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Kentucky Small Business Credit Alert – 2015

Kentucky Tax Alert

A REVENUE PUBLICATION March 2015, Vol. 34 No. 2

Businesses could qualify for up to $25,000

With tax season upon us, the Kentucky Cabinet for Economic Development wants to remind Kentucky’s small business owners that they could be eligible for up to $25,000 in tax credits.  The state is offering the Kentucky Small Business Tax Credit to eligible companies throughout the Commonwealth.  The criteria are relatively simple. All a small business has to do is create and maintain at least one qualifying job and purchase $5,000 or more in qualifying equipment and it may be eligible to receive a state income tax credit ranging from $3,500 to $25,000 per year. The amount of the tax credit depends on the number of jobs created and the amount of equipment purchased.

Mandy Lambert, commissioner of business development in the Kentucky Cabinet for Economic Development, says many Kentucky businesses are eligible for the credit and don’t even know it.  It’s simple to see if a business qualifies and to apply for the credit. Interested business owners should contact the Kentucky Cabinet for Economic Development at 800-626-2250, and its small business experts will walk owners through the process.

Learn more about the Kentucky Small Business Tax Credit at

The Kentucky Cabinet for Economic Development is the primary state agency in Kentucky responsible for encouraging new jobs and investment in the state. New capital investment announced in Kentucky in 2014 totaled more than $3.7 billion, spurring more than 15,000 projected new jobs. Information on available industrial properties, workforce development assistance, incentive programs, community profiles, small business development and other economic development resources is available at


The IRS has extended the deadline for an employer tax credit for those who have given employment opportunities to some lesser-served groups, including ex-felons, unemployed veterans and those on long-term government assistance.  Employers who have given job opportunities to one of several target groups now have more time to file for a tax credit on those employees.  The Internal Revenue Service has extended the deadline to claim the federal Work Opportunity Tax Credit until April 30, according to a news release from the Kentucky Career Center.

Employers can receive a tax credit under the program if they have hired an employee in at least one of nine selected target groups, including summer youth workers, qualified veterans, qualified ex-felons, designated community residents, vocational rehabilitation referrals and those receiving long-term government assistance, according to the IRS.  The hires must have been made between Jan. 1 and Dec. 31, 2014, according to the news release from the Kentucky Career Center.

To claim the tax credit in Kentucky, employers must submit IRS Form 8850 and ETA Form 9061 to the Kentucky Work Opportunity Tax Credit Online System or mail the forms to the Kentucky Career Center, 275 E. Main St., 2WA, Frankfort, Ky., 40621. Online applications should be submitted at
Those with questions about the program can call the Kentucky Work Opportunity Tax Credit Unit at 502-782-3465.

Kentucky Tax Alert comments and suggestions should be addressed to the Office of Income Taxation/Training Branch, Finance Cabinet, Department of Revenue, Frankfort, Kentucky, (502) 564-0937.
Steven L. Beshear, Governor
Lori Flanery, Secretary
Finance and Administration Cabinet
Thomas B. Miller, Commissioner
Department of Revenue
Pamela Trautner, Editor
Sarah Gilkison, Publications Coordinator
Production/Design: Support Services

The Kentucky Department of Revenue does not discriminate on the basis of race, color, national origin, sex, age, religion, disability, sexual orientation, gender identity, veteran status, genetic information or ancestry in employment or the provision of services.  The Department of Revenue may be found at

Reprinted in its entirety – from State of Kentucky

Q1 2013 State Tax Credits & Incentives Update

First quarter 2013 many states focused on publishing guidelines and posting informational memorandums.  No breakthrough legislation was at the forefront in the tax credits and incentives arena and mostly tweaking and clarification occurred this quarter.  Many state governors are asking their legislators to consider tax cuts and rate reductions and even elimination of personal income tax, corporate tax and in some instances property tax.  Solutions to this lost revenue are deep cost cutting and higher sales tax.

Following is a summary of Q1 legislative tax credits and incentives activity:

Alabama – approves designation of “Major 21st Century Manufacturing Zones” by municipalities.  Legislation provides for funding up to 100% of costs through tax increment financing by cities and counties.  The state also extends the sunset date of capital credit and recording of tax abatements to end of 2018.

Florida – DOR adopts emergency rule regarding R&D income tax credits.  The rule clarifies annual reporting, documentation, and tax credit limits in Advisement No. 13A-001.  Florida also reduces the increases in productive output requirement from 10% to 5% for sales and use tax exemption eligibility on industrial machinery and equipment.

