The Anchin Tax Credits and Incentives Group is committed to helping clients take advantage of the many incentive programs offered by federal, state and local government agencies. These programs enhance economic development by spurring companies to make business investments and to create and retain jobs, thus promoting neighborhood commercial activity and strengthening the economy.
Our specialists identify companies that are eligible for these business incentives and assist them through the complexity of government programs. The group works with a wide range of tax and business incentive programs to deliver tangible benefits. Millions of dollars are awarded annually to companies in the Tri-State area through economic development incentives. These opportunities translate to significant tax savings, many resulting in substantial refunds or credits.
Don’t leave money on the table: Anchin’s Tax Credits and Incentives Group can analyze your current situation and help you obtain and maximize valuable incentives.
If your business or client is performing Research & Development, contemplating relocation, expansion, building new facilities, or hiring additional employees, Anchin’s Tax Credits and Incentives Group can identify what government incentives the company may be eligible to receive.
Federal Research & Development Tax Credits
The Research & Development (R&D) Tax Credit is a federal tax incentive intended for businesses of all types and sizes to conduct applied R&D within the U.S. that will lead to new, improved, or technologically advanced products, processes, principles, methodologies, or materials. A tax credit can be used to offset income tax liabilities on a dollar-for-dollar basis, thereby lowering a company’s effective tax rate and increasing cash flow. Recently, the criteria for qualifying for R&D tax credits have been redefined, becoming more lenient to now include a larger group of businesses. In fact, a company may qualify if it has simply invested time, money, and resources toward the advancement and improvement of its products and processes.
The Federal R&D tax credit (in Sec. 41) is a 20% incremental credit on qualified R&D expenses that exceed a base amount or a 14% incremental credit under the alternative simplified credit regime. Due to the federal credit’s incremental nature (where only qualified costs over a base amount are eligible for the credit), the maximum federal benefit is often 6.5% of qualified R&D expenses.
State Research and Development Tax Credits
State R&D incentives play an important role in the states’ ability to compete for and attract new investments and jobs. Numerous states have recently enhanced R&D incentives—giving more options to taxpayers looking to invest further in R&D or even relocate some expenses to a more taxpayer favorable jurisdiction. Many state governments reward taxpayers with income tax credits for increasing R&D spend. In some states, companies may take a credit against their state income or franchise tax equal to a percentage of their qualified R&D expenditures over some base amount (the credit typically can be carried forward or backward for a specified number of years). States generally use the federal definition of qualified R&D in their tax codes. Some states have refundable R&D tax credits. The most transparent component of the value of a state's tax credit is the credit rate. These credit rates currently range from a low of 1% to a high of 20%, equivalent to the federal rate. A number of states offer different credit rates for different levels of R&D spending, typically with the rate lower for higher tiers of R&D (in order to provide greater incentive to small businesses and start-ups to perform R&D).
New York Excelsior Jobs Program
The New York State Excelsior Jobs Program was developed to provide job creation and investment incentives to firms in targeted industries, specifically biotech, pharmaceutical, clean and green technology, financial services, agriculture, and manufacturing. Other industries may qualify if they are attaining specific job creation and investment goals.
The program consists of four new, fully refundable tax credits that can be claimed over a ten-year period: The Excelsior Jobs Tax Credit; The Excelsior Investment Tax Credit; The Excelsior Research and Development Tax Credit; and The Excelsior Real Property Tax Credit. Approximately $200 million in tax credits have been committed to business in New York State.
What is unique about the Excelsior Program in contrast to many past tax incentive programs is its discretionary nature. A company typically enters into a formal agreement with Empire State Development (“ESD”) outlining its job and investment commitments and eligible benefits. Although the program’s regulations provide specific criteria for eligibility, ESD has some degree of discretion to use if a persuasive case can be made for a promising company. The high degree of discretion in ESD’s decisions, in addition to the already complex process of qualifying for state incentive programs, can create steep hurdles for businesses. With significant refundable tax credits on the table – an important concern when facing diminished cash flow – the benefits can be considerable. Thus, it’s a distinct advantage for a business to have a strong advocate to help navigate the process, negotiate with ESD officials, and ensure that you receive the maximum possible benefits.
Current Tax Credits and Incentive Programs
New York City Economic Development Programs
- New York State Empire Zone Program (EZ)
- Industrial Development Agency (IDA) Benefits
- Industrial and Commercial Incentive Program (ICIP)
- Industrial Relocation Grant Program (IRG)
- Relocation and Employment Assistance Program (REAP)
- Rent Abatement for Commercial and Industrial Tenants
- Energy Cost Savings Program (ECSP)
- Low Interest Loans
The State of New York Economic Development Programs
- New York State Excelsior Jobs Program
- New York State Energy Research and Development Authority (NYSERDA)
- New York State Empire Zone Program (EZ)
- Industrial Development Agency (IDA Benefits)
- New York State Capital Grants Programs
- Manufacturing Assistance Program (MAP)
- Low Interest Loans
The State of New Jersey Economic Development Programs
- Business Employment Incentive Program (BEIP)
- Urban Enterprise Zone (UEZ)
- Business Retention and Relocation Assistance Grant (BRRAG)
- Clean Energy Program (NJCEP)
- New Jersey Economic Development Authority (NJEDA) Brownfield Redevelopment
- Technology Business Tax Certificate Transfer Program
- The Federal Renewal Community Program
Timing is everything. A day early is better than a day late. The most critical component to these programs is applying before your contract or lease is signed, or permits are pulled.
What are the results of these efforts? More than 100 separate successes, including:
A Long Island, NY distributor saved an estimated $7 million over a 10-year period on a $14 million property purchase by accessing complimentary incentive programs, including IDA, Excelsior Jobs, and Energy Cost Savings programs.
An upstate designer and manufacturer in Orange County, NY, pending Empire Zone certification in two locations, will access investment tax credits for new facilities, adding jobs in Orange County.
A food manufacturer in Brooklyn, NY received tax credits of $2.3 million over two years, with 50% refundable to reinvest in the business.
A manufacturer and distributor in Long Island, NY received a $250,000 discretionary grant from MAP to improve retention and manufacturing operations, processes. Team has also initiated site selection process, using cost value analysis to compare sites statewide.
A life sciences company in Massachusetts received $1,300,000 in Federal R&D Credits and $265,000 in MA State R&D Credits.
A LED manufacturing company in Long Island, NY received $6,000,000 in Federal R&D Credits and received $2,000,000 with multiple State R&D Credits.