KIZ_Tax_Credit_Application_Presentation_2015

THE KIZ & R&D TAX CREDIT PROGRAMS
WHAT’S IN IT FOR ME!
Spring 2015

TECHNOLOGY-BASED ECONOMIC DEVELOPMENT
2
The Four Pillars of
Technology-based
Economic
Development

TECHNOLOGY AND INNOVATION OFFICETECHNOLOGY AND INNOVATION OFFICE
Industry Clusters

TECHNOLOGY AND INNOVATION OFFICE
Technology-based Economic Development Tools Along the Continuum

5
• What is the KIZ Program and Its Benefits?
• What are the KIZ and R&D Tax Credits?
• Who’s Eligible?
• Why Should Your Company Apply?
• How Much is Available to Your Company?
Overview

KIZ Program Goals
• The KIZ program aids entrepreneurs, newly formed startup
companies, and mature companies in identifying and
capitalizing on new ideas and opportunities.
• The program does this by gathering and aligning the
combined resources of educational institutions, private
businesses, business support organizations, commercial
lending institutions, venture capital networks (including
angel investors), and foundations (KIZ partners)
• Each KIZ has developed a unique mix of these partnerships
and programs to support innovation and entrepreneurship
in their zones.
6

Keystone Innovation Zone
• Over 90 institutions of higher education are directly involved in
the KIZ program.
• Pennsylvania has invested $14 million in the KIZ program which
has leveraged $956 million in outside funding.
• This funding has helped to create close to 4,300 jobs and
retain another 12,700 positions by providing support to nearly
9,100 businesses.
• At least 865 new companies have been borne out of the KIZ
program.

• Assistance provided to new company startups
• Provides KIZ companies with the possibility to access local
internships for college students
• Increases the number of filings for patents, licenses,
trademarks, and trade secrets in the region
• Provides low cost incubator space
• Access to incubation type services including help in
developing a business plan, marketing plan, project planning,
and patent filing
• Increase the number of new jobs and companies created by
the transfer of technology and research to the private sector
Benefits to KIZ Companies

• Increase investments made in technology research
• Create partnerships with university faculty and research
facilities
• Annual Transferable KIZ Tax Credits
• Preferential consideration for DCED Programs
• Access to Regional Universities’ R&D Teams
• Site Selection Assistance
• Business Planning
Benefits (continued)

• Networking Opportunities
• Entrepreneurship Development Assistance
• Intellectual Property Rights Assistance
• Grant Writing Assistance
• Access to KIZ Sponsored training and seminars
• Access to financing options and investment opportunities
• Partnership opportunities with university faculty and research
facilities

The sale of the KIZ tax credits provides young Pennsylvania
companies with new working capital that was available to
meet critical needs.
Examples of these
needs include capital
expenditures,
expansion of their
workforce, operational
expenses, and even to
make companies more
attractive to venture
investment.
Does Your Company Need to
Upgrade its Equipment?
Facility Expansion Projects?

• Since the program began:
– Over 1,400 KIZ tax credit applications approved totaling
nearly $103.8 million in credits being awarded.
– DCED has approved nearly 1,330 sales/assignment
applications resulting in excess of $81 million in KIZ tax
credits transferred.
– KIZ companies have benefited greatly from nearly $73.8
million (an average of 91 cents on the dollar) in new
capital created from the sales/assignments of their KIZ tax
credits
• Last year over $17.0 million in tax credits were awarded
to Pennsylvania KIZ companies.
KIZ Tax Credit Program

• You are eligible for KIZ Tax Credit if you are a
company who:
1) Has been in operation for less than eight years,
2) Is located within the boundaries of a DCED approved KIZ,
3) Operates within one or more of the targeted industry
sectors of a particular KIZ and have worked with the KIZ
Coordinator.

• A KIZ company may claim a tax credit equal to 50% of the
increase in their gross revenue in the immediately preceding
taxable year attributable to activities in the KIZ, over the
company’s gross revenue attributed to activities in the KIZ in
the second preceding taxable year.
• A tax credit for a KIZ company shall not exceed $100,000
annually.

The R&D Tax Credit
The R&D tax credit is designed to
encourage taxpayers to increase
their R&D expenditures in PA to
enhance economic growth.
The DOR is authorized to award up to
$55 million in R&D tax credits annually.
The legislation provides that 20% of
the R&D tax credit annually must go
to small businesses first.
To receive the R&D tax credit a
company needs to enter their
Qualified Research on Form REV-545.

Qualifying research expenses include: in-house research expenses,
and contract research expenses.
Pa’s R&D tax credit is for the increase in research-related expenses
over the previous year’s expenses.
To qualify for the PA R&D tax credit, the company must have
established a base year with the federal tax credit program.

Unused R&D tax credits may be passed through to the
company’s shareholders or sold to another entity.

