Save up to 10% on State tax liabilities with Sellable / Transferable Incentives
Whether you have a state tax liability of $250,000 or $5,000,000, ADP can help you reduce your company’s state tax liabilities by helping you find state tax incentives available for purchase at a discount.
Selling/Purchasing Tax Credits: An economic opportunity for your business
Many states now allow businesses to sell and/or purchase state tax credits. Transferable credits are available in a variety of categories, including:
Georgia Film, Television & Digital Entertainment Tax Credit
Georgia offers a transferable tax credit to any production company or qualified interactive entertainment production company for 20% of investments in a state certified production. An additional 10% credit is also available in certain situations. The credits can be sold to other Georgia taxpayers. Credits can offset 100% of a corporate or individual Georgia Income Tax.
Louisiana Motion Picture Investor Tax Credit
Louisiana provides a transferable credit for up to 35% investments in a certified motion picture project or in multiple projects. The credits can be resold to other Louisiana taxpayers. The purchased credits can offset 100% of a corporate or individual Louisiana income tax. The credit can be retransferred to another buyer.
Grow New Jersey Assistance Tax Credit
New Jersey offers a transferable credit up to $15k for each new or retained full-time job per year up to ten years. Qualified businesses can receive credits up to $5k per year for a period of ten years for each new or retained full-time job located in a qualified business facility as long as the number of full-time jobs meets or exceeds minimum requirements. NJ offers up to $10k/year in bonus credits over ten years for each new or retained full-time job, if qualified business meets additional criteria. Credits can be purchased to offset 100% of the Corporate Business Tax and Insurance Premiums Tax. Buyer is not subject to recapture.
Massachusetts Low-Income Housing Tax Credit
Massachusetts Department of Housing and Community Development assigns developers low-income housing tax credits for qualified Massachusetts projects with the goal of increasing affordable housing units. Credits offset corporate excise, personal income and insurance premiums tax. Buyer is subject to recapture if the federal low-income housing tax credits are recaptured and sellers offer full indemnification. There is a 5 year carry forward from date the credit was originally issued. The credit can be resold.
New Jersey Technology Business Tax Certificate Transfer Program (Net Operating Loss / Research & Development) Tax Credit
New Jersey allows eligible unprofitable Technology & Biotechnology companies with a location in NJ the opportunity to sell their unused NOL’s and R&D tax credits to unrelated profitable corporate taxpayers in NJ. Credits can be purchased to offset 100% of the corporate business tax. Buyer is not subject to recapture.
Massachusetts Brownfield Tax Credit
Massachusetts offers a tax credit up to 50% qualified expense for cleanup of eligible property that has the presence of hazardous substances. Credits offset corporate excise, personal income and insurance premiums tax. Buyer is not subject to recapture. There is a 5 year carry forward from date the credit was originally issued. The credit can be resold.
New Mexico Sustainable Building Tax Credit
New Mexico offers a transferable credit for the construction in New Mexico of energy efficient, sustainable commercial or residential buildings, or renovations of existing buildings into sustainable buildings. If credit is less than $100k, 25k may be used in the first and each of the following three years. If the credit is greater than $100k, up to 25% of credit may be used each year for 4 years with any remainder being carried forward. There is a 7 year carry forward. Credit may be transferred once. Buyer is not subject to recapture. Credits can be purchased to offset Corporate Business Tax and Personal Income Tax.
Pennsylvania Film Tax Credit
Pennsylvania offers a transferable tax credit for 25% of production expenses incurred on qualified film productions. This is a $60mm program with a $12mm cap per project. Buyers can only claim up to 50% of tax due. Tax Credit offsets corporate net income tax, bank/trust shares tax, insurance premiums, and capital stock/foreign franchise tax. There is a one year carry forward.
Massachusetts Historic Rehabilitation Tax Credit
Massachusetts offers a tax credit up to 20% qualified rehabilitation expense of a qualified historic structure listed on the National Register of Historic Places. Credits offset corporate excise, personal income and insurance premiums tax. Buyer is not subject to recapture. There is a 5 year carry forward from date the credit was originally issued. The credit can be resold.
Connecticut Film Tax Credits
Connecticut offers three transferable film credits: the Digital Animation Production Company Tax Credit, Digital Media & Motion Picture Tax Credit and the Film Industry Infrastructure Tax Credit. Digital Media & Motion Picture Tax Credit and Digital Animation Production Company Tax Credit are available to eligible production companies for up to 30% of production costs. The Film Industry Infrastructure Credit is for up to 20% of the investment in a state-certified project. Buyer can purchase film tax credits to offset corporate income, premium, and bank franchise tax. CT taxpayers can offset up to 70% of their state liability, Premium taxpayers can offset up to 55%. There is a moratorium on issuing Digital Media & Motion Picture Tax Credit for 2014 to 2015 but previously issued credits are still transferable. All the Film Tax Credits have a 3 year carry forward.
ADP’s NTBE group has successfully transferred over $1 billion in tax credits. Our team continuously monitors changes to incentive programs and has the expertise to help facilitate an exchange transaction from start to finish.
How ADP’s National Tax Benefit Exchange can work for you
State Tax Credit Sellers
NTBE can bring cash back into your business by helping to qualify your company for state tax credit programs, administer the application process, secure the credits, and match your company with a buyer of the approved benefit. Credits that might ordinarily be unused can be monetized.
State Tax Credit Buyers
NTBE provides opportunities for state taxpayers to help reduce their state tax liabilities. NTBE matches taxpayer’s state tax liabilities with state tax credits that can help reduce the state tax liability from 50% to 100% dependent up on the state credit program. The state tax credits are available for purchase at a discounted rate. The buyer can see up to 10% in tax savings.
Transactions from Start to Finish
NTBE has the ability and expertise to manage the entire transaction from application to funding. The NTBE team matches buyers and sellers and helps handle all the agreements, state mandated paperwork, the issuing of funds and transfer of the tax credit certificates.