What are Employment Tax Credits?
Governments often entice businesses to invest locally in order to encourage economic growth, which is measured by increased employment, new technology, and improved civic infrastructure. Federal and state laws provide tax benefits for qualified activities such as:
- Locating a business in metropolitan, industrial, or rural areas
- Hiring targeted groups of individuals
- Purchasing capital assets
- Investing in experimental research
Who can benefit?
Any business can benefit from these programs at the federal, state and local level. Depending on the locations and activities of a business it may be entitled to pre-existing incentives that only need to be appropriately documented in order to be claimed. Many businesses and their owners may file for refunds of prior taxes paid as well as offset future tax liabilities. While this process generally involves tax return preparation, it is unreasonable to expect tax preparers to identify each and every niche program available. KBKG’s goal is to augment tax preparers’ services to utilize these programs where beneficial.
Who can qualify?
A common misconception regarding employment-related credits is that the legislation surrounding them is so detailed that no business would qualify. In fact, only 10% of the benefits available to businesses are actually realized. KBKG has eliminated the guesswork by investing significant research into each program and the ever-changing legislation surrounding it. We analyze the key issues with respect to qualification, allowing tax preparers to focus on “big picture” tax planning while we handle the details. KBKG also works to promote awareness and educate the business community regarding these incentives so that program participation may grow.
Is it worthwhile?
Since most of these incentives are non-refundable credits, a business or its owners must pay tax in order to benefit; however, many of the credits carry forward indefinitely. This means a tax planner can secure the credits now for use at a later time. Participating businesses save anywhere from thousands to hundreds of thousands of dollars per year.
» Find out if my clients are eligible
KBKG’s Strategic Alliance program allows service providers to partner with us to deliver these benefits to your clients. We work with you to identify eligible candidates, document the incentives and secure refunds. Tax preparers, real estate professionals and financial advisors are just a few of the practices that benefit from bringing this cash flow to the table for their clients.
Client FAQ: Common Questions
Can my tax preparer do this? If so, how come they haven’t brought it to my attention yet?
Your tax preparer is by far the best resource for any tax-related inquiries. KBKG’s role is to augment your tax preparer’s expertise and capabilities by providing staff exclusively dedicated and trained to manage the volume of paperwork associated with tax incentive programs. Much of the information surrounding these programs is outside the realm of traditional accounting and encompasses HR, payroll, operations and tax. It would be unreasonable to expect a tax preparer to maintain all of these functions and monitor all related legislative changes. KBKG provides these services to you for your tax preparer.
How much does it cost?
The cost is usually a percentage of the tax savings a business receives and is usually not due until a refund has been received or savings are realized.
How long does the process take?
Depending on how quickly a client provides the necessary paperwork, the process can take up to 2 months.
What if I am already claiming credits?
Much of the legislation surrounding these programs changes regularly. These changes are often retroactive and may entitle your business to receive refunds not previously realized. Additionally, our in-depth knowledge of these programs and their complexities allows us to identify areas of the tax return where current tax software and forms do not adhere to the latest rulings and legislative changes. Nonconformity can unintentionally limit the amount of benefit a business or its owner may realize. KBKG specialists are trained to identify these issues. A consultation with our professionals can help determine whether you may be at risk of missing additional opportunities.
Will claiming these credits increase my chances of being audited?
No. The reason companies get audited is because they have either been randomly selected for an audit, or because of abnormal figures on their tax returns. If the credits you claim are accurate and properly documented in the tax return according to government and industry standards, there is no increased likelihood of an audit. However, at KBKG we not only stand behind our work, we also provide audit support and representation to back up our findings free of any additional costs.