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Happy Memorial Day from C & I Tax

May 31st, 2010

memorialday

Santa Clarita Hits New Enterprise Zone Benchmark

May 28th, 2010

In exciting news for the Santa Clarita Enterprise Zone, The Signal has just reported that local businesses have issued 248 vouchers for Enterprise Zone-eligible hires in April. This hits a new record for the Enterprise Zone and should help to reveal to other cities in the state how important this program is to increase employment.

This is the largest number of vouchers issued in a single month since the Santa Clarita Enterprise Zone began in 2007.

Each voucher represents an individual eligible for a voucher, and who has been hired by a local company.

The city has issued more than 1,700 vouchers for the program since its designation, helping nearly 200 local businesses by providing tens of millions of dollars in potential tax saving benefits.

“Since its inception, the Santa Clarita Enterprise Zone program has resulted in more than 1,700 employees hired by local businesses and has the potential to save participating businesses a collaborative $60 million dollars,” Mayor Laurene Weste said. “With 97 percent of commercial-zoned land within the city of Santa Clarita included in the boundaries of the Santa Clarita Enterprise Zone, thousands of city of Santa Clarita businesses are eligible for these amazing tax savings.”

Would it be a Good Idea Make California an Enterprise Zone?

May 26th, 2010

The Pacific Research Institute poses an interesting question that many business owners across the state have been pondering: should all of California become an Enterprise Zone?

K. Lloyd Billingsley proposes the following ideas below:

An enterprise zone is an economically depressed area targeted for revitalization through tax and regulatory relief. Such relief attracts business, provides jobs, reduces poverty and generally improves conditions. California has 42 enterprise zones, recently criticized as “ineffective” by scholars David Neumark and Jed Kolko. That prompted some business owners to fire back.

“The Enterprise Zones scattered throughout the state are like a business-friendly oasis in the desert of high-cost and regulation that is California,” wrote Daniel Morrow in the February 12, 2009, Capitol Weekly. “The tax breaks for buying equipment and hiring people provide exactly the kind of incentive that is necessary to get business to stay in California in the first place and serve as an attraction for new businesses as well, one of the very few California has to offer.”

California could also use another idea favored by Jack Kemp, an advocate of the flat tax. This means everybody pays the same rate, instead of a more punitive (what “progressive” really means) rate for high-income workers. During an economic downturn, punitive rates make for revenue instability. In Ending the Revenue Rollercoaster (2008), PRI’s Robert P. Murphy made the case for a flat state income tax of 3 percent. Said Steve Forbes, “A 3 percent flat tax would trigger the biggest boom in California since the Gold Rush!” And a flat income tax would help prevent the boom from being followed by a bust, our current condition.

Tax News May 2010

May 24th, 2010

New Home Tax Credits Available

The 2010 New Home/First Time Buyer tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. / more+

Withholding Agents Who Fail to Withhold

A withholding agent is required to withhold seven percent from all payments or distributions of California source income made to a nonresident payee unless the withholding agent receives authorization from us for a waiver or reduced withholding amount. / more+

Available Now: Free California Source Income Withholding Webinars

We will host free California source income withholding webinars in May 2010.  / more+

Consider an Installment Agreement for Your Clients with Tax Bills

Now that you’ve got those returns filed for your clients, some of them may be returning to your office with Statements of Tax Due from us. Some may have forgotten to send in a check, or if they were short on cash, they may have sent in a partial payment, or no payment at all resulting in the tax bill. The best advice you can give them is to contact us immediately to let us know the situation and to discuss payment options.  / more+

IRS Nationwide Tax Forums Registration Available!

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business Fair

The Riverside Small Business Fair is a special event designed to help small businesses by connecting them with representatives from over 40 federal, state, and local government agencies.  / more+

2009 Bill of Rights Annual Report

Read about what the Taxpayer’s Rights Advocate is telling the Legislature on your behalf in the 2009 Bill of Rights Annual Report.  / more+

Small Business

If Your Clients Have an Online Business – They May Owe State Taxes

We, along with the California State Board of Equalization (BOE), urge online buyers and sellers to be informed about their tax obligations.  / more+

Ask the Advocate

Doing Business

As you know, I get many questions from practitioners about how to handle their client specific issues. This month, I received an interesting question from a practitioner in the bay area relating to “doing business.”  / more+