Montana – new processes and timelines enacted for local government approval and denial of property tax abatements or exemptions in H.B. 152.  Legislators also amend and adopt new regulations for Alternative Energy Systems credit, Film Production credits, Energy-Conservation credit and credit for increasing R&D.

New Jersey – refundable New Jobs for NJ tax credit for employers of 100 or fewer FTEs hired after 4-1-13 equal to payroll taxes paid during tax year for each eligible employee.

Minnesota – expands R&D credit for qualified activities

Iowa – on the table is a proposal to raise state tax credits allowance from $120 million to $185 million to expanding companies in the state.  Also look for a streamlined HIRE One Act Credit and elimination of personal property tax.  The Department of Economic Development adopts amendment to Endow Iowa tax credits increasing the amount available against corporate and personal taxes for 2012.

New York – releases TSB-M-13(1) summarizing reduced tax rates for eligible manufacturers until 1-1-15.  Eligibility requirements are also explained.

Wisconsin – published updated fact sheets on income tax credits.  The governors proposed budget includes adding $175 million additional credits for economic development tax credit program.

Michigan – beginning 12-31-13 local property tax exemption is allowed for commercial and industrial personal property if combined taxable value of all property owned is less than $40,000.  Michigan personal property tax is being phased out through 2016.

California – on the horizon with public comment closed in February, various changes to the EZ legislation; updated fees, elimination of retroactive vouchering; streamlining processes, self-certification, data collection and audit procedures.

Colorado – provides guidance revisions for various tax credits including Aircraft Manufacturer New Employee Credit, Job Growth Incentive Credit, and Plastic Recycling Investment Credit.  DOR updated guidance for claiming EZ New Business Facility Employee Tax Credits and updates the list of counties designated as Enhanced Rural EZs for 2013 – 2014 in FYI Income 10 memorandum.

Pennsylvania – The city of Philadelphia extends the Special Tax Credit Opportunity for Job Creation indefinitely for each new job created for eligible employers.

Louisiana – DOR issues Informational Bulletin No. 13-010 summarizing changes to the R&D credit with and extension to 12-31-19.

New Mexico – modifies High-Wage Jobs credit to clarify eligibility, adjusts certification requirements and extends the credit to 2020.

Virginia – increases the amount of worker retraining to maximum of $200/year/employee tax credit for eligible worker training courses by qualified employers.  Retraining must be in science, technology, engineering, mathematics or applied mathematics.  Sunset date is extended to 2018 (H.B. 1923).

Illinois – DOR issues Bulletin FY 2013-12 summarizing reporting requirements for EZ tax payers receiving tax incentives and also deadlines for reporting.

Please contact Baetsen & Associates at (616) 301-5980 or for your business tax credits and incentives needs.

Travel & Entertainment Expenses Tax Deductible & Out of Control

It’s that time of the  year when we start organizing revenue and expense.  Expenses for business travel, meals, and entertainment (T&E Expenses) have to meet certain tests before they are deductible for taxes.  T & E expenses must be incurred in a trade or business; ordinary and necessary to the business; and serve a clear business purpose and be directly related to the active conduct of the business.  Business travel is fully deductible, where meals and entertainment are only partially deductible.  For meals to be deductible, company staff must be present and substantial and bona fide business discussion must take place directly before, during or after the meal.  Deductible T&E expenses must be supported with adequate record keeping.  The expense & business purpose should be documented along with amounts, dates, place, names of business or individuals involved plus receipts.  If in doubt, ask for assistance and clarification from your service provider.

So you have taken a look at T&E paid out.  You find they have increased more than inflation and exceed budget while company T&E Policies didn’t change.  T&E expense is necessary for many businesses but can be the most vulnerable to fraud and abuse.  Having a T&E Policy that clearly defines company reimbursed expenses is a start to controlling fraud and abuse.  However, in order to maintain control,  record keeping is critical from point of sale through review, approval, and audit.  Oversight and compliance begins with the employee and ends with the approval and audit process to ensure every employee adheres to policies and procedures.  Companies spend time and resources manually reviewing, approving, and tracking T&E expenditures and want to be sure oversight is working not only to prevent fraud and abuse but to control costs.  Consider moving from a manual system to an automated system.  Automated systems reduce staff time, speed up review and reimbursement, provide a system of checks and balances, and allow for better forecasting and planning.  Mobile technology can play an important role.  If you are concerned about rising T&E costs, it is a good time to revisit your policies and your procedures and processes for oversight and compliance.

