Think background checks are only involved in hiring new employees? Think again. In the case of a new program started in Michigan this month, business owners applying for tax incentives will need to pass a criminal background check. While this doesn’t mean that if you have a criminal history your business will be taken away, it does mean that the state won’t award your company any tax incentives. The background check appears to be basic, with criminal history being the most significant portion being checked.
The program, adopted by the Michigan Economic Growth Authority, was created after an incident that happened last month. Prior to the April 15 tax deadline, a convicted embezzler in the state was awarded a $9 million tax incentive. Although the former criminal wasn’t actually awarded any money, the incident was a wakeup call to the state to develop a plan for receiving tax incentives.
While this program applies to most businesses in the state, companies with five year histories and publicly traded companies are exempt.
This resolution to incorporate background checks goes back several years, according to another recent article. Tax incentives in the state were awarded by the Michigan Economic Growth Authority to businesses or proposed businesses that promised to retain to create jobs within the state, pay a weekly rate, and make state capital investments. The Economic Growth Authority, however, didn’t have any clear procedures in place to make sure that businesses awarded these credits were actually following through. In fact, when the Economic Growth Authority had been given reports in regards to these businesses, 15 out of 27 had incomplete data.
With such a large percentage of incomplete data, having the state conduct background checks in business owners is an inevitable procedure. After all, the money from this tax incentive is designed to help pull out one of the states hurt hardest by the latest recession.