Pub. 3 2021 Issue 5

S E P T E M B E R / O C T O B E R 2 0 2 1 12 nebraska cpas S TAT E TA X B R I E F I N G THE CPA’S CRITICAL ROLE IN NEBRASKA BUSINESS EXPANSIONS BY NICK NIEMANN AND MATT OTTEMANN, MCGRATH NORTH The speed and force at which the economy and business models are changing is unprecedented. Driven by both pre-COVID and COVID global, regional, and local demographic, political, technology, and business model changes, we are in the midst of a rapidly accelerating “perfect storm.” This is affecting the lives of every individual, organization, and government today. Business leaders, now more than ever, know that if they don’t innovate and grow, their companies will die or fade quickly. The Business Expansion Decision-Making Process There are a variety of business, legal, financial, tax, and incentive considerations that go into business expansion, site selection, and business development project decisions. Once a decision is made to expand or move some part of a business, the business expansion, site selection, and business development process across the U.S. normally follows a well-thought-out methodology. Those steps are normally as follows: Step 1: Business and Location Criteria Defined Step 2: High-Level Location Factors Screened Step 3: Site &Community Level Factors Analyzed and Screened Step 4: Site Due Diligence and Incentives Application/ Negotiations Step 5: Site Control and Acquisition Step 6: Project Construction and Implementation Key to success is team play and collaboration with the company, its business expansion legal team, and its CPA. The company’s CPA should ideally be involved in either all of the above steps or selected steps as appropriate to accomplish company objectives. Nebraska’s Business Expansion Incentive Programs One of the key considerations in business expansions or moves is the potential for decisions impacting state and local business incentives. Every year, state and local governments award billions of dollars in business incentives to those companies throughout the country that actively seek these benefits as part of their site location and expansion decisions. Nebraska CPAs are familiar with Nebraska’s new Imagine Nebraska incentive program, which is the third generation of Nebraska’s leading business growth incentive platform. In a prior article, we’ve reviewed some of the key provisions of the Imagine Nebraska program. Nebraska has a variety of other potential incentives available for companies that are expanding in the state. These include the following: • Local Option Economic Development Grants: Cash grants made by cities or counties to companies expanding in their area. • Microenterprise Tax Credit Act Credits: Refundable income tax credits provided to individuals actively involved in a microbusiness. • Site and Business Development Act Grants: Grants made by the Nebraska Department of Economic Development for assistance with industrial site and building development. • Nebraska Innovation Fund Prototype Grants: Matching grants that aid with product development to Nebraska companies. • Community Development Block Grant Loan Program: Partially forgivable loans for companies that will expand the state’s economic base and that create quality jobs principally benefiting employees in the low- and moderate-income levels. • Nebraska Seed Investment Program: Up to $500,000 investment funding for Nebraska small businesses (less than 500 employees) to assist with turning research, innovation, and technology into a viable business. • Tax Increment Financing: Deployment of property tax revenue increases (15 or 20 years) to fund the company’s share of public infrastructure and certain related company project costs. • Nebraska Rural Development Act Tax Credits: Tax credits, equal to $3,000 for each new employee and $2,750 for each $50,000 of new investment, for development in rural areas (and certain impoverished parts of Omaha). Also, 10% credits, up to $150,000, are available for livestock modernization and expansion projects.