Keystone Opportunity Zone Tax Help in Pennsylvania

CPA Firm Serving the Tri-State Area Since 1983

Keystone Opportunity Zones (KOZ)

Pennsylvania introduced the Keystone Opportunity Zone Program in order to encourage economic growth and promote community revitalization. First proposed in 1998, the program is administered by the Department of Community and Economic Development (DCED), the Department of Revenue, and the Department of Labor and Industry (DLI). The Keystone Opportunity Zone Program provides significant tax benefits to business owners and residents of designated zones. With these tax benefits, however, comes several reporting requirements and deadlines that must be met in order to remain compliant with the program.

At SD Associates, P.C., our Pennsylvania CPA firm has extensive experience helping businesses understand the requirements of the Keystone Opportunity Zone Program. Our tax professionals work closely with our clients to ensure they are meeting all filing deadlines and other requirements imposed by the program.

About The Keystone Opportunity Zone Program

The Keystone Opportunity Zone (KOZ) Program transforms unused or abandoned properties into new business centers and residential areas. The main goal of the program is to provide an impetus for community revitalization and development. A KOZ may also be referred to as a KOEZ (Keystone Opportunity Expansion Zone) or a KOIZ (Keystone Opportunity Improvement Zone).

In order to designate a parcel of land as a KOZ or KOEZ, it must be designated by the local community and approved by the Department of Community and Economic Development. A KOIZ must be designated through an Executive Order from the Governor, as well as approved by the local community.

The Benefits of The KOZ Program

As a member of the Keystone Opportunity Zone Program, businesses and residents have a unique chance to receive special tax benefits. These benefits can apply to a wide range of both state and local taxes, such as:

• Corporate Net Income tax
• Personal Income tax
• Sales and Use tax (related to purchases made in the zone)
• Earned Income/Net Profits tax
• Property tax
• Mutual Thrift Institution tax
• Business Gross Receipts, Business Occupancy, Business Privilege and Mercantile tax

In addition, priority consideration is given to projects located in a KOZ that are looking for funding assistance from local community and economic building initiatives.

How to Qualify For The KOZ Program

The KOZ Program can apply to businesses in or relocating to the KOZ, as well as residents. In order to qualify for the KOZ Program, there are certain criteria that must be met.

According to DCED.PA.gov, a business must be authorized to conduct business in the KOZ and must be engaged in active business operations. A broker, representative, or agent cannot be engaged in the aforementioned active business conduct. The business must own or lease property in the KOZ, and it must conduct its business from that property.  In addition, a business that is relocating to a KOZ must either “increase full-time employment by 20% within the first full year of operation, or make a 10% capital investment in the KOZ/KOEZ property based on their prior year’s gross revenues.”

Please note that this is not a list of complete criteria. For more information, visit the DCED website or contact our accounting firm in Pennsylvania.

How The KOZ Program Affects Tax Reporting

While participants of the KOZ Program reap many tax benefits, including having many taxes waived altogether, there is still a need to understand the tax reporting requirements. Businesses and residents must report their income and other taxes in accordance with state and local laws. This means that participants of the KOZ Program must still meet filing deadlines and adhere to specific reporting guidelines set forth by the Pennsylvania government. In addition, participants must recertify their KOZ status on an annual basis.

At SD Associates, P.C., we can help businesses make sense of complicated tax filing requirements. Our Philadelphia real estate accountants are here to help business owners remain compliant with tax reporting regulations. We understand how important it is for our clients to get the most out of their benefits through the KOZ Program, and our business services are designed to elevate their finances.

FAQs

How long do KOZ benefits last?

In many cases, KOZ benefits can last for 10 years. This amount of time can be extended if the business has met certain requirements. However, this is not necessarily the case for all businesses operating in a KOZ. Consult your Pennsylvania small business accountant at SD Associates, P.C. for more information.

 

Is there a deadline to apply for KOZ status?

If you would like to apply for KOZ benefits, you must submit an application online by December 31st of the year to which you would like your benefits to apply. This deadline also applies for applicants who currently enjoy KOZ benefits and would like to continue benefiting from the program.

 

Where are KOZ zones located?

There are KOZ zones located throughout Philadelphia and the greater Commonwealth of Pennsylvania. Parcels vary in size and designation. To find a KOZ near you, contact a current KOZ coordinator or view the current KOZ map.

 

What is the difference between KOZ, KOEZ, and KOIZ?

The main difference between the KOZ, KOEZ, and KOIZ designations is the date that the individual parcels were approved for the KOZ Program. The first round of KOZs was approved when the program was first created. As the program became more successful, a second round was approved in 2001 – these parcels are known as KOEZs. The third round was approved in 2003, with these parcels being referred to as KOIZs. KOZs and KOEZs have the same designation procedures, but the process differs slightly for KOIZs.

 

How can an accountant help my business with KOZ benefits?

An accountant in Pennsylvania can help you ensure that your business is in compliance with all state and local filing requirements and help you take advantage of every possible benefit available through the KOZ Program. There are many forms that must be filled out and deadlines that must be met in order to qualify for KOZ benefits, and our accountants can help your business navigate this process.

Contact Our CPA Firm in Pennsylvania Today

If you are looking for a Pennsylvania real estate accountant to help you make sense of the KOZ Program and other related tax laws, SD Associates can help. Our team of CPAs, accountants, and tax professionals is knowledgeable in all areas of tax law and compliance. We are committed to helping businesses stay competitive in the ever-changing business landscape. Contact us today at (215) 517-5600 to learn more about how we can help you optimize your finances.