05 Mar GO-Biz Accepting Applications for California Competes Tax Credit
The Governor’s Office of Business and Economic Development (GO-Biz) will be accepting applications for the California Competes Tax Credit (CCTC) starting March 6th. There are $68.3 million in tax credits available during this application period for businesses that are expanding (or continuing on) and adding full-time jobs in the state (not required, but preferred). The deadline to submit applications is Monday, March 27, 2017, at 11:59 p.m. (Pacific Time) and the online application website will automatically close once this deadline has passed. The online application can be accessed at www.calcompetes.ca.gov.
You request the amount of credit you want and Go-Biz evaluates your requested amount based on other applications they receive. Credits are awarded as they are earned over a 5 year period and offset CA tax. Credits are for items in the future, not what you have done in the past, therefore apply for the credit BEFORE you hire folks or make a significant purchases. Frequently Asked Questions (FAQs), and program regulations are available at www.business.ca.gov/CalCompetes.aspx. If you plan on staying in business over the next 5 years, I recommend you apply for this credit, it doesn’t hurt, could be substantial, and does not take much time.
Businesses interested in learning more about the CCTC can participate in free application webinars. Webinars posted here, which are extremely helpful in filling out the application.
Do you remember the big announcement that Toyota was moving its headquarters and 3,000 jobs from California to Texas? There are many reasons companies leave CA for another state, but CA is trying to reduce those reasons by incentivizing companies to stay in CA through their CA Competes Tax Credit.
The sole purpose of this credit is to create and keep jobs/business here in CA. This credit is different from almost all credits because it is forward looking and there is no preset credit amount you’ll receive. You’ll develop a 5 year plan of how many additional employees the company will hire/keep and the company “investment” in CA over 5 years (real and personal property, i.e. resign lease agreement, resign software agreement, computers, desk, chairs, vehicles, improvements, etc.). Here is the weird part, you request the credit for what you need, seriously! How do you determine what you’ll need to be a happy CA company, who knows, but the amount requested can’t be ridiculous. Prior amounts requested are posted online and can give you a gauge for what others have requested. The minimum credit is $20K and the maximum credit is $13.66M. After you fill out the application for the requested credit, number of employees you’ll hire, and the investment you’ll bring to CA over the next 5 years, they benchmark you against other companies that applied during the application period (it is a competitive credit). The credit is awarded by year as the 5 year plan is met.
You can find out more information here, http://www.business.ca.gov/Programs/CaliforniaCompetesTaxCredit.aspx