State Tax Incentives – Do I Qualify?

October 24, 2019

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In this episode of The Bottom Line, Tim Schuster and Steve Abbott, president of Abbott Consulting Group, discuss some of the ways your business can take advantage of state tax incentive programs, such as through relocation, investment and staff training.


Transcript

Tim Schuster:Hello and welcome to a special edition of “The Bottom Line.” This podcast examines the everyday business and finance issues faced by closely held and private businesses. We hope to provide you with the news you can use and what we like to think of as a jargon-free zone. I'm your host Tim Schuster, and I have a special guest with me today, Steve Abbott from Abbott Consulting Group. Today we'll discuss with Steve state incentive programs. Steve, welcome.
Steve Abbott: Hey Tim.

TS: Nice to see you. So Steve and I have had the fortune of meeting recently. Can you tell our listeners a bit about yourself and the Abbott Consulting Group?
SA: Sure. Abbott Consulting Group is a firm with expertise at federal, state, county, and local incentive programs that achieve cost reductions, usually in corporations. Typically that happens when companies are growing, moving locations, investing, or training their employees. We forecast results in advance, and the typical client savings are about $725,000.
TS:Wow. That's a lot that people thought they could potentially be leaving on the table. So when would it be best to bring you in for a consultation?
SA: It's best if we're brought in during the planning stages. That way we have plenty of time to negotiate between states, and it's also really critical that clients don't publicly let anyone know what they're doing in advance or publicly indicate what direction they're going from one state or another. That reduces our leverage and ability to negotiate.
TS:That's interesting. So it's almost like the thought process of don't show your poker hand just yet. So what types of incentives do you typically work on, and what stage companies do you work with?
SA: We work across all U.S. states. There are certainly some states that are better than others, with regards to the depth of their incentives and what they're willing to do to negotiate into either adding or retaining employees. And typically what we see are tax credits, low-cost loans, forgivable loans, or in some cases just outright cash grants for companies to expand or invest. And then there are also grants to train or retrain your employees. It really depends on a state-by-state basis, but that would be pretty much the overview of what you would see.
TS: Is there a minimum size for you to get involved? Something else to consider is how you get compensated.
SA: Generally, there's not a minimum. We have a client out in California, Mob Crush, a small mobile gaming company. They were about eight people, and now they're 40. We got involved when they were eight. And so that's fine as long as they've got something to talk to the state of California about, which is growth. And they added those employees. We've got clients that are as large as 3,000 that are moving production line jobs from one state or another. So there's really a no specific area that is too big or too small. It's important to note that we get compensated primarily based on the success of the project. So we get a small project start fee and then get compensated based on when the client receives the actual incentives.
TS:So the takeaway here is if you're thinking about doing any of these processes where potentially it might be moving or even thinking of staying, you should really reach out to your trusted advisor or someone like yourself to start that process as early as possible.
SA: Yes. These programs are around to basically enable companies to grow within the state, that they are to ready to reinvest in the company, to reinvest in the employees, and that they can be extremely beneficial for companies overall.
TS:Do you have any case studies you can share? I'm sure there's some good ones there.
SA: There's some really interesting ones. We have a client, Frank Recruitment Group that’s headquartered in the U.K., and it needed to expand into the U.S. market. So we helped them with their first expansion into the U.S. market in Philadelphia. We negotiated $2.2 million in a combination of tax credits and incentives. In fact, $750,000 of that was cash to help offset the cost of that move. Then we have another company, S&S Manufacturing. It’s based in Connecticut, and we negotiated a $1.5 million loan for them to stay in Connecticut and to potentially grow over the long term. But this was simply a retention move they were considering, reducing the size of their workforce. And Connecticut said, we'll step in and give you $1.5 million as a forgivable loan if you keep the employees here for five years.
TS:Wow, that's incredible. Steve, thanks for this useful information.
SA: Glad to be here.
TS:I appreciate it. And before we close, I like to provide one of my famous New Jersey fun facts. So everyone's heard of Milton Hershey, the famous chocolatetier, but did you know he got his start in New Jersey at a restaurant in Morristown in the 1880s. New Jersey has always been changing the world, and chocolate is on the list.

Thank you for listening to “The Bottom Line” as part of the EisnerAmper podcast series. If you have any questions or there's a topic you'd like us to cover, email us at, contact@eisneramper.com. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business.

About Tim Schuster

Mr. Schuster is a Senior Manager providing tax compliance services to individual filers, as well as assistance on tax returns for companies in the manufacturing and real estate industries.

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