Articles

Florida Businesses Are Missing Out on Significant Tax Credits by Karen Lake


Posted on July 01, 2013 by Karen Lake

With unemployment is at its lowest levels since 2008, businesses are not only growing the national labor force, but savvy employers are also realizing considerable tax benefits through federal Workforce Opportunity Tax Credit (WOTC) and state tax incentives. 

The WOTC is an often-overlooked incentive that enables businesses to reduce their federal income taxes between $1,200 and $9,600 per employee for the hiring and training of specific job candidates, including those who are veterans, disabled persons, ex-convicts and recipients of food stamps, Long-Term Family Assistance and Supplemental Security Income. For example, a private, for-profit business can receive up to $9,600 in tax credits for each disabled veteran it hires.  Moreover, because there is no limit to the number of qualified employees that a business may claim, an employer that hires 10 disabled workers could earn $96,000 in federal income tax credits.  That’s quite a significant savings, especially for small- to mid-size companies.

 

While the federal program aims to improve challenged workers’ chances of gaining employment, state governments offer addition tax incentives to businesses that create and retain high-quality, high-paying  jobs in their states.  While some businesses find the application process for these tax credits to be too tedious an undertaking, others are simply unaware that they exist.  

 

Florida’s Quick Response Training (QRT) program reimburses businesses in specific industries up to $6,000 for expenses related to entry-level job training it provides to full-time and high-earning employees.  To qualify for a QRT grant, a business must be headquartered in Florida and in operation for a minimum of two years. This program does not restrict the type of training a business provides.  Rather, employers that create jobs and institute programs intended to raise workers’ skills have the freedom to select the content, instructor and location of the training. 

 

Similarly, under the Incumbent Worker Training (IWT) program, the state government may reimburse Florida-headquartered companies for expenses related to training programs that upgrade the skills of their existing employees.  This may include continuing education or targeted instruction in the use of computer hardware and software, including elaborate billing systems or basic business-processing programs.  To qualify for an IWT grant, a business must be in operation in the state for a minimum of one year, and it must have at least one full-time employee who is a resident of Florida.

 To help keep high-wage-paying businesses in Florida, and to encourage their expansion within the state, the government offers Qualified Target Industry Tax Refunds (QTI).  This program rewards businesses’ for each full-time job they create by applying credits to their corporate income, sales and other business taxes.  For example, a company that remains in the state may receive $3,000 for each new employee it hires.

 

To further incentivize businesses to create employment opportunities and expand in the state’s rural and urban areas, Florida offers these employers tax credits of $500 to $2,000 for each new qualified job it creates.  With these Rural and Urban Jobs Tax Credits, businesses may take the tax credit against their corporate state income tax or Florida sales and use tax.

 

In addition to improving a state’s business climate and economic development, these job-creation and workforce-training tax credits support businesses’ competitiveness and improve employees’ skills and wages as well as business productivity and profits. The challenge for many businesses is the tedious and time-intensive process of applying for these incentives on their own. It requires applicants to understand the conditions of their eligibility, to gather and submit meticulous documentation, and to cross every “t” and dot every “i” on forms from the Internal Revenue Service and Department of Labor Employment and Training Administration. Moreover, it requires consistent tracking and follow-up with government representatives in order to maximize ones chances of receiving a check in hand.  

In these matters, businesses should rely on their professional tax consultants to manage the process of identifying and applying for federal and state tax incentives.  By doing so, business executives will be able to remain focused on their day-to-day business operations and avoid losing out on potential tax savings.

 

About the Author: Karen A. Lake CPA is a senior manager in the tax practice at Berkowitz Pollack Brant. For more information, call (305) 379-7000 or e-mail klake@bpbcpa.com.