Last year the Governor and the California Legislature took action to wind down the California Enterprise Zone Program beginning in 2014. EZ Credits can still be claimed on 2013 and amended in the four prior years, and employers can continue to claim hiring credits through 2018 on qualified employees hired priro to 2014.
As a replacement for the EZ program, various incentives, including the California Competes Credit Program (“CC Credit”) has been initiated. The CC Credit requires taxpayers to subit detailed information to Scaramento for evalauation and consideration for a pool of credits (discussed below). 25% of the credits will be earmarked for Small Businesses – defined as those with less than $2M of gross revenues.
The The California Governor’s Office of Business and Economic Development (GO-Biz) has been conducting educational sessions concerning the California Competes Tax Credit throughout Southern California this week. Many local businesses and practitioners have attended the meetings. . The ideal taxpayer profiles are as follows:
- Planning to add headcount in California any time between 2014 through 2018 in excess of 2013 FTEs and/or
- Planning to make capital expenditures in California any time between 2014 – 2018
About the Credit
The CC Credit is a negotiated income tax credit available to businesses that want to stay and grow or want to come to California. Tax credit agreements will be negotiated by GO-Biz and approved by a newly created “California Competes Tax Credit Committee,” consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, one appointee from the Senate, and one appointee of the Assembly. Credits have a carry-forward provision of 6 years.
Amount of Credits Available
California has a fiscal year that runs from July 1 – June 30. The amount of CC credits by fiscal year budgeted by the Governor under the Go-Biz program are as follows:
- Fiscal Year 2013/2014 – $30M
- Fiscal Year 2014/2015 – $150M
- Fiscal Year 2015/2016 – $200M
- Fiscal Year 2016/2017 – $200M
- Fiscal Year 2017 /2018 – $200M
What To Do?
- Apply immediatley for the current round of tax incentives
- Evalaute other existing state and federal incentives
- Discuss and understand your growth plans between now and 2018.
- You want clients to hear from you rather than our competitors
- Application for fiscal year 2013/2014 closes on April 14. It may be strategically better to submit application for the fiscal year 2014/2015. The application period for 2014/2015 should open after July 1, 2014.
HCVT has significant experience in identifying and documenting various federal, state and local tax incentives and we have deep connections within the economic development community.
We can assist you in presenting your project to maximize your probability of securing some of the avaialble tax incentives.