Federal & State Tax Credits
The Strategic Group one of the largest clearing houses of federal and state tax credits in the Southeast.
They have expertise in low-income housing, historic rehabilitation, energy, and film, among others; to give you tax credit options.
They offer consulting services to navigate which tax credits are suited for a client’s situation.
A tax credit is an economic incentive issued by a government agency to encourage the private activity, typically investments, in economic development an example would be the State of Georgia’s Film & Entertainment credits. Such incentives can be in the form of grants, rebates, loans or tax credits.
The Strategic Group works with tax credits that can be transferred to outside investors.
Tax credits are issued by the Federal government as well as U.S. State and territory governments, and thus can be applied against tax liabilities at either level. States credits typically cannot offset Federal liabilities, and vise versa.
Tax credits are either transferrable, meaning they can be sold by the entity earning them and purchased by another, or nontransferable. This is usually determined by the law creating the tax credit.
Most nontransferable credits are allocable to partners in the project. As a result, many credits are monetized by silent equity partners that receive the credits in exchange for capital contributions. These capital contributions typically resemble the sales prices paid by investors purchasing transferable credits.
Tax credits are either refundable or nonrefundable. A refundable tax credit can be “sold back” to the State or Federal government that issued them for a specified amount defined in the rules and regulations of the tax credit program through which they were issued. Nonrefundable tax credits are redeemed only by applying the credit against a tax payment on year-end tax filings.
Almost all tax credits are a combination of these elements. For example, a film studio could be earning a State transferrable tax credit certificate. Meanwhile, a real estate developer could be receiving a Federal Historic Tax Credit that is nontransferable, nonrefundable and thus, can only be utilized by the entities in the partnership sponsoring the project earning the tax credits. The latter can be allocated to an Investor who has been admitted into the partnership.
Tax credit clearing houses work to facilitate the transfer of tax credits from the developers and producers earning tax credits to investors who want to purchase them to offset their tax liabilities. Not all producers or developers need a clearing house if they know the right staff at profitable firms paying significant taxes in the applicable fiscal year in their tax jurisdiction. However, most do not have these contacts.
As a clearing house, The Strategic Group connect the investment community, comprising billion-dollar corporations with significant and complex tax liabilities. They seek out the most attractive programs to meet the needs of our clients and close transactions through a variety of investment structures. These transaction structures range from simple tax credit certificate sales to complex tiered partnerships.
Whether a tax credit is issued at the State or Federal level also impacts which tax liabilities it can be used against. The type of tax liability that can be offset by a tax credit is dependent upon the rules and regulations of the program through which the credit is issued. At The Strategic Group, they know which credits work with which taxes and use this expertise to help match project sponsors with investors.
The Strategic Group is an experienced and trusted partner in Georgia entertainment tax credits with relationships with some of the largest productions groups in the state.
The Strategic Group has partnered with some of the largest developers of historic rehabilitation programs across the country. We have helped restore some of America’s most cherished landmarks including hotels, theaters, and repurposed government buildings.
The Strategic Group offers several ways for investors to take advantage of these tax credits.
Tax credits are in limited supply this year, sign up here for first access.