Budgeting for Access - Offsetting Costs

By Dave Barton, PGA

I think it is important as I present the below information to share with you that I do not do my own taxes. I am actually pretty dang good with math – I do not do my own taxes. When it comes to taxes for golf facilities or other organizations I have been associated with, I have generally been fortunate enough to have access to CPAs who seem to love numbers as well as the other elements that go into an annual tax return. Thank goodness!

What follows is most assuredly not new information to many of you as the tax relief options (and options to offset the costs of access) have basically been around since the Americans with Disabilities Act of 1990 (ADA) was enacted. That said … people come and go, and it never hurts to have a reminder. Additionally, no information or recommendations below should be considered legal or professional tax advice, but options to consider as you plan for your facility.

I’d be remiss if I did not give a shout-out to Mitchell Stump, CPA who has been serving the National Alliance for Accessible Golf for many years and puts up with a lot of questions from me related to matters such as this. I’d advise you to check out clubtaxnetwork.com and the work Mitch does to advise and inform golf clubs around the country on tax related matters.

Any language below related to the provisions of the tax credits and deductions outlined is referenced to and presented as it is on IRS.gov.

There are three (3) tax benefits you should be familiar with that can potentially provide offsets to your golf facility’s cost of improving access. They are:

Disabled Access Credit
Barrier Removal Tax Deduction
Work Opportunity Tax Credit

What’s the difference between a “credit” and a “deduction”?

Deductions can reduce the amount of your income before you calculate the tax you owe.
Credits can reduce the amount of tax you owe or increase your tax refund. Certain credits may give you a refund even if you don't owe any tax, also known as "refundable credits".
Some credits are not refundable, therefore if no tax is due, the credit can not be claimed.

Who among us, or what organizations out there would not like to see income tax decreased with a usable deduction, or credits that might increase refunds?

Although our organization's mission emphasis is on creating access for golfers and increasing their participation in the game, I’ll mention the Work Opportunity Tax Credit first. When it comes to actions that build and support inclusive cultures, it is a very positive message when your staff is representative of individuals with disabilities who would like to support your business. This tax credit is available to employers for hiring individuals who have consistently faced significant barriers to employment, including people with disabilities and veterans.

The maximum amount of tax credit for employees who worked 400 or more hours of service is:

$2,400 or 40% of up to $6,000 of first year wages for qualifying individuals.
$9,600 or 40% of up to $24,000 of first year wages for certain qualified veterans.

A 25% rate applies to wages for individuals who work at least 120 hours but less than 400 hours for the employer.

To claim the credit, an employer must first get certification that an individual is eligible. Employers do this by submitting IRS Form 8850, Pre-screening Notice and Certification Request for the Work Opportunity Credit, to their state workforce agency within 28 days after the eligible worker begins work. Employers should not submit this form to the IRS. They should contact their state workforce agency with questions about Form 8850.

I’ll leave the math up to you for planning and budgeting purposes, but there are a lot of ways ranging from part-time to full-time and/or seasonal to figure out how to hire with an open mind and then use some tax credits to offset your labor expenses.

The Disabled Access Credit is a non-refundable credit for small businesses that have expenses for providing access to people with disabilities. An eligible small business is one that earned $1 million or less or had no more than 30 full-time employees in the previous year. Small businesses claim the 50% credit for eligible access expenditures by filing Form 8826, Disabled Access Credit. The business can claim the credit each year they have access expenditures.

Per Form 8826, this credit is available in the amount of 50 percent of "eligible access expenditures" that exceed $250 but do not exceed $10,250 for a taxable year. A business may take the credit each year that it makes an eligible access expenditure.

Eligible access expenditures include amounts paid or incurred

To remove barriers that prevent a business from being accessible to or usable by individuals with disabilities;
To provide qualified interpreters or other methods of making audio materials available to hearing-impaired individuals;
To provide qualified readers, taped texts, and other methods of making visual materials available to individuals with visual impairments; or
To acquire or modify equipment or devices for individuals with disabilities.

It is important to note that eligible expenditures in #1 above do not include expenditures that are paid or incurred in connection with any facility first placed in service after November 5, 1990. Why?

Well, that is when the Americans with Disabilities Act that established the law regarding building design/construction requirements for accessibility related to individuals with disabilities was enacted. So, you can’t get a “credit” for something that should have been a design element of your building in the first place, including new construction.

Disabled Access Credit Example #1: Company A purchases equipment to meet its reasonable accommodation obligation under the ADA for $8,000. The amount by which $8,000 exceeds $250 is $7,750. Fifty percent of $7,750 is $3,875. Company A may take a tax credit in the amount of $3,875 on its next tax return.

