SIDEZ notes tax credits may be available for businesses in area
The Further Consolidated Appropriations Act of 2020 is a three-year extension of the empowerment zone, EZ, tax credit incentives that will give many local businesses a significant tax break.
Tabatha Smith, executive director of the Southernmost Illinois Delta Empowerment Zone, SIDEZ, shared an update on the program in a news release.
All federally designated empowerment zones expired at the end of 2011 but the EZ tax incentives have been extended once again in the agreement signed on Dec. 20, 2019.
This recent legislation essentially extends the EZ tax incentives continually from 2002 to the end of 2020.
SIDEZ is one of 11 rural empowerment zones in the country and includes all of Pulaski County and parts of Alexander and Johnson counties.
Three of four census tracts in Alexander County are in the EZ; Tamms, East Cape and McClure are not in the zone.
One census tract in Johnson County is in the zone, including all of Johnson County south of Highway 146 and the City of Vienna.
Businesses located in the SIDEZ may be eligible to take up to $3,000 per employee credit on their federal income taxes.
To be eligible for the credit, the employee must live in the empowerment zone.
A business may deduct 20 percent of the first $15,000 of wages paid to a qualified zone employee.
EZ credits are available for both part-time and full-time employees as long as they have been employed by the employer for at least 90 days.
Businesses in the empowerment zone that have not taken advantage of EZ tax credits in the past could generate a refund check by amending prior year tax returns.
Generally, unused credits can be carried forward 20 years and back three years.
Some types of businesses are not eligible for the credit such as suntan facilities, golf courses, stores whose principal business is the sale of alcoholic beverages for off-premise consumption and others.
Some types of employees are not eligible, including certain related taxpayers or dependents, any 5 percent owner and others.
Special limitations apply to farming trades or businesses. Business owners should consult with a professional to make sure employees are qualified zone employees and to verify eligibility of other tax credit benefits.
Smith said that while the SIDEZ organization serves all of Johnson, Pulaski, Alexander, Massac and Union counties, the empowerment zone as defined by the federal government is based on census tracts.
SIDEZ administers a revolving loan fund targeted to small and emerging businesses in Johnson, Pulaski, Alexander, Massac and Union counties.
Loans of up to $250,000 at a current interest rate of 4.5 percent support local entrepreneurs and expand business opportunities for non-traditional borrowers.
SIDEZ also works with small and emerging businesses in Johnson, Pulaski, Alexander, Massac and Union counties by participating in the Rural Business Development Grant, RBDG, program.
The U.S. Department of Agriculture provides grants for rural projects that finance and facilitate development of small and emerging rural businesses and can fund a broad array of activities.
Businesses are not directly eligible for the grants, but rural, private non-profit corporations like SIDEZ are.
Typically, SIDEZ will purchase equipment with grant funds and lease the equipment back to a local business at a below-market rate.
This program is available to all of Johnson, Pulaski, Alexander, Massac and Union county businesses.
Any small and emerging private business located in Johnson, Alexander, Pulaski, Union or Massac county that employs 50 or fewer employees and has less than $1 million in projected gross annual revenue is encouraged to contact SIDEZ, Smith said.
“Thanks to the vision of the SIDEZ Board of Directors and its former executive directors, the SIDEZ organization is well-poised to continue its mission of economic and community development for many years to come,” Smith stated.
Information about the EZ federal tax credits or the RBDG program is available by contacting Smith at 618-745-6307.