TECHNOLOGY AND INNOVATION OFFICETECHNOLOGY AND INNOVATION OFFICE
Change to the Guidelines
• A new Check Box will be added to KIZ Coordinator’s
Certificate page of the Electronic Single Application
• By checking this box, I certify that I am authorized to submit
this Application by virtue of my status as one of the
following: 1) a fulltime employee of the Company; 2) the
Certified Public Accountant of the Company; or 3) the KIZ
Coordinator for the Company.

• Ineligible Gross Revenues
– Rent Collected
– Sale of Tax Credits
• Eligible/Ineligible Compensation for the Payroll Factor
• Eligible/Ineligible Property for the Payroll Factor

• Eligible Compensation
– The following constitutes compensation if it appears
on the owner’s personal or the company’s federal tax
returns
• net profits of the company paid to the company’s
owner included as part of the owner’s
• compensation paid to company’s officers receive
• guaranteed payments or dividends given to the
company’s partners receive
• the cost of labor (provided the workers are directly
employed by the company)

• Eligible Compensation (continued)
– Compensation does not include any individual not
employed directly by the KIZ Company including (but
not limited to):
• Contracted employees (i.e., employees of a third party
entity contracted to perform work at the KIZ company)
• Management fees paid to another company – even if
the company is parent/sister company
• Independent sales people, etc.
• Consultants

• Document Requirements
The following documents must accompany the
application:
– Signed tax forms that were filed for the Base and
Comparable tax years (or verification of electronic
filing)
• PA Income Tax
• Front pages and signature pages (if different from the
front page) of Federal Income Tax forms
• Pages of tax forms indicated on the Excel worksheets
– Other documents identified on the worksheets
• Financial statements
• W2s/W3s

Reporting Requirements
The KIZ Company must have submitted their online
semi-annual KIZ reports in accordance with the KIZ
guidelines
Please plan ahead!
Application is through DCED’s Electronic Single
Application

Single Application Highlights
One-time User Account
A Program Finder provides a list of programs:
• based on eligibility and/or the use of funds
• short program description
• links to the program’s fact sheet and guidelines
• provides program requirements upfront
Instant confirmation of submitted applications

• Deadline Requirements
– Applications must be submitted on or before
September 15th
– Each application will be reviewed as submitted.
• Applications that are deficient or missing required
information or documentation will be determined to be
ineligible.
– All state and federal filed tax returns must be
submitted with this application.
• Extensions will not be taken into consideration in the
review of the KIZ Tax Credit application.
– No time extensions will be granted.

• Remains a paper Application - not an online application
• Requires a company official to sign that the company has
filed its taxes prior to submitting the sales application
• Only the verification forms of filed taxes are required –
complete tax return no longer needed.
• DCED will except the sales applications from January 1st
through October 15th of each year.
Tax Credit Sales Application

You Need to Be Committed to Getting Your KIZ Tax
Credit Submitted On Time!
I’m Going to Give You the Right Tools for Success!
Don’t Be Scared or Overwhelmed By the Process!

Required KIZ Tax Credit Worksheets
Four Tabs
– Gross Revenues
– Comparable Taxable Year (payroll and property factors
figures)
– Base Taxable Year (payroll and property factors figures)
– Calculation Sheet
Automatically calculates the payroll and property factors,
and the estimated award amounts
Must be submitted with the application

Gross Revenue Tab

Gross Revenue Tab – 3 Messages

Taxable Year Tabs – Payroll & Property Factors
• You must fill in the document name, line #, and page #,
prior to entering the amount !

Taxable Year Tabs – 2 Messages
Or,

The Good News Is That The Worksheet Does The Math
For You!

Part A
Gross Revenues of the company for the Comparable Tax Year attributable to targeted industry activities within
the KIZ.
Enter the Comparable Tax Year 2013
Property Factor
Property within KIZ (from line A)
$0

Property within PA (from line C) $0 = 0.00% (Line 1)
Payroll Factor
Payroll within KIZ (from line B)
$0

Payroll within PA (from line D) $0 = 0.00% (Line 2)
Total (Line 1 + Line 2) 0.00% (Line 3)
KIZ Apportionment
(From Line 3) 0.00% 2 = 0.00% (Line 4)
Pennsylvania Gross Revenues
in target industry in Comparable Year $0.00 (Line 5)
Comparable Year’s Gross Revenues
attributable to the KIZ (Line 5 x Line 4) $0.00 (Line 6)
Calculation Tab
The Good News Is That The Worksheet Does The Math For You!

Eligibility Message

Calculation Tab
Part C
Comparable Tax Year 2013 (Line 13)
Base Tax Year 2012 (Line 14)
Comparable Tax Year
Gross Revenues of the company attributable to target industry
activities in the KIZ for the year in Line 6
$0.00 (Line 15)
Base Tax Year
Gross Revenues of the company attributable to target industry
activities in the KIZ for the year in Line 12
$0.00 (Line 16)
Increase in Gross Revenues (Line
16 – Line 17)
$0.00 (Line 17)
50% of amount on Line 17 $0.00 (Line 18)
Amount of KIZ Tax Credit for which
the Company is applying $0.00 (Line 19)
Note: If the total for all qualified applications received by DCED exceeds the annual allocation, the amount awarded will
be reduced from the amount listed on this application.

