When we talk to tax professionals in corporate America about metrics they use in measuring performance, the number of the various types of tax returns they file is usually high on the list of measurables. They usually talk about the number of people in the tax department and how they have it staffed in terms of the level of specialization. This is completely understandable. Tax people have a huge job. All these returns have to get in on time and accurately or penalties and interest is the result.
I think the analogy of Offensive Linemen to Tax Managers is pretty good. Offensive linemen have a certain job to do. If they do their job well, you almost never hear their name called. They usually don't get the credit they deserve when things are going well. But if they move before the ball is snapped, or let a pass rusher get to the quarterback for a sack or get called for holding and nullify a nice play, boy do they get the negative attention.
I think a lot of tax people like it that way for the most part. As long as they're getting their jobs done and aren't getting flagged for penalties, everything goes pretty smoothly and they enjoy a lot of autonomy. Another aspect I think most tax people would acknowledge about their jobs is that, because of the nature of taxes and the burden of compliance, they are somewhat insulated from ups and downs in the economy. Taxes don't go away even though the overall business climate might be down, so (traditionally) they avoid (at least some of) the layoff pressure.
Okay, that's probably stretching the analogy! But have things changed for tax people these days? It's a down economy, I know that's no revelation, but has it changed the tax departments role? It seems that just getting the job done and avoiding penalties isn't enough any more. It seems like there's more pressure than ever on tax people in the corporate tax departments everywhere. Upper management is looking to their tax professionals to somehow produce more than just tax returns. They're asking their tax people to pull a rabbit out of the hat and produce some savings or refunds. Almost like they're being asked to constantly rejustify their existence by doing more than tax returns.
If you're not feeling that direct pressure from upper management, maybe it's self-imposed. Maybe you are feeling it yourself as you watch your company go through some hard times. Maybe if you could identify some savings opportunities, the company could benefit and maybe some jobs would be saved.
We're getting a lot of queries from our clients to help them identify areas where they can do just that.
Well, we've been talking a lot about this lately. The fact is, we subscribe to every tax research and news service we know of. We have access to a potential gold mine of information that could benefit our subscribers. We're going to try to help you identify opportunities. In fact, we're going help you at no charge, just go to this link for more details.
There's all kinds of incentives out there for business in just about every state and in many local jurisdictions. In fact, according to CCH, there are over 8,000 distinct state and federal tax incentive zones that can generate hiring tax credits ranging from $500 to $12,000 per employee, equipment credits of 10% or more, favorable financing and/or partial to full exemption on tax gains upon disposition.
These tax breaks1 can amount to tens of thousands to millions of dollars. They can fully shelter the annual tax obligations of certain businesses, and if a business owner has failed to claim these benefits in past years, it is often possible to obtain tax refunds for 3 years or more by documenting the credits via amended returns.
There are sales and use tax credits, rebates and exemptions, property, income and franchise tax credits available2. There are also hiring credits and investment credits available. And it's more than just state and local tax savings. We can also identify federal incentives and non-tax incentives as well. Do you know about the opportunities that exist in Federal Empowerment Zones, Indian Tribal Lands, Renewal Communities and Gulf Opportunity Zones? What about what the opportunities are in the states. There are some states that are "pre-qualification states" and "non-pre-qualification states" meaning in some cases you have to have applied for a benefit before you qualify in some states, whereas in others, no prequalification is required. Do you know if your locations qualify for "Municipal Redevelopment Area" benefits?
It turns out that only 10% to 50% of these benefits are ever claimed.
A regional restaurant chain received $500,000 in hiring credits and $80,000 in sales tax refunds on equipment.
A national telecom company looking for a new call center site found an enterprise zone that saved them $300,000 per year.
A national processor saved over $1,000,000 in a single location that happened to be located in a renewal zone.
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