← STRATEGIES FOR A GREENER ECONOMY Green Tax Incentives and Missed Opportunities
Despite of the many budget cuts experienced by different government sectors, the amount of tax incentives is increasing for consumers and businesses which are paving the way to making their buildings more energy-efficient and gradually changing their infrastructure to enable them to use renewable power source. However, in spite of the good news, such opportunity is hardly ever successfully taken advantage of according to an article written by Steve Heusinger and Ramon Reynoso.
$2.3 billion federal budget is reserved as incentives for consumers and companies investing in greening homes and businesses. More than 1,200 state and local incentive programs await companies joining the race towards becoming energy-efficient. These incentive programs come in the form of rebates and loans, sales, property tax, and corporate savings. But these incentives are never fully taken advantage of due to burdensome bureaucratic processes involved in the tax credit.
Heusinger and Reynoso provided the following example as to why a lot of companies are failing to take advantage of the federal tax incentives for buying energy efficient green homes, providing jobs for green businesses and making their industries more sustainable. Consider that Acme Widget Company announced the creation of green jobs through its $20 million company construction project. The company may plan to create around 100 employees. The state to where it operates will offer 50% reimbursement for the company’s qualified green training expenditures which are equivalent to $5,000 per new employee. The State may also offer Acme with $1,000 income tax credit for jobs offered which will be given during the first five years of the project operation. Acme will financially project $1 million worth of incentive both for it’s training grant and state income tax credits.
As the company begins to hire new employees, documentation of the green training program might not be done. The documentation program is required by the state to quality the company for tax credits. Throughout the life of the project, the company’s tax manager might leave the company and not provide the next tax manager with information about the states job tax credit. As Acme files its federal and tax return the new tax manager might somehow fail to claim the company’s jobs credit. After subsequent checking, the company might realize in the end that training expenses and income tax paid costs the company more than it was originally projected and that the state job credits were missing.
Through the ensuing investigation with the state economic development officials, the company will soon come into its senses that it just lost its eligibility to claim for incentives because it failed to comply with the regulations set by the state. This in turn will cost the company to lose a total of $1 million tax credit because of not taking the necessary steps to make sure that compliance with the state’s regulations on tax credit are taken cared of. This type of scenario reminds companies to check the tax credit and state incentive programs within their organization and assure that regulations are met during the course of the project.