools, Molds, Dies
  • Developing or Applying for Patents

Just to name a few…….

Only the folks in Washington DC could take unilateral support and turn it into unilateral confusion.

Since 2004 Growth Management Group has been educating and assisting Manufacturers and other Commercial Property Owners on their rights to programs buried deep within the tax code.   To date we’ve assisted small and mid sized companies discover over $300M in benefit.   Contact us for a comprehensive review.

$14B Available in Manufacturing Tax Credits

$14B Available in Manufacturing Tax Credits

There is a new bill that would put $14B in tax credits back into the pockets of manufacturers.  What makes this bill unique amongst its predecessors is that manufacturers don’t have to wait around for this one to pass through its bureaucratic channels (or stall out in a constant state of delay and confusion).

Manufacturers can take advantage of this program before it passes.  This is because a largely unknown version of the program already exists called the R&D Tax Credit.  A temporary version is in place through the end of 2013 as part of the American Taxpayer Relief Act of 2012.  So, manufacturers can actually begin receiving funds this year based on previous years activities.

5 Reasons Manufacturers are not taking advantage of the current version of this credit:

  • They don’t understand the IRS definition of R&D (see article:  R&D I don’t think we do that!)
  • They believe their companies are too small
  • They believe the benefit won’t outweigh the work
  • They believe they have to change the way they operate in order to qualify
  • They believe that the credit is not being renewed

Not only will this credit most likely be renewed, but congress has continually made it easier to qualify and expanded the eligibility to include not only the Fortune 1000 but also small to mid sized firms who can utilize the credit to significantly affect their bottom line.

When working with manufacturers we ask two questions to determine qualification:

  1. Are you expecting to be profitable this year, or were you profitable in any of the last 4 years?
  2. Is your annual payroll for any of these years in excess of $1 million?

Since 2004 Growth Management Group has been educating and assisting Manufacturers and other Commercial Property Owners on their rights to programs buried deep within the tax code.  To date, we’ve assisted small and mid sized companies discover over $300M in benefit.  Contact us for a comprehensive review.

 

 

Stop Surviving and Start Growing

CEO’s are about the thrill of the deal, achieving something no other person has, the adventure, the vision!  Terms like survival, and cost cutting are something they’re willing to tolerate, but only as a means to the next opportunity to dream again. Even though the business landscape hasn’t changed much in the past few years, the attitude of the CEO has.  We are tired of surviving, and ready to grow again!  Even more, we refuse to live in survival mode.

So, what’s next?  The answer is simple:  GROW.  It seems like such an obvious solution, why didn’t we think of it years ago?

I think it’s because we weren’t hungry enough!  Cutting costs was easier than returning to the practices that once grew our empires in the first place.  But now the fun is gone, work has become exactly that…WORK!  So, the decision has been made; the dreaming has started again and this is where we go from here.

4 Ways to Stop Cutting & Start Growing:

1st:  Start dreaming again.  Get away, go for a drive, sit down with a notepad or whatever it is you once did to dream.  Don’t be afraid, don’t get caught up in the “what if” and “how will we pay for that” roadblocks.  Let’s be honest, you never counted cost the first time you wrote a vision, why start now?  One tip:  dream bigger this time.  You’re older, farther down your path, with more capacity.

2nd:  Make the commitment.  Not just to yourself, make it known.  Tell your staff, family, colleagues and friends.  Accountability is a mighty force and letting others know your plan not only gets others helping push the boulder up the mountain, but it makes giving up more difficult.  Once your name is on the line and your direct reports are coming back with status updates, your team is involved; it becomes real.

3rd:  Get back to the basics.  I know it was fun for a while when we didn’t have to work to get new clients, when the only thing needed for growth was an open sign, but now it’s time to get back to the basics.  Ask yourself, “What was it that made me successful in the first place?”  “What crazy forms of gorilla marketing did I implement?”  “What associations was I apart of?”  And, the painful one…“How many cold calls was I or my staff making?”  It’s important that we realize while the world around us has changed into a social hotspot, traditional marketing and relationship building are still the most effective ways to gain long-term clients and partnerships.

4th:  Every decision should point towards growth.  I’ve watched many CEO’s over the last five years point every decision towards survival, not towards growth.  If I asked what they would do if a few hundred thousand dollars dropped in their lap, most would talk about growing their business and expansion, but that isn’t what happens when those opportunities arrive.  In the last 10 years we’ve gotten companies around $300M in Specialized Tax Incentives, and I have watched time after time a company receive this money and immediately start plugging holes; going into survival mode. They are dedicating hundreds of thousands of dollars towards keeping the status quo.  The answer is so simple; if we are committed to growth, we have to turn every decision towards that plan.  Recently I’ve seen a shift in mindset.  No longer are CEO’s willing to survive just keeping afloat.  They’ve dropped the bucket, stopped bailing water, and decided the real solution is to build a bigger boat.

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.

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.

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.

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.

CPA Alliance

GMG offers our CPA Partners a seamless & turnkey solution to offer specialized tax services to their clients across the country. The benefit to our CPA Partners is an increase in billable revenue and added value in the marketplace.

Benefits of joining forces with GMG Solutions Group, LLC

  • Generating new revenue streams
  • Attracting new clients to the firm and helping develop desirable niche markets
  • Solidifying current client relationships and loyalty
  • Increasing billable hours
  • Increasing your competitive advantage in the marketplace
  • Private Label Opportunities

We specialize in providing a suite of engineered accounting solutions to CPA firms and their clients. Our engineers are fully compliant and well versed in IRS Circular 230 – FIN Standards.

GMG Tax Incentive Services

Commercial Building Tax Incentives

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

Specialized Tax Incentives

  • R&D Tax Credits
  • Hiring Tax Credits
  • International Sales
  • Sales & Use Tax

We offer a turnkey partnering program with CPA Firms nationwide to help their clients maximize cash flow and bridge the gap between accounting and engineering.