It made sense, so they started building. As a result, Felder’s Collision Parts’ second warehouse will be completed this year. Felder says the tax incentive definitely influenced their expansion, advancing the project two or three years. It also convinced them to build a 12,000 square-foot building instead of 8,000 square feet as they originally planned.
“It was the most brilliant move we could have made to really recoup from the devastation of Katrina and Rita,” she says.
Felder, who is also newly elected chairwoman of the National Federation of Independent Business’ Louisiana Leadership Council, wants to help other small businesses take advantage of what she calls “a once-in-a-lifetime opportunity.”
While the state has done a good job making resources available to help, she says more needs to be done to educate them on how to take advantage of GO Zone.
“The opportunity afforded our businesses in this state is probably one of the absolute important opportunities of businesses of any size, but in particular to small businesses to take advantage of capitalizing expansion,” Felder says. “It’s an absolutely wonderful opportunity, particularly for small businesses. We don’t get many breaks.”
But she says businesses, particularly in the five- to 10-employee range that could substantially benefit from GO Zone incentives, are assuming they’re only for big business, fraught with IRS red tape or require people dedicating people they don’t have to using them.
Stan Fulcher, research analyst with Louisiana Economic Development, says small business owners who have approached them about projects for GO Zone typically use the depreciation bonus for smaller projects or bonds.
“We usually tell them to go to their CPA to discuss the project and, if it’s determined to be a large enough amount, they would bring in a bond attorney for usually $5 million or above,” Fulcher says.
Then they submit a bond application that is handled through bond issuers like the Louisiana Community Development Authority, Louisiana Public Facilities Authority or parish government. Bond approval is based on each project’s economic benefit, such as how much it benefits workers displaced by the hurricanes, average salary or wages, construction jobs, investment, skills necessary for the new permanent jobs and any valued-added factors like providing oil and natural gas to aid the economy.
Like Felder, Don Mains agrees the state and IRS have been helpful, but it still appears overwhelming to small businesses.
Mains chairs the Louisiana Tax Incentive [LTI], which has kicked off a grassroots campaign heavily focused on helping them get past old misconceptions and into what he calls “the largest cash incentive delivered through the tax system in our nation’s history.”
Having served as deputy assistant secretary for economic development with the U.S Department of Housing and Urban Development [HUD], he says Felder’s concerns about small businesses, as well as their communities, missing this vital growth opportunity are justified.
LTI wants to help ensure all affected by the hurricanes get the help they need, Mains says. Nearly $10 billion in tax credits and savings is available to the Gulf Region.
LTI partnered with the IRS to offer a comprehensive Web site —yourtaxclaim.com —that outlines incentives and their varying deadlines [some have been extended] and qualifying areas for GO Zone [the federal Gulf Opportunity Act of 2005 and its 14 incentives] to rebuild from hurricanes Katrina and Rita, and the Renewal Community Initiative [28 parishes] started in 2002.
“The challenge is to get past the word ‘tax incentive,’” Mains says. “Marketing tax incentives is a challenge because small businesses think this is too complicated for them.”
An estimated 120,000 businesses could qualify for these tax incentives in the Gulf Region. Some small businesses have limited their participation to GO Zone’s depreciation bonus and wage credits because it brings money in, but Mains says more is available that can help businesses, as well as their communities, recover and grow.
Aimed at starting a groundswell, the group recently sent 6,000 letters to tax preparers about the incentives to help more small businesses take advantage of them.
“This is really economic development, and where wealth can be created by communities,” Mains says. “But the key is awareness, educating yourself on the Web site and then seeing your tax preparer. People just need to look into it and take advantage of it.”
This is what the Felders did, and it made such a difference in their business that she wants to see others benefit, too.
“We were directly impacted by the storm,” Felder says of their near 35-employee operation. “Overnight, one-third of our sales went away.”
Many of their customers in New Orleans East, one of the areas hardest hit by Katrina, have never reopened.
With the expansion nearly complete, they will simply file their taxes this year with their accountant, who will fill out GO Zone forms for the IRS and then the money will come back to them.
“It made the decision,” she says. “I would much rather my money go into my building and my product than to the IRS.”
Anna Thibodeaux’s article reprinted courtesy of The Greater Baton Rouge Business Report. She can be reached at email@example.com. All Rights Reserved.