By leveraging industry-specific tax knowledge, Wegner CPAs guided a Wisconsin-based manufacturer to reclaim over $180,000 in tax refunds through the Wisconsin Manufacturing Credit. This case study highlights the financial impact of specialized expertise in identifying and recovering missed tax benefits.
The Challenge
In an initial prospect call with a Wisconsin-based manufacturing organization, Wegner CPAs manufacturing advisors identified that the company had missed out on substantial tax breaks. Although properly assessed as a manufacturer for property tax purposes, the company had not claimed the Wisconsin Manufacturing Credit on its tax returns for several years. This oversight is a common error for out-of-state providers unfamiliar with Wisconsin tax law or in-state providers that do not specialize in providing services to manufacturing organizations. This omission meant the company missed out on reducing its tax liability by up to 7.5% of its manufacturing income. Given Wisconsin’s top individual tax rate of 7.65% and corporate tax rate of 7.9%, this resulted in unnecessary tax payments over multiple years.
Our Solutions
After reviewing the company’s past Wisconsin tax returns, our manufacturing specialists identified the credits missed by the previous provider. Our team then looked to the Wisconsin manufacturing assessment rolls to see if the taxpayer was already considered a manufacturer for this purpose. The company already existed on the rolls, simplifying the process for our team.* Our specialists then calculated manufacturing income according to Wisconsin definitions to determine the credit, ensuring all qualifying manufacturing income was included. After, they were able to go back and amend returns still within the four-year statute of limitations, as well as take the credit on a current and future basis.
* If the company was not on the manufacturing assessment rolls, our manufacturing specialists would have assisted with the completion of Form PA-780 to confirm eligibility for future credits.
Positive Outcomes
By amending the past returns, the Wegner CPAs tax advisors helped the company recover over $180,000 in tax refunds plus interest that the prior provider had missed. Moving forward, the company is now prepared to correctly apply the Wisconsin Manufacturing Credit, reducing its state tax liability by up to 7.5% annually. This case underscores the importance of working with industry experts who are well-versed in the unique tax opportunities available to Wisconsin manufacturers. An experienced and informed tax advisor can identify these missed opportunities and correct them, leading to significant financial benefits.
Don’t miss out on big tax breaks.
The Wisconsin Manufacturing Credit was first available to taxpayers in 2013. Tax practitioners familiar with the manufacturing industry were on top of this opportunity from the beginning.
The first eligibility requirement to claim the Wisconsin Manufacturing Credit is that the property is to be assessed as manufacturing, and many manufacturers are already assessed this way for personal property tax purposes. From there, practitioners identify manufacturing clients and look them up on manufacturing assessment rolls. If the taxpayer is on the assessment roll, then it is just a matter of calculating the credit and taking on the tax return. For taxpayers not on the manufacturing assessment rolls, practitioners work to complete Form PA-780 Questionnaire for Potential Manufacturer first before calculating the credit.
While this credit results in significant tax savings for manufacturers, in the years since, Wegner tax advisors have seen many eligible returns miss out on the credit. This happens for a variety of reasons including unfamiliarity with Wisconsin tax laws and practitioners that lack of understanding around their manufacturing clients’ operations. Our tax advisors are here to help you make the most of the credits available. If you are looking for help maximizing tax savings for your manufacturing organization, reach out to our team today.
