Most Carbon County residents realize that people can deduct charitable contributions from income taxes.
For instance, an individual donating $1,000 to the College of Eastern Utah Prehistoric Museum can deduct the same amount from personal income at the end of the year.
But imagine a world where the individual can also get a $500 tax credit in addition to the deduction.
The concept is difficult for people to believe. In fact, many professionals in the financial world have said it can't legally be done.
"That's what I have faced for the three years since we set up the Southeast Utah Community Development Corporation," explains Carbon County economic development director Delynn Fielding. "No one believes that it can be done, but it can."
Fielding has an information sheet that points directly to the Utah Code where it is allowed.
Under section 9-2-13, the code specifies that "... state tax credits against individual income taxes or corporate franchise and income taxes are applicable in an enterprise zone."
The state code indicates that a credit of 50 percent of the value of a cash contribution to a private non-profit corporation, up to $100,000, can be claimed under the provision.
Therefore, residents who donate money to different agencies in the county could be getting the credit every year, but only if people send the financial contributions to the organization through the SUCDC. The state code specifies that the donations must be contributed to a "private non-profit corporation."
"That is why we set this non-profit private corporation up," notes Fielding. "But no one has sent one penny through it yet."
"I have talked my head off to people about this. But either they aren't hearing me or they don't believe it can be done," adds the county economic development director.
The situation frustrates Fielding.
"Over 90 percent of what I work at fails," admits the county economic development director.
But that's the nature of the development efforts across the country, especially in bad economic times. Even in the good times, getting things going is a tough task faced by economic development directors.
Fielding is charged with trying to do a number of things.
First, the economic development director is expected to try to attract new businesses to the area through presentations designed to sell Carbon County to the individuals and companies.
Fielding also spends a lot of time developing businesses within the county with local residents. Whether it be a start-up enterprise or an expansion of an existing business, the economic development director is there to help.
The creation of SUCDC represents one step toward economic development, but more indirectly.
The agency was set up in 2001. Board members include Mike Milovich, Joe Piccolo, George Harmond, Bill Howell and Fielding.
The original idea of the 501c (3) designated corporation was the creation of jobs through the growth of business.
It can also act as a conduit for grants for other agencies.
But most importantly is the tax break it can offer almost everyone who gives any money to any local agency as a donation.
"First of all the money must be designated for a reasonably charitable cause, "explains Fielding. "And there are restrictions. For instance, people cannot designate money through us that they are giving to the scholarship fund at CEU to a specific student. But they can send their scholarship money through us to the fund in general."
An example of a potential scenario highlights what an average taxpayer in the county might do.
"Let's say someone wants to donate a $1,000 to the museum," points out Fielding. "If that person has a income of $40,000 a year without any other deductions, he or she will pay $5,285 in federal income tax and $2,558.18 in state tax. That individual's total tax burden would be $7,843.18."
"Now let's say that same individual donates $1,000 to the museum through the corporation," continues the county economic development director. "First of all, the tax burden will be lower because the income level will now be at $39,000. But with the money going through us instead of directly to the agency, the person can then also get a tax credit for $500, which lowers the tax burden even more."
"Consequently, with those two breaks included, the federal tax would be only $5,135 and the state taxes would calculate out to $1,988.18 for a total of $7,123.18," points out Fielding.
The move will save the taxpayer $720 in taxes.
"With doing that, the actual cost of a $1000 donation is actually only $280," states Fielding.
Some time ago, the county economic development director and representatives from the corporation planned a breakfast to explain the state code and the SUCDC program to tax professionals from around the community. Only one individual attended the event..
"Until we put the state code in front of their faces, most of them just can't believe it can be done," comments Fielding. "We even have had to do some convincing with the people that would receive the money from us. So far, no one has taken advantage of it."
The program has nothing to do with new donations, explains the economic development director. Residents who have been contributing for years to a group or agency can start to reap the tax break benefits with no penalty.
Another important thing to remember about the possible donation path is that, since it can only take place in an enterprise zone, companies or individuals from the Salt Lake area or anywhere in Utah can garner the benefits as well, according to Fielding. Enterprise zone designation allows for special tax credits in rural areas, but not along the Wasatch Front. However, donors do not have to reside in or conduct business in the Carbon County area to use the tax advantage.
How do the tax savings add up to economic development? First, individuals can use money they save for purchasing power in the area. Second, companies can use the tax benefit in a similar manner or to create new jobs.
The SUCDC also has the ability to have money funneled into the non-profit corporation through a transaction to cut the cost for a business proposition, explains the economic development director.
The process can be completed through a complicated use of money tools and procedures.
"However there are some limitations," states Fielding. "According to the code, the tax credit does not apply to retail business or public utilities that donate."
The code also eliminates the credit for businesses that are already qualified for a targeted income tax credit.
"It's a great way for people to donate to their favorite cause and end up with more money in their pocket because of that donation, "concludes Fielding. "Now, all we need are people who want to take advantage it."
Editors note: The article is the last installment in a series of three stories on economic development efforts in Carbon County.