The Ohio Department of Development’s (ODOD) incentive sheet describes it this way: “The Job Creation Tax Credit is a refundable tax credit to companies creating at least 25 new full-time jobs (within three years) in Ohio. The credit may also be available for certain high-wage industries creating 10 or more new full-time jobs within three years. The refundable tax credit is measured as a percentage of the state income tax withholdings for all new employees hired under the program, and is applied toward the company’s commercial activity tax liability. Should the amount of the credit exceed the company’s CAT liability for any given year, the difference is refunded. Approved projects generally range between a 25 and 55 percent credit for a period of 5 to 7 years. The businesses must apply for the credit before committing to the project.”
>> Go here for the main ODOD page for the program: http://tinyurl.com/ododj
Net, new positions and wage requirements
A few comments: the new jobs is a net, new job figure. ODOD looks at how many full-time employees were at the site one year ago from submission of the application. If, because of the economy, a company of 70 employees had to lay off 25 and then looks to create 50, ODOD would say the project looks to create 25 net, new jobs. Secondly, to qualify for the high-tech version of the tax credit, the average wages of the jobs must be 400% of the federal minimum wage (federal minimum wage is $6.55 and rising to $7.25 on June 24, 2009). The regular credit wages have to be 150% of federal minimum wage, which is at about $10.88 per hour.
The other issue with the JCTC is a possible “relocation waiver” from an existing facility in Ohio, if a company is looking to go into another area: “Intrastate relocation projects are generally ineligible to receive JCTC assistance. Specifically, a taxpayer is prohibited from relocating employment positions within Ohio to a project site within the first five years or the term of the credit, whichever is less. There is available a waiver from this general prohibition, upon a formal determination by the Director of ODOD that (1) the site from which the employment positions would be relocated is inadequate to meet market or industry conditions, expansion plans, consolidation plans, or other business considerations affecting the company and (2) the legislative authority of the negatively impacted community has been notified of the relocation.” This isn’t insurmountable, and we could assist in getting this through.
A few other comments. A company commits to stay twice the term of the tax credit. If the situation is a lease, the term of the tax credit will likely not exceed the term of the lease. Also, the jobs created have to be employed by the entity receiving the tax credit (i.e., they cannot be temporaries). Although it is not law, the Ohio Tax Credit Authority asks for a commitment by the company to hire at least 10 percent minority and/or disadvantaged persons as part of the project.
As with all Ohio Dept. of Development incentives, the company must meet with an ODOD representative, typically Michelle Miller and/or Kevin Carver. Typically, a couple of weeks after that meeting they are assigned an online login and password to fill out the Financial Assistance Application (FAA). After the FAA is complete, along with the application fee and supplemental required documents (e.g., original signature pages in blue ink mailed in), the company will be assigned a date to go to the Ohio Tax Credit Authority. At that meeting the Business Development Representative for ODOD (Michelle Miller) will present the project, the company will attend and answer any questions and make comments, and the representative of local government providing support will also be there to address any questions in that regard. Following submission of proof that the local support agreement/legislation is executed (currently, there is a requirement that there be local financial support for the project equal to at least 25% of the estimated value of the credit), ODOD will draft an official agreement and submit it to the company for signature. Once that agreement has been signed off on, ODOD only requires an annual report (they supply the format), and every year when ODOD receives the annual report, they send out a certificate that the company sends along with their taxes to claim the credit.
>> Go here to get the ODOD deadlines & OTCA meeting dates: http://tinyurl.com/ododdead09
>> Go here to get make-up of OTCA: http://tinyurl.com/jctcotca
>> Go here to get a .pdf version of the FAA: http://tinyurl.com/ododfaa
>> Go here to see annual report forms (companies fill out Form C): http://tinyurl.com/ezannual
Estimating your credit
In order to gauge what a project might receive I look at the most recent credits (percentage and term) awarded, as policy often changes (the most recent JCTC’s were granted in April http://tinyurl.com/ohbwem):
35%, 5 yrs (Collectcorp): $325k investment, 125 new jobs created, 0 retained jobs, value of $115k over term
40%, 6 yrs (Atrium): $3.4M, 25 jobs, 117 ret, $27k over term
40%, 5 yrs (Morgan): $1.5M, 35 jobs, 79 ret, $49k over term
45%, 6 yrs (Atlantic): $3M, 10 jobs, 47 ret, $70k over term
45%, 6 yrs (Limbach): $1.1M, 28 jobs, 115 ret, $122k over term
45%, 6 yrs (Pakmark): $1.9M, 25 jobs, $62k over term
45%, 6 yrs (Thirty One): $5.5M, 75 jobs, $114k over term
50%, 6 yrs (AssureRx): $350k, 30 new jobs, $187k over term
50%, 5 yrs (Ed Map): $1.3M, 92 jobs, 40 ret, $78k over term
55%, 7 yrs (Max-Wellness): $263k, 150 jobs, 9 ret, $847k over term
75%, 15 yrs (Chase): $14M, 1150 jobs, 13000+ ret, $14M over term
You can look at the Ohio Individual Income Tax tables to figure out how much new income is generated per person (http://tinyurl.com/pm2k9a).
Example: A company creating 25 net, new jobs at $11.00 per hour would equate to $22,800 per year and about $400 per person in new income tax. If the company received a 40%, 6 year JCTC, it would be worth about $1000 per employee (ca. $960) over the 6 year term. As illustration, if one went go with 25 net, new jobs (over and above the figure one year prior to application), this would mean about $24,000 over the term to the company.
Here are some of the JCTCs received by Springfield MSA companies:
1/22/2007: LSMG (JCTC) – http://tinyurl.com/p2guut
1/22/2007: Qbase (JCTC) – http://tinyurl.com/p2guut
12/3/2007: Transeo (JCTC) – http://tinyurl.com/o823dz
5/19/2008: KCI Holding (JCTC) – http://tinyurl.com/mjb9vo
5/19/2008: Sutphen (JCTC) – http://tinyurl.com/mjb9vo
10/27/2008: SelectTech (JCTC) – http://tinyurl.com/mdvtj2
12/8/2008: RRI (JCTC) – http://tinyurl.com/nhfsgh
2/23/2009: Phygen (JCTC) – http://tinyurl.com/mr76z4