Turning the Corner for Team Success

“Teamwork remains the one sustainable competitive advantage that has been largely untapped.” (Pat Lencione, President, The Table Group)   We have all watched our children or friends reach success in school, sports, and work not only as a result of individual achievement but while working as part of a team.  In sports, those teams that function as a healthy team, regardless of skill level, find a way to overcome their weaknesses.  Why is that?  I believe it is because those teams do place team results as most important over the individual.  Respect and confidence is built one step at a time.  Those at the top, coaches and managers, are critical to the success of building a successful team and engaging each and every person on that team.

I have recently been involved in watching a rather unsuccessful team as a spectator and a parent.  I can analyze all day about why this team is losing a majority of their games despite the talent.  Each player on that team has their strengths and weaknesses and each player has their mistakes and shining moments.  However, I do observe the disfunction – absence of trust, fear of conflict, lack of commitment particularly by coaching staff, avoidance of accountability, and inattention to team results.  I see the all too common individualism on and off the playing field that breeds dysfunction.  So who’s responsibility is it to encourage trust, engage everyone in solving the issues, building commitment from everyone; coaches, managers, and players alike.

How does a dysfunctional team turn the corner?  It begins with building trust and confidence from the top down and engaging all the players.  Trust leads into the ability to resolve conflict in a way that engages the team to solving the issues.  Resolution of conflict and collective problem solving lead to team commitment and team goals and objectives.  A commitment on the part of all leads to accountability as each and every player’s role and responsibilities are defined based on their strengths and weaknesses.  A player is able to ask for help, and players are available to offer feedback and assistance. In the end, as the team succeeds so do the individuals. 


Interested in Energy Conservation? Consider a comprehensive energy audit.

Many want to cut costs and consider energy saving installations.  But where to begin?  A good start is with a comprehensive energy audit that includes Ashrae level energy audit; lighting energy assessment and financing options (LEAF), and water consumption assessments. 

Energy savings, consumption, and recycling audits should address the clients needs of reducing operating expenese, address capital cost requirements, available incentive and financing programs, return on investment, and critical goals and sustainability for the long term.

Consider service providers that provide, at a minimum, a proposal including a guarantee for the amount of savings and willingnes to work until savings are identified beyond a certain agreed upon level; this should result in an agreed upon scope of work, timeline and schedule (it typically takes 6-8 weeks to complete a comprehensive study).  Finally, the client should receive a written report (50-110 pages) provided to, and reviewed with, the stakeholders including a complete breakdown of issues including building envelope, plumbing, electrical, mechanical,& maintenance processes. Budgetary costs should be included for recommended projects with ROI calculations. A spreadsheet should also accompany the report outlining projects that meet the criteria.  A team presentation of the findings to the project stakeholders should be conducted.

With a comprehensive report, the stakeholder should be able to prioritize and pick and choose projects depending on budget and related return on investment.  A study could have numerous cost saving projects and the stakeholder may only choose to implement the low hanging, low cost projects in the near term.  Other projects can be installed based on priority of return on investment and overall long term sustainability objectives.

View the audits from a project by project perspective.  The goal should be to acheive operational cost savings in excess of 10%.  Savings can be over 35% depending on the project.  Multiple recommended projects should also realize a return on investment within 12 months unless a major capital expenditure is required. 




MEDC Explains How To Claim Old MBT Certificated Credits

Wednesday, 31 August 2011
Taxpayers Will Have The Option to File the MBT or the CIT 

If a taxpayer has received a certificated tax certificate, they must apply it to the higher calculation of the Michigan Business Tax (MBT) or the Corporate Income Tax (CIT) but file it on the MBT form.  

The following is from the Michigan Economic Development Corporation (MEDC):  

The tax reform package of bills that were signed into law earlier this year will allow taxpayers to receive the benefits for their MBT certificated credits by electing to continue to file the MBT for the duration for their credits.  In the case of a taxpayer with unused MEGA credits, if their MEGA is for five years, they would be making the election to file the MBT for the five year duration. 

Companies electing to claim their credits and file the MBT will apply the value of the certificated credit to the higher of either the MBT liability, including non-certificated credits, or the calculated CIT liability as if they were subject to the CIT.  Companies must calculate the liability on both each year.  Forms will not be out until the end of the year. 

Companies may also opt-out of this option and simply file under the CIT if they would have a lower CIT liability compared to the value of their certificated credit under the MBT formula, but they would forego any remaining credits.