Authored by Phil Cohen
The Wall Street Journal reported last week that increased spending in the energy industry is creating a reward for energy companies: deferred taxes.
An increase in drilling projects, costing millions on average per project, has allowed oil and gas companies to defer taxes amounting to billions of dollars against their capital expenditures and depreciation. Deferral can continue as long as the companies continue to show increased capital spending toward drilling and peripheral operations.
Tax deferrals were also reported in other industries with high capital spending including transportation (railroads and airlines in particular) and telecommunications, though no other industry reached the numbers that the energy industry has reached.
As a result of deferring their taxes, energy companies have more funds on hand to begin new projects, hire the professionals they need, and purchase new equipment, all means of stimulating economic growth. These capital expenditures will also generate tax revenue in other areas and create new jobs. In addition, hydraulic fracturing and horizontal drilling in the United States have increased domestic daily output by almost 50 percent.
Deferring federal taxes is just one way that oil and gas companies and other players in the energy industry can increase working capital to take advantage of steady business. For companies that want to eliminate the wait for payments and get on the fast track to continued growth, oil and gas accounts receivable factoring can provide immediate cash for companies to invest in their success. Read on about Factor Finders’ competitive oil and gas factoring programs then contact us to request a free quote.