What is it?
The Arizona Commerce Authority (ACA) is the state’s leading economic development organization. Created by the Arizona State Legislature in 2011 as an evolution of the former Arizona Department of Commerce, the ACA is overseen by a public-private sector board chaired by the Arizona Governor. The ACA has a streamlined mission to grow Arizona’s economy by attracting new businesses from out-of-state, help existing Arizona companies create new jobs in the state, and working with entrepreneurs to start new Arizona businesses. (See more about the ACA here).
The ACA offers a comprehensive suite of programs that assist businesses of all sizes. The focus of this article will be on the agency’s tax relief programs, although you are encouraged to go to the website and learn more about all the programs the ACA offers.
Tax Relief Programs
The ACA offers 15 tax relief programs that range from refundable tax credits to tax exemptions. Here is a brief synopsis of the tax relief programs available through the ACA:
Quality Jobs: offers up to $9,000 of Arizona income or premium tax credits spread over a three-year period for each net new quality job.
Qualified Facility: provides refundable income tax credits to eligible manufacturing companies that create new Arizona jobs and invest in one or more qualifying facilities.
Research & Development: provides an Arizona income tax credit for increased research and development activities conducted in the state.
Angel Investment Tax Credit: provides credits to investors who make capital investments in small businesses certified by the ACA.
Computer Data Center Program: provides Transaction Privilege Tax and Use Tax exemptions at the state, county and local levels on qualifying purchases of CDC Equipment.
Foreign Trade Zone: offers up to an 80 percent reduction in state, real and personal property taxes to businesses located in a Foreign Trade Zone or sub-zone.
Military Reuse Zone: provides tax credits, a TPT exemption or property reclassification to qualified projects in an MRZ.
Renewable Energy: offers a property tax reclassification to companies in the solar, wind, geothermal and other renewable energy industries who are expanding or locating in Arizona.
Renewable Energy Production: provides an income tax incentive awarded to utility-scale generation systems based on the amount of electricity produced annually for a 10-year period using solar or wind energy.
Healthy Forest: provides incentives for certified businesses that are primarily engaged in harvesting, processing or transporting qualifying forest products.
Work Opportunity Tax Credit: provides a federal tax credit to private-sector businesses from certain groups who have consistently faced significant barriers to employment.
Additional Depreciation: accelerates depreciation schedules for prospective acquisitions of commercial personal property.
Sales Tax Exemptions For Manufacturing: provides a sales tax exemption for various machinery or equipment.
Lease Excise: reduces a project’s operating costs by replacing the real property tax with an excise tax.
Arizona Finance Authority: a one-stop shop for financing, supporting expanding and relocating businesses, communities’ infrastructure needs, and first-time homebuyers.
Each of these programs is instituted to help grow Arizona’s economy by incentivizing businesses to expand and develop. Most of the programs have basic eligibility requirements to limit the participants to those companies that will drive Arizona’s economy forward. Some of the credits have a limited dollar amount allocated to the program and are awarded through a competitive process.
What Companies Can Benefit?
Many of the programs are unique to certain industries, such as solar and manufacturing. But other credits are available to a wider array of companies, such as the Quality Jobs credit. The ACA provides an excellent overview of the qualifications for a program and the application process on their website.
If you are unsure whether your business may qualify for one of these programs, consult with your CPA or reach out to the ACA directly. If you need help completing the application/reporting process for a program, or researching your eligibility for a program, please feel free to contact us at Price Kong.
About the Author
Troy is a member of the Arizona Society of CPAs and the American Institute of Certified Public Accountants. His interests include golf, fishing, hiking and spending time with family. He is an Eagle Scout and actively participates and volunteers with his church, including serving as Scoutmaster of a local scout troop in 2014 and 2015.
You may reach Troy at his direct phone: 602-776-6367 or by e-mail at [email protected].