News and Views for the California Enterprise Zones » Uncategorized

The Dicon Opinion

StevenDotan — Fri, 27 Apr 2012 17:52:00 +0000

Here is the actual Opinion. The Supreme Court ruled in favor of the FTB based primarily on the FTB’s general audit powers which, as the Court cited, are not supplanted or limited by the regulatory scheme concerning an employer obtaining a voucher. “The FTB may rely upon this certification if it so chooses, and the Attorney General has acknowledged that the FTB likely will do so ―perhaps even in most cases, to the employer‘s benefit.”

“As the FTB explains in its opening brief: ―It is . . . reasonable to conclude that vouchers provide for an additional level of review which may satisfy the Board in some cases, while not in others. For example, in some cases the Board‘s review of a statistically significant sample of an employer‘s vouchers may convince it that the vouchers were properly issued only for eligible workers. In this case the Board may accept the vouchers without demanding the production of specific documentation of worker eligibility, or without any additional investigation. In other cases, though, the review of the employer‘s vouchers may raise concerns with the Board, or even reveal that vouchers were improperly issued. In these cases the Board will prudently demand evidence or documentation of worker eligibility. The Board is not required to audit every voucher in every case, just as it is not required to audit every taxpayer‘s return; in fact, the Board‘s limited budget effectively prevents this as a practical matter. In fact, given budgetary constraints, one would expect that the Board‘s review of employee eligibility would probably occur only in those cases where it has information that vouchers may have been improperly issued.‖ The FTB cites several weaknesses in the vouchering process that could lead the FTB to audit a voucher, noting that ―at the time the vouchers were issued in this case there were no statutory or regulatory requirements regarding the documentation required to obtain or issue a voucher. In addition, there is no requirement for an agency that issues vouchers to communicate at all with the employees for whom it is required to supply vouchers, and vouchers may be retroactively issued years after the employment takes place. [¶] Nor, until new regulations that became effective November 27, 2006, was there even a requirement that enterprise zone agencies keep voucher records. [Citation.]

We find reasonable the FTB‘s view that ―[t]he voucher process complements the review/audit process and enhances its efficiency by allowing the Board to rely on vouchers in those situations where it has confidence in their accuracy, while requiring evidence in those cases where it does not.‖ Because the FTB‘s interpretation of section 23622.7 is reasonable, there is no statutory conflict that requires the certification process to be harmonized with the laws governing the FTB‘s authority in the particular way urged by Dicon and the Court of Appeal.”

Research and Development Credit Extended, But Key Calculation Remains at 14%

StevenDotan — Wed, 22 Dec 2010 17:43:03 +0000

The Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 extended the R&D credits for another two years. Because of the heavy burden in producing document and calculating the traditional fixed base percentage, many companies opt for the Alternative Simplified Method despite yielding a lower credit percentage. There was a big push to increase the Alternative Simplified Credit percentage from 14% to 17%, but the Tax Act didn’t go that far. For the next two years, taxpayers who choose to use the ASC method will have to live with the 14%.

Inland Empire Companies Continue Using EZ to Hire Employees

Steven Dotan — Wed, 24 Mar 2010 11:54:03 +0000

Considering that California has one of the highest unemployment rates in the nation, it is about time that companies begin taking advantage of the enterprise zone hiring tax credits. Reports are showing that businesses operating in the San Bernardino enterprise zone region increased their hiring-related tax credit usage in 2009 compared to previous years.

Andrew Edwards, from The Sun, reports, “In 2009, managers of 99 businesses requested some 940 hiring vouchers, and 857 of those requests were approved. That’s about 57 percent more requests than 75 businesses filed in 2008. Enterprise zone officials maintain that the hiring credits and other tax incentives made it possible for firms to create 132 new jobs and keep another 725 on the books. The 99 firms that sought tax incentives during the past year represent only a slice of businesses that could be eligible for enterprise zone-related perks.”

If your business in in San Bernardino or Colton, you may be eligible for numerous tax credits, contact us today to find out which tax credits you can apply for.

Enterprise Zone Come Under Fire in Santa Clarita

Steven Dotan — Wed, 27 Jan 2010 11:56:57 +0000

Despite the fact that new businesses in Santa Clarita will be able to take part in the Enterprise Zone program, Jonathan Randles has reported that new legislation is being discussed that could make the area’s EZ program much less effective.

Randles reports that Assemblyman John Perez, D-Los Angeles, is sponsoring an amendment that would require businesses to hire full-time employees and give their employees health benefits to receive the full tax credits.

