Legal Briefs

Gainesville’s ‘Opportunity Zone’ Job Tax Credits

Published Monday, January 3, 2011

In 2010, the City of Gainesville successfully secured approval from the state of Georgia to designate 270 acres in the downtown area as an “Opportunity Zone.” Under this program, any business within this special district is eligible to receive a reduction in their state tax bill if they hire at least two new employees.

 

Jim Coyle, a tax attorney and tax specialist with the Gainesville, Ga. law firm Stewart Melvin & Frost, explains how this designation can be beneficial to local businesses.

 

Question: Explain the state’s Opportunity Zone program and how it can benefit Gainesville businesses?

Jim: The “Opportunity Zone” program is offered by Georgia’s Department of Community Affairs with the intent to help spur development and job creation in areas like our community. Like the name of the program implies, this is a great “opportunity” for businesses to benefit financially from a tax credit – which is much more impactful than a tax deduction because it is a direct dollar-for-dollar credit against your tax bill.

 

Credit the City of Gainesville for securing this program --and the Greater Hall Chamber of Commerce for helping to promote it. As we begin economic recovery locally, I hope that a lot of businesses in this community will take advantage of this tax credit and help spur additional jobs and growth for the entire community.

 

Question: Where exactly is Gainesville’s “Opportunity Zone”?

Jim: The Gainesville Opportunity Zone includes the city’s downtown and Midtown business districts. All together, the zone covers a land area of 276 acres within the City of Gainesville. The Downtown District covers all the businesses between Academy Street and Jesse Jewell Parkway which includes the entire downtown Square and several surrounding blocks. The adjoining Midtown district is located on the other side of Jesse Jewell Parkway and stretches south all the way to the railroad tracks along Moreno Street in the industrial side of town.

 

Overall, there are approximately 500 businesses in this Opportunity Zone.

Question: If your business is located in this district, what are the potential tax benefits if and when you decide to hire new employees?

Jim: If a business in Gainesville’s Opportunity Zone creates at least two net new jobs within a tax year, then it may be eligible to receive a tax credit of $3,500 for each new employee. This is a tax credit that is extended first to your state income tax bill. And if there is any additional credit left over, then you can extend it to your state payroll withholding and reduce your tax bill even more – up to a maximum $3,500 per new job.

 

There are a few conditions – but really not a lot of red tape. First, you must create at least two net jobs. That means you can’t lay off 3 people and then try to qualify by hiring two new employees. You must expand your workforce by at least two new jobs in a one-year tax period.

 

Also, these two new jobs must be full-time jobs (at least 35 hours a week), your business must offer health insurance to any new employees, and the average wages for the new jobs must be above the lowest average wages in the state (approximately $22,000/year).

 

Question: Is the $3,500 tax credit per new employee just for one year?

Jim: No. And that’s the great deal about this tax credit. If you hold on and maintain those new job positions for the next four years, then you can claim the same amount of credit on your tax return in each of those four years. That allows your tax credit to potentially make a huge positive impact to your cash flow, especially if you are a small business.

 

Question: What should businesses do if they think they may qualify and want to participate?

Jim: The tax credit is claimed by filing Form IT-CA when you complete your Georgia Corporation Income Tax return. Those forms can be downloaded from the Georgia Department of Revenue’s website. Of course, if you have any questions about filing for the tax credit, you can contact your accountant or tax lawyer. I know that our law firm, for example, will certainly be informing our own business clients.

 

In addition, if you simply want more information about the Opportunity Zone Job Tax Credits, you can contact the City of Gainesville as well as the Greater Hall Chamber of Commerce – both of which provide information on their websites. I know that both the City and the Chamber have done a good job of promoting this program, and I hope that we have helped to educate a few more businesses here today.

 

If you want to do your research on-line, you can simply go to the State of Georgia website at www.Georgia.gov and enter a keyword search for either the Department of Community Affairs which will give you a complete description of the Opportunity Zone program or the Department of Revenue, where you’ll find a description of many more tax credits that your business might be eligible for.

 

On the Georgia Department of Revenue website, there is a complete list of every available tax credit offered by the state of Georgia. These programs range from:

  • Statewide tax credits for providing new jobs in certain specific industries such as manufacturing and telecommunications;
  • Providing child care to your employees;
  • Providing health insurance to your employees;
  • Or even purchasing an electric vehicle charger for your business.

All of this information is available on the Georgia Department of Revenue website, which you can find through www.Georgia.gov.

Question: Do you know whether many Gainesville businesses have already taken advantage of the Opportunity Zone tax credit here locally?

Jim: Surprisingly, only one business is on record of having filed the application and being approved since the program started back in January of 2010. But I think there are probably several local companies that qualify but they just don’t know about it yet. So, I would definitely encourage any business owner to look into this program because it could certainly be well worth their time and effort to do so.

 

Also, the application process is much simpler than you may think. The entire application is only a couple of pages long. There is not a lot of red tape involved.

 

 

Question: Are there other Opportunity Zones like this in Gainesville?

Jim:

To date, this is the only one. However, according to Rusty Ligon, the City of Gainesville’s Community Development Director, the City is in the process of creating three additional Opportunity Zones as part of its Comprehensive Plan update this year. So, this is a good program, and I am sure that you will hear much more about it in the near future. And as the economic recovery hopefully continues, you should see many more local businesses taking advantage of this job-creation program.