Workforce incentives: 12 key states for growing your

Workforce incentives: 12 key states for
growing your business
May 5, 2015
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Presenters
Mark Mitchell
Senior Manager
State and local tax
Houston
Maria Assalone
Manager
State and local tax
New York
Eric Levenhagen
Supervisor
State and local tax
Indianapolis
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Agenda
Topic
Introduction
20 programs, 12 states
Work Opportunity Tax Credit
Tips and reminders
2
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Many types of business incentives available
People incentives
Investment incentives
Operation incentives
• Hiring tax credits and
grants
• Payroll tax rebates
• Workforce training
credits and cash grants
• Retroactive
• Prospective
• Work Opportunity Tax
Credit
• Federal and state target
zone credits
• Income and franchise
tax credits
• Capital investment cash
grants
• R&D tax credit
• Rehabilitation tax credit
• Low income housing tax
credit
• New Markets Tax Credit
• Renewable energy
credits and incentives
• Sales and use tax
refunds or exemptions
• Infrastructure assistance
• Real and personal
property tax abatements
• Energy efficient
commercial building
deduction
• Utility incentives
Related cost reduction
opportunities
• Cost segregation
• Tangible property
regulations
• Export incentives
• Accounting method
changes
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People or workforce incentives
 Hiring tax credits and grants
 Payroll tax rebates
 Workforce training credits and cash grants
-
Retrospective
Prospective
 Work Opportunity Tax Credit
 Federal and state target zone credits
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12 key states
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California
California Employment Training Panel
Description
Benefit
Targets companies threatened by outof-state competition or that compete in
the global economy
Reimbursement for training
Performance-based
$1,800 funding cap per employee
$18 to $26 per hour
Employer matching component
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Nevada
Silver State Works
Description
Multiple program options to hire and
retain pre-screened qualified workers
Company can only utilize one of the
three available programs
• Employer-based training
• Employer incentive job program
• Incentive-based employment
Benefit
Employer-based training – pays
employee wages up to $200 per week
for six weeks (maximum of $600)
Employer incentive job program –
provides up to a 50% wage
reimbursement
Incentive-based employment – offers a
wage and training subsidy of up to
$2,000 per employee
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Utah
Economic Development Tax Increment Financing
Description
Benefit
Competitive refundable tax credit
Refundable
Designed for companies that meet
three key criteria
• Hire at least 50 new employees
• Meet specific wage thresholds
• Demonstrate support from local
community
Up to 30% of new state revenues
generated by the company
Includes sales, corporate and
withholding taxes paid to the state
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Oklahoma
Training for Industry Program (TIP)
Description
Training reimbursement for companies
that are creating jobs in Oklahoma
Capital investment requirement
Benefit
Reimbursement for new hire training
Amount is established on a case-bycase basis
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Oklahoma (cont.)
Quality Jobs Program
Description
Benefit
Incentive for new jobs in specific
industries (based on NAICS)
Payroll rebate paid on a quarterly basis
for up to ten years
Minimum payroll and county wage
requirements
Up to 6% of eligible wages
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Kansas
Kansas Industrial Retraining
Description
Benefit
Provides assistance to restructuring
industries
Typical funding of $300 to $500 per
trainee
Minimum of five existing employees
likely to be displaced because of
obsolete skills
Requires at least a dollar-for-dollar
match from the company (excludes inkind or indirect expenses)
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Kansas (cont.)
Promoting Employment Across Kansas (PEAK)
Description
Incentive for new jobs in targeted areas
and industries
Benefit
95% of eligible payroll
Retain (or refundable) up to 10 years
Requires minimum healthcare
Based on scope of jobs created and
median annual wage
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Indiana
Skills Enhancement Fund Training Grant
Description
Benefit
Supports training and upgrading skills
of employees
Typically reimburses 50% of eligible
training costs
Tied to new capital investment
Applies to two full calendar years from
commencement of project
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Indiana (cont.)
Economic Development for a Growing Economy
Description
Refundable income tax credit related to
new jobs creation
Not to exceed 100% of the expected
increased tax withholdings generated
Benefit
Typically $5,000 per new job unless
hourly wages are more than $20 above
state average
Credit certification is phased in
annually for up to 10 years
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Florida
Incumbent Worker Training and Quick Response Training
Description
Benefit
Performance-based expense
reimbursement grants
Costs are reimbursed directly to the
company
Existing, for-profit businesses
50% employer match is required (75%
match in rural areas)
Reimbursements for skills upgrade
training provided to currently
employed, full-time workers
Maximum $50,000 per grant, per
company
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Florida (cont.)
Qualified Target Industry Tax Refund
Description
Benefit
Available to companies that create jobs
above county average wage rate
$3,000 or higher per net, new Florida
full-time equivalent job created
Can be applied to a variety of taxes
• Corporate income
• Sales
• Property
Actual benefit is based on location
Requires pre-approval
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Georgia
Retraining Tax Credit
Description
Training programs must be designed to
enhance quality and productivity or
teach certain software technologies
Expenses must be approved by the
Technical College System of Georgia
Benefit
50% of direct training expenses
Up to $500 credit per full-time
employee, per training program
Annual maximum of $1,250 per
employee
Any business that files an income tax
return in Georgia is eligible
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Georgia (cont.)
