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Business Development
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Frequently Asked Questions About Wisconsin's Community Development Zones How large does my business have to be to qualify for your tax credit program? A: Participating businesses come in all sizes. Some Community Development Zone Program participants are start-up businesses with absolutely no employees when they apply to the program. At the other end of the spectrum, we are working with businesses that have projected job growth of up to 350 employees. Ideally, projects being considered for Community Development Zone tax credits should include the creation of at least five new, full-time positions.Can you tell me exactly how much my tax credits will be? A: You will initially be allocated tax credits based on the anticipated rate of pay for the positions you plan to create. The actual credits that you will be able to apply against your tax liability depend on several factors, including the number of full-time positions (scheduled to work 2,080 hours per year) you create and their corresponding wages and benefits. In most cases, businesses are allocated $3,000 or $5,000 per job created, depending upon the pay level. Assuming that I meet or surpass my job creation projections, when can I start collecting my tax credits? A: The Department of Commerce normally distributes your allocated tax benefits over multiple tax years. If job creation takes place on about the same schedule you originally projected, you can expect to receive 25% of the tax benefits after the first year and another 25% after the second year. The final 50% of the credits is usually held until the third year to ensure that you reach your projections for job creation and target group hires. If the actual number of jobs you create does not meet the original projections, adjustments to your total tax credit package will be made during the third year.
My business won't generate much tax liability in the first few years. Why should I consider your program? A: While your current tax situation may prevent you from initially utilizing the credits, you actually have 15 years in which to use all of your tax credits. Are there any restrictions on who I can hire? A: Only new, full-time jobs that are filled by Wisconsin residents are eligible for tax credits. Program guidelines call for roughly one-fourth of your new positions to be filled by members of specific target groups. Who are members of these eligible target groups? A: Target groups include workers unemployed as the result of a plant closing or layoff, referrals from vocational rehabilitation programs, youths from low-income families, W2 participants and economically-disadvantaged veterans and ex-felons. For additional information, click here. How do I find target group members to hire? A: Local employment and training service providers and Development Zone Job Specialists with the Department of Commerce can help you locate qualified employees who are also members of eligible target groups. The Department of Workforce Development (Wisconsin Job Service/Job Center) must certify eligible targeted employees. (Your business must pay a $50 fee for each target group member who is certified.) I'm having difficulty finding enough targeted employees to meet the 1-out-of-4 provision. What do I do? A: While hiring targeted workers is a major goal of the Community Development Zone program, we recognize that factors outside an employer's control can make it difficult to reach the 1-in-4 level. When this happens, the Department may grant a waiver if you can show that you've made a good-faith effort to identify, recruit and hire members of target groups. It sounds like my business could benefit from your program. How do I get started? A: The first step is to contact your local Community Development Zone coordinator.
How much work will I have to do to stay in compliance once I'm a certified Development Zone business? A: We ask each business to complete and submit Annual Project Reports. These two-page reports include a summary of your business activities for the past fiscal year, information on new investments, jobs created, anticipated hiring/acquisition plans for the coming year, an estimate of your tax liability and a copy of your fourth quarter payroll. (Businesses must file an Annual Project Report, along with fourth quarter payroll information, each year. Even though you may not have a tax liability in the first years of your project, your tax credits can still be released for future use if you have created an appropriate number of jobs.) I still need help! Where can I go? A: Start with a call to your local Development Zone Coordinator. This is the person who is closest to your business and should be able to provide you with a quick answer. Or you can contact the Bureau of Enterprise Development staff in Madison. You can also explore our web site, where you'll find additional information.
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