It's the largest federal incentive program for the private sector ever created,
and it means businesses across the Gulf Coast region affected by hurricanes Katrina, Rita and Wilma can still pursue their share of a total of nearly $10 billion in available tax credits and tax savings.
The Gulf Opportunity Zone Act of 2005, together with extensions passed in 2007 and the lucrative federal Renewal Community benefits available in Louisiana, represent an unprecedented opportunity for Louisiana businesses of all sizes.
The GO Zone was created to stimulate economic development and recovery in hurricane-impacted areas by literally using the tax system to spur employment, growth and investment. Provisions were set up to lessen the cost of clean-up and recovery, encourage the hiring of local people, provide increased deductions to upgrade equipment, incentivize both new construction and major rehabilitation projects, and stimulate job growth in rural areas. Through mechanisms such as tax-exempt bond financing, wage credits, bonus depreciation, education credits, zero percent capital gains and enhanced operating loss carrybacks, businesses and taxpayers throughout Louisiana can save millions of dollars over the next three years simply by knowing and applying the GO Zone and Renewal Community rules.
In fact, even though the GO Zone has been in effect since the beginning of 2006, 2008 could be the greatest year to date for redemption of these incentives, due to massive wage credits and increased expensing for businesses. Plus, many businesses located in the GO Zone were simply focused on survival for most of the two years after the storms - not on understanding and optimizing their tax return strategies. These businesses may still realize tax savings that are available to them by amending returns filed for tax years 2005 and 2006.
For example, an employer who paid wages to Katrina employees during 2006 may have been unaware of the available Work Opportunity Tax Credit when it originally filed. Assuming the return was filed on April 17, 2007, this business has until April 17, 2010 (a three-year statute of limitations), to file an amended return, claim the Work Opportunity credit and realize the savings.
In other words, it's not too late! You still have time to re-examine your post-storm operations and take a close look at all of the tax provisions described on this Web site with amending in mind. As long as your business incurred a qualified expense before the provision expired, you may have a three-year window to claim the applicable credit for the tax year in question. (For correct information about your own particular situation, you should always consult your own tax adviser.)
And the opportunities extend far beyond the GO Zone. Louisiana also has four federally designated Renewal Communities (RCs), comprising much of north and central Louisiana as well as portions of Orleans and Jefferson parishes. As many as 11,000 businesses in these RCs, spread across 28 parishes, have access to millions of dollars in RC incentives. In addition to wage credits and special depreciation provisions much like those in the GO Zone, investors in RC businesses can take advantage of zero percent capital gains on assets held for five years or more.
These RCs are parts of the state that the federal government has targeted for development in order to boost business and job growth. Visit renewallouisiana.com to see maps of Louisiana's RCs, or to determine if a particular address is located in an RC. In general, businesses can claim the RC tax incentives by operating in, investing in, and hiring residents of these areas. The program runs from Jan. 1, 2002, through Dec. 31, 2009, so these dates generally set the limits on qualifying activities.
In all, there are some 120,000 businesses in Louisiana that may be eligible to take advantage of one or more of these unprecedented incentives generating hundreds of millions of dollars for different parts of Louisiana, both rural and urban. Don't miss out! Review the GO Zone and Renewal Community provisions outlined on this Web site and make your business part of the most important economic development initiative in Louisiana history.
NOTE: The material above and elsewhere on this Web site is not tax advice for any particular taxpayer. Always consult your own tax adviser with respect to your particular situation.