Quality Jobs Tax Credit
Description
Benefit
Requires creation of at least 50 jobs in
a 12-month period
$2,500 to $5,000 per job created within
seven years
Each job must pay wages at least
110% of county average wage
Benefit is based on how far above the
county average wage each new job
pays (110% to 200%)
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West Virginia
Governor’s Guaranteed Work Force Program
Description
New and expanding projects must
create a minimum of 10 net new jobs
within 12 months
Existing projects must be in business
at least one year and meet specific
training criteria
Benefit
Lesser of 100% of training expense or
$2,000 per employee
Based on:
• Wages and benefits
• Number of employees
• Number to be trained
Operates on a reimbursement basis
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West Virginia (cont.)
Economic Opportunity Tax Credit
Description
Credit on qualified investments
Must create a minimum of 20 net new
jobs
Credit can offset up to 100 percent of
personal income tax attributable to
qualified investment over a 10-year
period
Benefit
Percentages vary based on number of
net new jobs created
• 30% for 520 jobs
• 25% for 280-519 jobs
• 20% percent for 20-279 jobs
Taken proportionally over 10 years
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Virginia
Workforce Retraining Program
Description
Requires new capital investment
Must demonstrate integration of new
technology into production processes,
changing product lines in keeping with
marketplace demands
Benefit
Provides services and funding to assist
in upgrading the skills of existing
workers
Amount determined on a case-by-case
basis
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Virginia (cont.)
Virginia Economic Development Incentive Grant
Description
Benefit
Discretionary, performance cash grant
Paid in 5 equal annual installments
Job creation requirements
• 200-plus jobs for populations less
than 300,000
• 400-plus jobs for populations over
300,0000
Payments begin in third year after
capital investment and job creation
Focused on significant headquarter,
administrative or service sector
expansions
Capital investment required
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New Jersey
Skills4Jersey
Description
Benefit
Training grant funds are available to
New Jersey employers
Reimbursement of costs, capped at
$1,000 per employee
Upgrade the skills of current employees
or train new employees
Companies may receive up to
$100,000 total for training expenses
Focused on retaining highly skilled and
high-wage jobs in the state
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New Jersey (cont.)
Grow NJ Assistance Program
Description
Tax credit
Creation of at least 10 new jobs and
minimum investment of $20/square
foot
Investment must occur in qualified
incentive area
Benefit
$5,000 to $15,000 per year for each
new or retained job
Rates vary by incentive location
Additional $5,000 per job, per year
when meeting additional scoring
criteria
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Connecticut
Human Capital Credit
Description
Tax credit for investments in training of
employees in the skills required to do
perform duties in Connecticut
Benefit
Credit is equal to 5% of the amount
incurred for human capital investment
Expenses considered:
• Training materials
• Instructor fees
• Course registration fees
• Related travel (within state)
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1 federal program to know
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Work Opportunity Tax Credit (WOTC)
 Federal income tax benefit administered by the
states
 Provides up to $9,600 federal tax credit per eligible
employee
 Credit amount is based on type of employee and
wages
 A few state programs mirror the federal program
The WOTC program is currently suspended for the
2015 tax year.
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WOTC planning
 Qualifying hires do not need to be part of a capital
investment strategy
 Company must identify eligible hires within 28-day
qualification period
 A consistent, confidential screening process will
help maximize potential credit
 Qualified employees must work a minimum of 120
hours to be considered eligible for the credit
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WOTC targeted groups
 Long-term family assistance recipients
 Qualified recipients of Temporary Assistance for
Needy Families (TANF)
 Qualified veterans
 Qualified ex-felons
 Designated community residents
 Vocational rehabilitation referrals
 Summer youth employees
 Supplemental Nutrition Assistance Program (SNAP)
recipients
 Supplemental Security Income (SSI) recipients
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Tips and reminders
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Why aren’t all companies taking advantage of
available workforce incentives?
× Lack of awareness–not all opportunities are widely
publicized
× Inaccurate or incomplete documentation
× Overpromises on investments or jobs–potential for
missed goals
× Failure to timely and accurately comply with
reporting and maintenance procedures
× Assumption of ineligibility
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Best practices
 Research continually to stay aware of programs
 Know the qualifiers and understand the
commitment
 For incentives related to capital investment, start
conversations early
 Establish a process for qualifying jobs or training
expenses…or partner with someone who can
provide a process
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Thank you!
Mark Mitchell
713.625.3500
mark.mitchell@mcgladrey.com
Maria Assalone
212.372.1451
maria.assalone@mcgladrey.com
Eric Levenhagen
317.805.6242
eric.levenhagen@mcgladrey.com
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12 key states for
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