In 2020 $2.5 million in tax credits is available statewide through the Main Street Tax Credit Incentive Program (previously $1.5 million) – and the Historic Downtown Prosser Association can receive up to $98,039.21 in contributions. Approvals are given each year on a first-come, first-served basis. The window to contribute opens on Monday, January 13 and ends March 27th. Come April 1, if the state cap has not been met, donors can make additional applications to contribute up to an eligible organization’s individual cap of $133,333.33
The Main Street Tax Credit Incentive Program provides a Business & Occupation (B&O) credit for private contributions given to eligible downtown organizations. Once your business donation request is approved by the Department of Revenue, you are eligible for a tax credit worth 75% of the contribution you have made to your downtown revitalization organization on your B&O tax liability the following year. Because HDPA is a 501(c)3 you may also be eligible for a federal income tax deduction as a charitable contribution.
The Basic Facts:
- Eligible community organizations can receive donations totaling up to $133,333.33 per calendar year
- Businesses must be registered to file their state excise tax electronically
- A donation request must be filled out and submitted online through the Department of Revenue website: here
- The donation can be spread out throughout the calendar year (must be paid in full by November 15th), but pledge early to guarantee the donation is eligible
- All payments must be received by Historic Downtown Prosser by November 15, 2020
- The business must take the tax credit the following year the donation is made – the tax credit cannot be carried forward
Here is a simple example of how the Main Street Tax incentive works: if your business contributes $10,000 to HDPA in 2020 utilizing this tax incentive, you will receive a $7,500 credit on your B&O Tax liability in 2021.
How do I participate?
- Sign up to e-file with the Washington State Department of Revenue here.
- From there, click on Doing Business, then My Account, and Apply for Main Street Tax Credit.
- Select Historic Downtown Prosser Association as the recipient and enter your contribution amount.
- Write a check in the amount of your contribution to Historic Downtown Prosser Association. All checks must be received no later than November 15, 2020.
NOTE: The tax credit request must be approved prior to making a contribution to a designated organization. Businesses applying for the credit must be signed up to file electronically with the Department of Revenue. Once a business is registered to file electronically, it can logon to its E-file account and click on the Main Street Credit link. The business only needs to know the organization it intends to contribute to and how much it intends to contribute to apply for the program. The organization (recipient) is the Historic Downtown Prosser Association. The application is simply a matter of inputting this information. The credit may only be claimed in the calendar year immediately following the calendar year in which the credit was approved by the department and the contribution was made to the program or the Main Street Trust Fund. Credits may not be carried over to subsequent years. No refunds may be granted for credits.
B&O Tax Credit Example
Part of your contribution may also qualify as a 501(c)(3) charitable deduction on your 2020 federal tax return.