Whenever I am asked by economic developers how they can enhance their incentive package, I explain to them that the long-term savings associated with certain tax planning techniques can dramatically enhance the savings from tax incentives and that both need to be looked at simultaneously to see if they contradict one another in any way. In addition, I explain that, unlike incentives, the benefits from these techniques can continue for the life of the project, not just predetermined periods.

Here are three significant tax planning strategies -- but certainly not the only ones -- about which a company should inquire:

1. Use of legal entities to minimize state tax through apportionment. Every state apportions a company's income for tax purposes: Typically, a state taxes a company on a portion of its entire net income, based on what is called an "apportionment formula." An apportionment formula is based on a combination of factors, which include a company's in-state payroll, property and sales as compared to the payroll property, and sales for the company everywhere. Some states choose to combine every subsidiary into the calculation, while others do not. Some states only combine the companies that have a physical presence in the state, while some combine every subsidiary. Others do not combine any subsidiaries at all

2. Use of partnerships to minimize state tax. Many states do not tax limited partners that have no management authority over an investment in a partnership. This can be used to a company's benefit. For example, two subsidiaries of the same parent company form a partnership to own a new facility. One subsidiary is a general partner with management control and the second subsidiary is a limited partner. The partnership is structured so the general partner receives 1 percent of the income and the limited partner receives 99 percent of the income.

In some states, the general partner would pay tax on its 1 percent of the income, but the limited partner would pay no tax on its 99 percent. In other states, the general partner may be taxed at the normal rate but the limited partner would pay at a lesser rate. A word of caution: When looking into partnerships, pay close attention to how any tax credits are treated because some do not flow through partnerships to the partners.

3. Use of leases to defer sales tax on taxable purchases. When a sales tax exemption is unavailable, such as on non-manufacturing equipment, leasing the equipment can sometimes provide a deferral of tax. In some states, by setting up a leasing subsidiary to lease equipment to an operating subsidiary, the interest income and interest expenses negate one another, while the sales tax gets paid over the life of the lease, rather than up-front.Even though the absolute dollars of tax may be higher, the present value of the tax is far less. Considering start-up costs are so important when a project gets evaluated, any deferral of tax into a later year can have a dramatic impact on the expected return on investment. A word of caution: Because some incentives require the investment of capital and the creation of jobs, a possibly more lucrative incentive may be better than a deferral of sales tax.

John Skowronski is the director of proactive incentives programs at MINTAX Inc., an East Brunswick, N.J., economic development consulting firm, specializing in incentives.