Let’s take a look at some of the most common opportunities for companies to take advantage of tax credits and incentives—including many that support the kinds of efforts and initiatives that companies undertake as part of their plans for growth and competitive advantage. We’ll cover how to buy or sell unused credits, and how you can recover overpaid taxes for sales and use taxes.
Companies can purchase state tax credits and incentives from companies willing to sell them at a discount. In ADP’s experience working with clients, buyers typically purchase these credits/incentives at 10% below the value of the credit/incentive.
Tax credit exchanges enable companies to buy and sell unused tax credits without having to engage with a broker. State tax credits and incentives available for purchase on the exchange include may of the types of credits and incentives described in this paper, such as film credits, low-income housing credits, and credits for building and construction, such as:
Companies can recover overpaid sales and/or use taxes and reduce tax liabilities for a variety of investments, including:
Construction and capital improvements
Integrated plant theory (continuous manufacturing)
Equipment & consumables used in R&D or manufacturing
Equipment used in R&D or manufacturing
Temporary storage & equipment rentals
Common carrier and PUC
Industry-specific exemptions (i.e. data, rail, energy, retail, mining, etc.)
Software, licenses, SaaS, or IT spend
Opportunity zone “leakage”
To learn more about tax credits that can benefit your manufacturing business, check out our other blogs on Federal Employment Incentives and Investment and R&D Credits.
Dana Fox is the Vice President of Alliances at ADP. ADP has over 40 years of tax credit experience across national, state and local levels, ADP has helped its clients capture over $1 billion in tax credits in a single year. To learn more, visit https://www.adpinfo.com/rd-tax-credit.