Two State Tax Credits
Two state tax credits that a company received for building a plant in Michigan and hiring local workers do not have to be reported as income, the IRS said.
One of the credits was refundable to the extent the company failed to have enough tax liability in Michigan to use it. The IRS said any refunds would have to be reported as income, but the fact that the credit is potentially refundable does not make the credit itself taxable. The agency said the company will end up with a smaller deduction at the federal level for state taxes paid because of the credits. It made the comments in an internal memo sent to an IRS field office in late November. The memo is FAA 20085201F.