Disabled Access Credit Example #2: Company B removes a physical barrier in accordance with its reasonable accommodation obligation under the ADA. The barrier removal meets the ADA Accessibility Guidelines. The company spends $12,000 on this modification. The amount by which $12,000 exceeds $250 but not $10,250 is $10,000. Fifty percent of $10,000 is $5,000. Company B is eligible for a $5,000 tax credit on its next tax return.

At this point you may say, “$1 million or less in revenue? 30 or fewer full-time employees? My golf course is above both of those!” Certainly, that is going to be accurate for many golf course owners, but for those with less revenue, and/or fewer than 30 full-time employees, this is a great tax credit to factor into plans that would meet the criteria outlined in Form 8826.

One particular eligible expense that has our attention is to acquire or modify equipment or devices for individuals with disabilities.

The question? Can a golf course use the Disabled Access Tax Credit to offset the cost of purchasing an Adaptive Golf Car?

The National Alliance for Accessible Golf believes the answer to this is “YES,” and based our opinion of the language in Form 8826 and a Tax Opinion Letter crafted in 2012 by a licensed, practicing Tax Attorney (Note 1). A copy of this opinion letter can be found and downloaded HERE. Although this opinion letter was designed to advise privately owned or managed properties, it specifically addresses the applicability of this credit to public golf courses and private clubs that could be viewed as a public accommodation by the Department of Justice.

For golf facilities that may not be eligible for the Disabled Access Tax Credit, fear not! The Barrier Removal Tax Deduction may be just the ticket to offset costs related to improving access at your facility. Businesses that are eligible for the Disabled Access Tax Credit can also take advantage of the Barrier Removal Tax Deduction together in the same year if the expenses meet the requirements of both benefits.

The architectural barrier removal tax deduction encourages businesses of any size to remove architectural and transportation barriers that help people with disabilities and the elderly get around more easily. Businesses may claim a deduction of up to $15,000 a year for qualified expenses on items that normally must be capitalized. Businesses claim this deduction by listing it as a separate expense on their income tax return. Per U.S. Code 26 USC 190

Architectural and Transportation Barrier Removal Expenses - The term "architectural and transportation barrier removal expenses" means an expenditure for the purpose of making any facility or public transportation vehicle owned or leased by the taxpayer for use in connection with his trade or business more accessible to, and usable by, handicapped and elderly individuals.

Qualified Architectural and Transportation Barrier Removal Expenses - The term "qualified architectural and transportation barrier removal expense" means, with respect to any such facility or public transportation vehicle, an architectural or transportation barrier removal expense with respect to which the taxpayer establishes, to the satisfaction of the Secretary, that the resulting removal of any such barrier meets the standards promulgated by the Secretary with the concurrence of the Architectural and Transportation Barriers Compliance Board and set forth in regulations prescribed by the Secretary.

A golf facility’s ability to claim credits or deductions depends on when the property, or elements of the property were built and in-service. Generally speaking, if a building was built prior to the enactment of the ADA in 1990 and no modifications or new construction has occurred, it is likely that tax credits and deductions would be available for access improvements as part of modifications or alterations, but not new construction.

For the golf course itself, accessible design standards were not adopted by the ADA for enforcement until 2010 and full enforcement did not begin until 2012. Therefore,

Courses and/or associated buildings constructed between Sept 15, 2010 and March 15, 2012 could have chosen the 1991 or 2010 ADA standards for new construction or alterations but must choose and comply.
Courses and/or associated buildings constructed on or after March 15, 2012 were required to use the 2010 ADA standards.

Credits and deductions cannot be claimed for alterations, including barrier removal if there was existing ADA guidance in place at the time the building and/or golf course were built.

There is a lot to unpack when it comes to the IRS, the ADA, new construction, alterations, credits, and deductions. Please consult with your CPA and/or tax advisor and gauge what may be possible related to credits and deductions that you can use to offset capital expenditures related to barrier removal or expenses related to equipment to help improve access at your facility.

Have you used the Disabled Access Tax Credit, Barrier Removal Tax Deduction, or Work Opportunity Tax Credit? If so, please visit us on GAIN - the Golf Access and Inclusion Network™ and share your experiences so that others can see what is possible.

Note 1: U.S. Tax Relief, LLC, 6830 S. Yosemite Court, Centennial, CO 80112, 303-221-2775, linkedin.com/in/dale-heider-a246784