This would dramatically decrease the effectiveness of the EZ program, since the costs of the health benefits would essentially wipe out the savings from the Enterprise Zone credits.

San Diego Enterprise Zone Workshop to Be Held on Friday

Steven Dotan — Mon, 18 Jan 2010 11:14:53 +0000

On Friday, January 22nd, 2010, representatives from the State Franchise Tax Board (FTB) and the Federal Internal Revenue Service (IRS) will present information on the state and federal Enterprise Zone programs and other business law updates.

This is an opportunity to get educated on tax credits and programs the business community can take advantage of in tax year 2009 AND begin planning for tax year 2010.

Details:
Friday. January 22, 2010
Registration 8-8:30 AM Event 8:30-10:30 AM
South County Regional Education Center
800 National City Blvd. National City

To RSVP:
Call: (619) 424 5143
Email: cindy@sandiegosouth.com

Happy New Year from C & I Tax Consultants

Steven Dotan — Fri, 01 Jan 2010 11:01:41 +0000

Happy New Year from C & I Tax Consultants

Happy Thanksgiving from C&I Tax Consultants

admin — Thu, 26 Nov 2009 11:01:24 +0000

BOE Denies FTB's Appeal and Holds That EZ Credits Can Reduce AMT

admin — Tue, 22 Sep 2009 23:37:24 +0000

Enterprise Zone credits may reduce AMT, says Board
The Board of Equalization has denied the FTB’s petition for rehearing in the Appeal of Nassco Holdings, Inc. (February 25, 2009) Cal. St. Bd. of Equal. Case No. 317434. The Board has also directed its staff to draft a formal opinion in the matter, for consideration.
In the original, unpublished letter decision of Nassco, the Board ruled that a taxpayer may use Enterprise Zone tax credits to reduce AMT. Similarly situated taxpayers, who want to apply their Enterprise Zone credits against AMT, must file claims for refund citing the same arguments that the taxpayer cited in the Nassco appeal.

Hesperia Revels in New Enterprise Zone Designation

admin — Fri, 21 Aug 2009 17:17:28 +0000

The Hesperia Daily Press proudly proclaims the success Hesperia had in managing to outbid many other cities to obtain Enterprise Zone designation. Below is the article:

HESPERIA • The state has named Hesperia as one of five new enterprise zones that will allow businesses to generate millions of dollars in tax credits.
Hesperia, along with along with Sacramento, Taft, Pittsburg and Tulare have been only conditionally designated at the moment, according to Steve Lantsberger, Hesperia’s head of economic development. But it’s essentially just a matter of some signing agreements between the California Department of Housing and Community Development and the city before it’s official.
“We spent a lot of time going through all of the requirements so that, if we were successful, there’d be very few things we’d have to do if we were conditionally designated,” he said Thursday. His office began working on the application 18 months ago, and the city will be an enterprise zone until 2024.
The enterprise zone covers most of the city, outside of residential areas. Businesses already operating in the zone as of Aug. 19 are eligible, as are new businesses.

Tale of Two Cities: Escondido Denied Enterprise Zone Designation

admin — Fri, 21 Aug 2009 17:13:43 +0000

As five new cities rejoice at being designated as Enteprise Zones, some others, including Escondido, are deeply disappointed at having missed the chance to boost their local ecomony. The San Diego Union Tribune had this to say:

ESCONDIDO — Escondido’s hopes of becoming an enterprise zone to boost its economy have been quashed.

It lost in the latest round of California Enterprise Zone applications to five other cities: Sacramento, Hesperia near Victorville, Pittsburg in the Bay Area, Tulare near Fresno, and Taft, north of Los Angeles.

“What a disappointment,” Mayor Lori Holt Pfeiler said. “We were hoping to add it as a tool to help revitalize our underused area (industrial district).”

The city had hoped to use an enterprise-zone designation and the tax credits it gives to businesses to attract high-tech corporations to diversify Escondido’s revenue.

Almost 40 percent of Escondido’s general fund income now comes from sales tax, which is plummeting and resulting in budget deficits.

In March, the city applied to the state Department of Housing and Community Development to become an enterprise zone, proposing an area that covered almost the entire city.

It was roughly bounded by Country Club Drive to the west, state Route 78 and El Norte Parkway to the north and Midway Drive to the east. The southern border jogged along Oak Hill Drive, Juniper Street, Centre City Parkway and Ninth Avenue.

But Escondido soon learned that it faced record competition, and this week, the department announced that the city lost.

John Nunn, the state’s enterprise-zone program manager, declined to explain the reasons, other than the city scored lower.