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ADVISOR TIPS
 Get Tax Credits for Training Investments
A number of state and federal laws or proposals let companies receive credits for their investment in IT-focused training.
By Jack Miller, Chief Operating Officer, Learn.net
Ongoing employee training not only improves productivity and employee satisfaction but is an indisputable money-saver come tax time, as well. Companies in Georgia, for example, can receive tax credits totaling up to half of their total training investment in approved training programs.
The retraining tax credit, part of the state of Georgia's Business Expansion and Support Act of 1994, provides companies up to US$500 per training program per employee, after the first 16 weeks of employment. Companies can receive Georgia tax credits for training employees to use new technology, new software and equipment, or a different computer operating system.
The retraining tax credits can be recovered for three previous tax years. So, for example, if a company did not seek the credits for the 1999 tax year, it can receive the credits this year if it has documentation or can re-create documentation about its program. In addition, the credits can be spaced out, or carried forward, over 10 years. If a company receives $100,000 in credits, it can use them all this year or spread them out as it sees fit over 10 years. Retraining tax credits in Georgia can cover up to 50 percent of a company's state tax liability.
Terry McMillian, president of corporate tax credit consulting firm McMillian & Associates, cites the following examples of Georgia companies that have received tax credits and incentives:
- A company with $2 million in annual revenue and 12 employees secured $48,000 in tax credits.
- A $10 million firm with 100 workers got $155,000 in tax credits.
- A $100 million company with 900 employees secured $1.3 million in tax credits.
Other legislation
In addition to the tax credits most states and the federal government offer for general worker training, a federal bill aimed specifically at information technology training was introduced in 2001 and is pending. Similar IT-focused tax credit legislation has also been proposed in numerous states, including Connecticut, Florida, Maryland, New York, North Carolina, Texas, Virginia, and Washington.
In January 2001, Arizona passed the nation's first training tax credit law focused on the information technology industry. Arizona's new law gives smaller businesses in the state a tax credit for half of all IT training expenses for as many as 20 employees, up to $1,500 per employee per year. That won't mean much to large employers in the area, such as Motorola and American Express, but it's a big help for smaller employers.
Help yourself
Many of these tax credit plans are aimed at helping to fill labor shortages, particularly in the technology industry. But in any business and for many types of jobs, financial help in worker training is available for employers.
"Retraining tax credits won't turn your training efforts into a profit center, but they can provide a significant portion of a company's training budget," McMillian says. "The law allowing retraining tax credits is there; you just have to know it's there and take advantage of it."
Many employers, particularly small companies, are unaware of the retraining tax credits, McMillian says. Some are familiar with the incentives, but choose not to spend the time and money necessary to piece together the documentation and deal with state tax authorities.
But, McMillian estimates, tax credits and other incentives typically generate a return on investment of time of roughly 180 percent. Put another way, a company will spend 30 to 40 percent of what it receives in credits in time and resources to get those credits. For this reason, many companies choose to outsource this work.
Whichever route you take, be sure to take advantage of the tax breaks available to you. Training pays off in more ways than one.
Jack Miller is the chief operating officer of Learn.net, an Atlanta-based company that has been developing and hosting Web-based training systems for large and midsize companies since 1995. ARTICLE INFO
Web Edition: 2002.05.28, Doc #09745
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Keyword Tags: Business Management, Business Strategy, Business Technology, Computer-Based Training (CBT), E-Learning, Finance, Financial Management, Internet-Based Training (IBT), IT Strategy, Learn.net, Management, Microsoft .NET Framework, Strategy, Tax, Training
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