Managing Tax Credits and Incentives in the Anywhere World of Work

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Remote and hybrid workforces spotlight the need for robust incentive management solutions. Here are a few highlights on what to consider and what to look for when choosing the right tools for managing TC&I in an increasingly complex world.

Remote/hybrid workforces are here to stay, creating new challenges and opportunities for employers and employees alike. Beyond communication, coordination and cultural considerations, one overlooked impact of the new everywhere workforce is the implications for employer tax credits and incentives (TC&I).

In a world where work can be done anywhere, the challenge of defining where an employee works and which related tax credits/incentives may apply becomes even trickier. That's where next-generation incentives management tools come in--allowing companies to go from reacting to compliance requirements to proactively tapping into opportunities to offset costs with incentives for which they may be eligible.

Remote/hybrid work adds compound compliance challenges

With thousands of state and federal TC&I programs available to eligible businesses, there's a significant opportunity for eligible companies to help offset costs and drive growth by taking advantage of these programs in a way that aligns with their business strategy.

Where someone works can impact a business in numerous ways, including withholding tax responsibilities and monitoring and aligning with various state and local incentive programs designed to encourage economic growth.

The rapid advance of remote work has led many states to update their TC&I programs to reflect the changing nature of work. As more and more employees work from home or from other locations outside of their employer's state, the rules and regulations governing tax liability and incentives for businesses and workers have become even more complex.

Employers need smart tools, and the support of experts to monitor how states are assessing where an employee conducts work for the purposes of TC&I - and for those not prepared, increased risk, anxiety, and lost opportunities are likely to be the outcome.

Incentives management systems help simplify the complex

Companies taking advantage of (or evaluating) TC&I for which they may be eligible can address the added complexities related to a hybrid workforce. With the right TC&I management platform in place, employers are more likely to maximize the return on their efforts to secure tax credits and incentives in a way that minimizes their efforts.

TC&I management platform offers:

  • A centralized system that offers a clear view of all tax credits and incentives within the company's portfolio with clearly laid out compliance obligations.
  • By using artificial intelligence (AI) to analyze data, these platforms help businesses identify opportunities for credit capture, as well as help avoid errors, penalties, and missed opportunities.
  • These solutions offer structure, transparency and collaboration among all stakeholders involved in TC&I success, from government relations, real estate, HR and tax, to name a few, regardless of their location.

TC&I platforms can break down specific requirements for each tax credit and incentive, including those dependent on work location, in a way that simplifies and standardizes the compliance process, with critical tasks and milestones monitored, managed and communicated for annual compliance reporting. Automatic triggers and alerts for all stakeholders in the compliance process can promote collaboration and boost efficiency. For example, TC&I systems can rely on payroll data to generate alerts showing that an employee or a company location may be eligible for a particular incentive program.

A TC&I platform's ability to track employment trends and forecast the types and locations of employees allows businesses to negotiate more successfully in advance with agencies providing employment incentives, supporting ongoing compliance while avoiding penalties and claw-backs.

As a result, employers relying on TC&I management systems can:

  • Preserve institutional compliance knowledge and expertise as workers retire.
  • Maintaining compliance with ever-changing employee-centered tax requirements in a way that allows companies to mitigate compliance risk proactively.
  • Promote better alignment between corporate strategy with tax credit and incentives strategies.

Learn more

To explore how ADP delivers tax credits and incentives management for its customers, view our explainer video. You'll learn how you can benefit from the following:

  • A complete view of past and current performance
  • Powerful and proprietary workflow and data analysis tools
  • Automated discovery of potential tax credits