Single Application Highlights
One-time User Account
A Program Finder provides a list of programs:
• Based on eligibility and/or the use of funds
• Short program description
• Links to the program’s fact sheet and guidelines
• Provides program requirements upfront
Instant confirmation of submitted applications

How to access the Single Application Login Page
Go to www.NewPA.com – click on “Single Application” OR click on “Single
Application for Assistance”

New Registration for PA PowerPort Login
Required fields denoted
with ♦
E-mail address can only be
registered once
User Name must be unique
Password is case sensitive
minimum of 8 characters
must include uppercase letter,
lowercase letter, number and symbol

Single Application
Information Section
This is the User Account
information.

Account Information Required
Information provided
determines programs displayed
•Stores User Account information
•Information used to pre-populate
Applicant Information on the
Single Application for Assistance
•Information can be updated
•How are you applying? Must be
completed prior to starting an
application.
•Errors display at top of page

Account Information Required
Taxpayer ID
• Federal Employer Identification
Number (FEIN) of the applicant
• Social Security Number (SSN) of
Owner for Sole Proprietorship
• PA Box Number not allowed
Information can be updated

Logging into the Single Application for Assistance
for Existing Users
Existing Users - Login with
user name and password
Forgotten Password –
Re-directs user to the PA
PowerPort website

Logging into the Single Application for Assistance
for New Users
• New Users – Register
to create a new PA
PowerPort Login
Account

PA PowerPort Login Account
IMPORTANT NOTE: You must return to the
Single Application website to complete an
application.
 Forgot Password
• Automatically
generated
password e-
mailed
 Update PA Login
Account
• Update Account
Information
• Change Password
PA PowerPort website is: https://www.login.state.pa.us/login/.

Begin a New Application
New Application:
Project Name 60 characters or less
Do you need help selecting your program?
• Yes – Directs you to the Program Finder (default setting)
• No – Allows you to type the program name or acronym
Click Create a New Application button
KIZ Tax Credit
No

Tax
Program Name Search
Enter the program name or
acronym to search
Search button will display
results
Apply
Additional Program
Information:
• Fact Sheet
• Guidelines
Specific Program Search

You must
upload your
signed KIZ
Coordinator's
Certificate first
in order to
access the KIZ
Tax Credit
Program’s
Application!

Applicant Information
• Use Account Information
button pre-fills information
previously entered into the User
Settings.
• NAIC Code – Drop down menu
appears with appropriate
choices based upon Entity
Type selected.
Single Application – Applicant

No
KIZ Tax Credit
Single Application – Project Overview
How to Apply for Multiple Funding Sources for the Same
Project
Answer “No” to the
question regarding
Multiple Funding
Sources.

Select County and
Municipality
Select Legislators
Multiple Legislators can
be selected.
Single Application – Project Site

Divided into 4 specific
questions
Minimum and maximum
character counts for
each question
45 minute session time-
out (saving after each
question resets time)
Special characters can
be used (ex. * & %)
Single Application – Narrative
We plan to receive Keystone Innovation Zone (KIZ) Tax Credits to
be used to offset various tax liabilities that may be owed by our
company.

Single Application – Budget
Select “Other” at
the bottom of this
spreadsheet
Funding Sources
Does not apply to
KIZ Tax Credit
program
Spreadsheet
Enter KIZ tax credit
and the amount

Enter text indicating
why you are seeking
a KIZ Tax Credit
Select Budget
Justification
Basis of Cost –
Budget Narrative –

Single Application – Addenda
Addenda for the
KIZ program is
required and
includes:
• KIZ Tax Credit
Excel Worksheet
• Tax Documents
• Other supporting
documents

Notification of incomplete sections of the application will be
displayed.
All required information/errors must be satisfied to obtain the
Submit Application button.
Single Application – Certification/Incomplete

Edit an Incomplete Application
Incomplete Applications:
•Edit button opens the application to allow completion or
updates to be made in the application prior to submission.
•Review your application prior to submission .
•Once the application is submitted to DCED it will be reviewed as
is by the program office.
Applications cannot be modified or updated once
they are submitted to DCED.

Once the required
info and/or errors
have been satisfied
the Submit
Application button
is displayed.
Single Application – Certification/Submission

12 – digit Single
Application ID number
Single Application – Certification/Confirmation
Instant Confirmation
Option to print the
signature page and/or
the entire application

Contact Me With Program Related Issues, At:
Colton S. Weber
(717) 214-5422
cweber@pa.gov
For Electronic Single Application assistance,
contact:
Customer Service Center
1-800-379-7448

KIZ_Tax_Credit_Application_Presentation_2015

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