Tax Planning & Tax Policy

Transcription

1 Tax Planning & Tax Policy Joseph A. Vinatieri, Esq. Partner Bewley, Lassleben & Miller LLP Whittier, CA Lee Sweet-Maier Sr. Manager Indirect Tax DuCharme, McMillen & Associates Dearborn, MI

2 Tax Planning When to Consider Incentives New construction or occupation of a new facility Relocation of existing operations Expansion of existing operations new product line Consolidation of multiple locations M&A Tax reforms or policy changes Special legislation? 2

3 Planning Process 3

4 Plant Expansion Auto Manufacturer Identify Internal Stakeholders who should be involved Real Estate or facilities Tax Department Purchasing Finance Human Resources Government Relations Internal Legal Counsel Plant Manager (or plant finance team) 4

5 Plant Expansion Auto Manufacturer Project Evaluation Establish relationship with project manager Identify location, capital investment, jobs impact Request initial project details: Estimated $ amount of project expenditure Real vs personal Capital vs expense Jobs impact - head count additions? Timeline of project estimated start and completion dates 5

6 Plant Expansion Auto Manufacturer Is the project certain? Know whom within your organization has to approve project Do not want to reach out to jurisdictions about a potential project if it s not certain that the project is a go. Incentives Analysis what is available? 6

7 Types of Incentives 7

8 Statutory Allowed within statute, but typically have qualification requirements Employment based Investment based Research & development Enterprise Zones Pollution Control Discretionary typically negotiated directly with the jurisdictions Property Tax Abatements Industrial development bonds Public infrastructure grants Utility incentives Land-cost Write Downs 8

9 Incentive Approval 9

10 Incentive Approval Government Representatives State Economic development agency Most often first government contact Act as a liaison between your company and the government authorities. Governor s Office Mayor/City Council County or regional economic development agencies Community colleges & universities Either the Economic Development Agency contact or your internal single point of contact should be helping you with determining what forms to be filed 10

11 Project Incentive Analysis Determine specific requirements to qualify: What amount of expenditure is required Don t want go for $30m if you are going to need $50m. Does it require additions to or minimum headcount requirements? Must be certain that any commitments are realistic What is the definition of headcount FTE? how is FTE defined? Does it include employee and contractor working on site. Is there a specific formula for calculating FTE? Permanent jobs vs. temporary jobs 11

12 Project Incentive Analysis Review Contract Terms. Redlines/acceptance Any clawback provisions? repayment of incentive benefits Explore alternatives to clawbacks with Agency Can clawback provisions be lessened or avoided? Make sure appropriate levels of management are aware of consequences for clawback provisions and are committed to achieving the requirements. 12

13 Plant Expansion Project Rollout 13

14 Project Rollout Ensure POs have necessary language if required Ensure POs are coded if required for tracking or claim benefit. Track head count numbers Submit appropriate certificates to suppliers for sales tax exemption claims Are project costs greater than anticipated? Can the incentive be amended to be increased for additional costs? Annual reporting requirements to the jurisdictions (IL EZ annual reporting) Provide a heads-up to assessor of abatement. Assessor may provide a separate account to report the abated equipment 14

15 What Happens When Things Go Wrong 15

16 What Happens When Things Go Wrong Sales Tax Audits 3 4 years later Claimed exemption on items that don t qualify or loss of incentive Property Tax Filing rendition or an audit of the business property statement when filed or within 3 year Proper filing Should you have procured a reliance letter from assessor? 16

17 The Hand That Giveth Can Taketh Away How Do You Defend? State gets cold budgetary feet 17

18 Tax Planning & Tax Policy QUESTIONS? 18