Business owners attend B&O tax forum

Valoree Gregory, front, addresses business owners at a workshop last week at the McGregor Company. Kimberly DeHart and Sarah McKnight stand at the left.

Colfax Downtown Association met with business owners at the McGregor Co. conference room in Mockonema Friday, Dec. 9, to help the businesses get a head start on applications for tax credit incentives through the state's Main Street program.

Colfax was accepted into the program last year and subsequently missed out on earning tax credit incentives when the statewide allotment was gone when the calendar had barely flipped.

“Last year was cut throat,” Colfax's Unified Executive Director Valoree Gregory told the business owners in attendance.

The Main Street program offers tax credit incentives for businesses in Main Street communities. Businesses can pledge their business and operation (B&O) taxes to be paid to the Downtown Association, and the business can then receive a credit for the next year.

“You have to pay taxes anyway,” said Gregory.

Gregory explained that if a business owed $500 in B&O taxes, the $500 could be paid to the Downtown Association by December of 2017, and a $375 tax credit would then be applied to the business for 2018 taxes.

“You pay your pledge to us, and we report it back to the government,” she said.

Because the association is a non-profit organization, the pledged funds can also be used as a charitable tax write-off in 2018.

There is no minimum amount a business would have to pledge to the association, and they could choose to pledge part or all of their B&O taxes.

The statewide program offers $1.5 million annually in tax credit incentives to be distributed to its 33 Main Street programs. The incentives, however, are not distributed equally. They are first come, first serve, and each community has a maximum amount that can be received. The amount for Colfax is $133,000.

Gregory said many of the Main Street communities are lobbying to bump up the $1.5 million allotment so that more communities can participate and the funds can be distributed more equally.

“Right now we're going to the legislature trying to get it bumped up for the next couple of years to $3 million,” said Gregory.

One of the business owners present, Allen Kirkpatrick, expressed concerns about pledging funds and the money already being allocated to other communities.

“What happens if I pledge and the money isn't available anymore?” Kirkpatrick asked.

“You'll know if you qualify or not,” said Gregory. “You'll know right away so you're not out anything.”

Gregory and Downtown Association President Kimberly DeHart said the online application will not allow a pledge to be made if funds are unavailable.

Another concern expressed was what would happen if a business pledged money but then could not fulfill the donation.

“The Downtown Association police are not coming after you,” said DeHart. “You can take it back.”

DeHart specifically mentioned a hypothetical situation of a business closing mid-year. If a business did close and could no longer fulfill its pledged amount, it would not be obligated to do so. Gregory said this has happened in the past with other Main Street communities, and when it does happen, it sometimes frees up more funds to be allocated mid-year.

“If it frees up, then the Main Street program e-mails me, and then I call the people on my list and tell them to apply,” said Gregory.

DeHart explained that with B&O taxes being pledged to the Downtown Association they plan to establish a grant fund to help business owners with store front improvements.

“We're giving back to the people who are helping our community,” she said.

She explained they will be establishing a store front improvement matching grant fund, and if a business is in need, the association would be able to help businesses meet up to 50 percent of the costs.

“We would give half, you would give half,” she said. “Anything to make the Colfax store fronts look better.”

DeHart also said that with the Downtown Association being a non-profit, they will also help businesses look for grant opportunities. This could potentially mean 100 percent of a project being paid for if, for instance, a business is awarded a $10,000 grant for store front improvements, which the Downtown Association would then match with $10,000 to complete the project, she said.

“We can manage that money the way we want,” said DeHart. “You as a community will decide the priorities.”

Gregory and DeHart emphasized at the meeting Friday that it is important for business owners to be ready to go with their applications for the statewide funding on Jan. 1.

“Get in the system before the money goes away,” said Gregory.

The application will go live Jan. 1, and the business owners are encouraged to apply right away or as soon as possible.

Business owners will be able to apply on their e-file accounts on the Department of Revenue website by selecting “credits & tax incentives.” A drop down menu will appear, and then “apply for Main Street credit” should be checked.

Once an applicant clicks on “get started,” the business owner can select the Colfax Downtown Association from a drop down menu.

This menu will also show how much money is left that can be allocated to Colfax.

If it is listed at zero, that means either that Colfax's allocation has already been met, or that the entire statewide allocation has been met.

On the following page, a contribution amount can be typed in, and the system will automatically calculate the credit rate (75 percent of contribution) on that page.

The final page is a summary before final submission takes place.

Once the application is complete, a confirmation letter will be sent from the Department of Revenue within 45 days, but contributions can be made prior to the letter being received. Contributions will be mailed to the Downtown Association.