Impressed by tax savings for energy efficient designs of public buildings, client re-hires firm for tax planning and compliance work.
Imagine that you are a business owner who just realized that you missed out on hundreds of thousands of dollars in tax deductions that you could have claimed as a result of building or designing energy-efficient buildings. How would you feel about the CPA firm that let those opportunities pass you by?
Now imagine that you are the CPA who educates that business owner about how she could realize those tax savings and redirect that much-needed cash into her business operations. Do you think that success would help position you as the go-to provider for all of the firm’s tax planning and compliance needs?
The answer, of course, is YES! We have seen this scenario play out time after time. In fact, with CSP360 serving in the background, a Southeastern regional CPA firm recently won $50,000 in recurring work from a former client by educating the owner about how her architectural firm could claim current deductions for their designs of energy-efficient public schools and universities, as well as government and municipal buildings.
Here’s how this architect learned that she could slash her firm’s tax bill and free up cash flow using the 179D deduction:
The architect asked her (soon-to-be former) CPA about whether her firm could claim a deduction under 179D. The uninformed CPA assured her (falsely) that qualifying for the credit would be overly burdensome, and the firm would not be likely to reap significant benefit.
But that answer never fully satisfied her. So when she received an invitation to attend a U.S. Green Building Council (USGBC) chapter meeting about the 179D Energy Efficient Commercial Buildings Tax Deduction, she immediately accepted. Interestingly, the speakers included a representative from a regional firm that used to handle her firm’s tax and accounting work. She hadn’t realized that the firm was so closely aligned with the USGBC, and she was intrigued.
Yes, architects can qualify for 179D
What she learned at that 179D seminar surprised and delighted her—but it also disappointed her to confirm that her current CPA had really let her down! The presenters shared examples of dramatic tax savings achieved by designers of public school buildings—the very types of buildings that this architect had been designing for more than six years. They explained that the 179D provision had expired at the end of 2013, but that designers of public schools and government buildings can amend tax returns to claim tax deductions for buildings or retrofits from any open tax years.
She also learned that, while it is true that qualifying for the credit requires the designer of public buildings to obtain an “allocation letter” from the government agency that owns the buildings, as well as independent certification by a licensed engineer, these hurdles are completely manageable with a knowledgeable and experienced partner by your side.
Good news and bad news
This architect lost no time in meeting with the regional CPA firm and CSP360 to discover just how much she could recover using the tax deduction. She was not disappointed! After conducting a thorough analysis of the architect’s records and performing site visits, the tax and engineering specialists discovered that the architect qualified for a total of more than $1 million in tax deductions for public buildings designed in the past three years.
The bad news? The architect could have lowered her tax bill even more with tax deductions for previous years if only she had known about the opportunity sooner. Because designers of public buildings only qualify for a 3-year lookback window (taxpaying building owners can look all the way back to 2006), she had missed out on several hundred thousand in tax deductions for public buildings the firm designed prior to 2011.
The spectacular news for this regional CPA firm? This former client, who had left the firm for a competitor almost a decade ago, was so impressed with these tax savings that she re-engaged the CPA firm for all of her tax planning and compliance work, worth about $50,000 per year.
Are you missing out on opportunities to win new business with architects and designers of public buildings—plus owners of commercial buildings? CSP360 partners with CPA firms across the country to spot these opportunities and perform the energy efficiency certification required to qualify for the 179D Energy Efficient Commercial Building Tax Deduction.