Clark County receives FTZ designation

I received exciting news this morning from Angie Atwood at the Columbus Regional Airport Authority for Clark County and all its businesses.  I will be doing a couple of posts on the benefits of a Foreign Trade Zone (FTZ) and how it can help businesses save money and time.  We will also look to set up an event for our business community.

Good Monday morning,

On Friday the FTZ Board approved our Alternative Site Framework application!  Your county is now part of FTZ 138’s service area.  This means that any company in your county can receive FTZ designation within 30 days.

Now we would like to get the word out by making presentations in your area.  This could be a meeting set up for invited area companies either by individual county or multiple counties could team up.  We would also welcome making presentations to groups like the chamber, port authority, rotary, etc.  I will defer to you as the expert in your county about how best to proceed.

CRAA is here to support your economic development efforts by making the FTZ available as another tool to retain and attract businesses.

I look forward to working with you to bring the zone to companies in your county.

Angie Atwood

FTZ Marketing Coordinator

Columbus Regional Airport Authority

7161 Second Street

Columbus, OH 43217

614-409-3622

>> Copy of the official approval

>> Homepage of the FTZ #138

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3 Ohio tax credits – Tech Investment, New Markets, Sporting Events

OEDA_Summit_Logo_2009This video post addresses three Ohio tax credits:

These tax credits are administered by the Ohio Department of Development (ODOD).  Giving the presentation are Chad Smith, Manager of the Office of Tax Incentives at ODOD and Steve Schoeny, the Director of the Strategic Business Investment Division. You can follow along with the presentation (start at Slide 24) as they speak. To my knowledge, written guidelines are not yet available. The presentation was done at the 2009 OEDA Annual Summit.

>> Ohio Dept. of Development

>> OEDA

New Ohio Film Tax Credit is for big + small movies

OEDA_Summit_Logo_2009This video post addresses changes to the Ohio Film Tax Credit program offered to communities by the Ohio Department of Development (ODOD). It also addresses the Industrial Site Improvement Fund program, which is being rolled in. Giving the presentation are Chad Smith, Manager of the Office of Tax Incentives at ODOD and Steve Schoeny, the Director of the Strategic Business Investment Division. You can follow along with the presentation as they speak. To my knowledge, written guidelines are not yet available. The presentation was done at the 2009 OEDA Annual Summit.

>> Ohio Dept. of Development

>> Ohio Film Tax Credit

>> OEDA

New Ohio Job Creation Tax Credit (JCTC) rules – Part 2

OEDA_Summit_Logo_2009Here is the second of two posts on changes now effective in the Job Creation Tax Credit program offered to expanding businesses by the Ohio Department of Development (ODOD). Giving the presentation are Chad Smith, Manager of the Office of Tax Incentives at ODOD and Steve Schoeny, the Director of the Strategic Business Investment Division. You can follow along with the presentation as they speak. The third video is above and the fourth video below the slides. To my knowledge, written guidelines are not yet available.  The presentation was done at the 2009 OEDA Annual Summit.  You can see the first 20 min. of presentation in yesterday’s blog post.

New Ohio Job Creation Tax Credit (JCTC) rules – Part 1

OEDA_Summit_Logo_2009Here is the first of two posts on changes now effective in the Job Creation Tax Credit program offered to expanding businesses by the Ohio Department of Development (ODOD).  Giving the presentation are Chad Smith, Manager of the Office of Tax Incentives at ODOD and Steve Schoeny, the Director of the Strategic Business Investment Division.  You can follow along with the presentation as they speak.  The second video is below the slides.  To my knowledge, written guidelines are not yet available.  The presentation was done at the 2009 OEDA Annual Summit.

Avoid paying sales tax on manufacturing equipment in Ohio

 tax-logo-3

A colleague of mine was working with a local manufacturer to help them tax advantage of the part of Ohio’s take law that exempts manufacturing equipment from sales tax (both county and state).  He had looked up the program online at the Ohio Department of Development, where it reads:

  • Program Description – “Manufacturing Machinery & Equipment Sales Tax Exemption – Provides an exemption from state and county sales tax for companies that purchase machinery and equipment for manufacturing activities.  Vendor needs a blanket exemption certificate, available on-line at the Department of Taxation’s website (http://tax.ohio.gov) under Business, Tax Forms 
  • Rate/Terms – Exempts business from entire state and county sales tax for purchases of machinery and equipment used primarily for manufacturing.  
  • Benefits – Provides significant tax savings for companies and individuals that are involved in manufacturing in Ohio  
  • Eligibility – Includes machinery, equipment, supplies and fuel used primarily in a manufacturing operation to produce tangible personal property for sales
  • Contact – Ohio Department of Taxation, Sales Tax Division (614) 466-7351 or (888) 405-4039

The Questions

The question the colleague had was how all of this needed to happen specifically.  Does the certificate need to be approved by someone before the exemption is granted?  Who fills it out?  Etc.  I had never done one, so I called around and talked to Janelle in the Zanesville office of the Ohio Dept. of Taxation, and she was very helpful.  You can call her at 888.405.4039.  Ask for agent 2750/Janelle. 

The Answers

The process is simple.  The manufacturer is the one who has to fill out the certificate (STEC B – pdf, Word).  Then, when they are purchasing the equipment, they give it to the vendor, who puts it in their files and does not charge the tax.  When manufacturers fill the form out, they should put “will be used directly in manufacturing” as the reason.

Extra credit – what all is covered

The law relating to the exemption covers much more than just production equipment.  It also covers the following:

  • material handling equipment that moves product through the manufacturing process
  • transport equipment (not incl. cars on highways)
  • catalysts, solvents, water, acids, oil, etc. that interact w/product + are part of mfg. process
  • equipment that supports, controls, lubricates, or powers production equipment
  • machinery + equipment used to make machinery + equipment, fuel, etc. for manufacturing
  • scrap storage or handling equipment, when scrap to be reused
  • test equipment for raw materials, works in progress, and finished product
  • coke, gas, water, steam, etc. used in mfg. operation
  • machinery that treats, filters, pumps, etc. material for use in manufacturing
  • machinery + equipment and fuel used to produce electricity for manufacturing
  • transport or transmission machinery + equip for electricity, coke, gas, water, steam (w/parameters)
  • machinery + equipment that treats, filters, cools, refines, renders water, steam, acid, oil, solvents for reuse
  • parts, components, installation + repair of equipment covered
  • machinery + equipment, detergents, solvents, supplies, etc. used for cleaning towels, linens, clothing, mats…
  • equipment + supplies used to clean dairy processing equipment

>> Ohio Department of Development (ODOD)

>> ODOD Tax Credits & Exemptions

>> Ohio Tax Forms

>> Find the form in both Adobe PDF and Microsoft Word here – pdf, Word

>> Read the law (ORC 5739.011)

Ohio Job Creation Tax Credit – can mean over $1,000 per job

 

Sutphen received a JCTC worth over $70,000 for 30 new employees

Sutphen received a JCTC worth over $70,000 for 30 new employees

Summary

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.   

Relocation

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.

Additional Comments

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. 

Process

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.

Springfield MSA

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