Inside FTB

Take a look at the changes happening here at FTB.  / more+

Criminal Corner

Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time.  / more+

Featured Enterprise Zone: Pasadena, CA

May 21st, 2010

Pasadena is a city in Los Angeles County. Famous for hosting the annual Rose Bowl football game and the Tournament of Roses Parade, Pasadena is the home of many leading scientific and cultural institutions, including the California Institute of Technology (Caltech), the Jet Propulsion Laboratory (the leading robotics and spacecraft design and manufacturing NASA center), Art Center College of Design, the Pasadena Playhouse, California School of Culinary Arts Pasadena and the Norton Simon Museum of Art. As of the 2000 census, the city population was 133,936, making it the 160th largest city in the United States. The California Finance Department estimated the Pasadena population to be 146,166 in 2005. Pasadena is the 6th largest city in Los Angeles County, and the main cultural center of the San Gabriel Valley.

If you are looking to move your business into Pasadena there are a wide range of tax credits available to you, such as:

Hiring Credit Program
This five year state tax credit, potentially up to $37,000 per qualified employee, for full-time or part-time employees that meet one of the twelve qualifying criteria under the Hiring Credit Program. Potential criteria includes but not limited to: previously laid off due to plant closure or downsizing, military veteran, public assistance recipient, and resident of a targeted employment area. Enterprise Zone business must obtain a Hiring Credit Voucher from the Pasadena Enterprise Zone Office.

  • Targeted Employment Area Ranges for 2007 Designation
  • 2007 Targeted Employment Area Map
  • State Income Limits 2008 to 2000

Sales and Use Tax Credit
Allows Enterprise Zone businesses to claim a state tax credit equal to the sales and use tax paid on the purchase of qualified equipment. Qualified equipment includes assets such as manufacturing, data processing, office, audio/video, and computer equipment.

Business Expense Deduction
Enterprise Zone businesses may deduct up to 40% of the cost of qualified property purchased for exclusive use in an Enterprise Zone during the first year it’s placed in service.

Net Operating Loss
Enterprise Zone businesses may elect to carry forward 100% of their net operating loss for 15 years.

Net Interest Deduction for Lenders
Lenders can earn a deduction from income on the amount of net interest earned on loans made to Enterprise Zone businesses. Businesses looking for an edge in applying for a loan should bring this credit up with your lender.

Influential Cal Chamber Cites Anti EZ Bills as Job Killers

May 18th, 2010

This year’s CalChamber ‘job killer’ list includes 37 proposals that would make it even more difficult for California companies to remain viable in this difficult economy,” said Allan Zaremberg, President and CEO of the California Chamber of Commerce. “Our businesses need to have certainty that they can be competitive before they will begin to reinvest in our economy. Not only do these bills send the wrong signal and create an uncertain environment for investment but, if passed, they would create new costs that would harm our ability to recover and add new jobs.”

“The only way out of these economic hard times is a rebound of the private sector. Our policy makers must focus on job creation, reducing regulatory burdens and holding the line on new costs. If enacted, these ‘job killer’ bills would make it even more difficult for us to solve the huge, gaping budget hole that Governor Schwarzenegger announced on Friday.

Here’s a link to the cal chamber job killers bill. Click Here.

COSTLY WORKPLACE MANDATES

AB 482 (Mendoza; D-Norwalk) Expanded Employer Liability — Increases potential liability exposure for hiring decisions by unduly restricting the ability of businesses to use consumer credit reports as part of the background check process.

AB 1994 (Skinner; D-Berkeley) Increased Workers’ Compensation Costs — Inappropriately increases costs to employers by expanding workers’ compensation presumptions into the private sector for the first time by allowing hospital workers to be eligible for various presumptions, including H1N1, MRSA, and other diseases and injuries.

AB 2187 (Arambula; I-Fresno) Expanded Employer Liability — Creates a significant disincentive to locate jobs and operations in California by potentially criminalizing almost any legitimate wage dispute with a terminated employee that takes longer than 90 days to resolve.

AB 2727 (Bradford; D-Gardena) New Liability for Hiring Decisions — Increases potential liability exposure for hiring decisions by restricting the ability of employers to make their decision based on a job applicant’s criminal conviction.

SB 810 (Leno; D-San Francisco) Government-Run Health Care — Creates a new government-run, multibillion-dollar socialized health care system based on a yet-to-be specified ‘premium structure’ — in essence, a tax on all employers.

SB 1121 (Florez; D-Shafter) Harms California Farms and Farm Workers — Places farms at a competitive disadvantage, increases cost of doing business for California farmers, and reduces available resources to invest in workers and farms by removing overtime exemption for agricultural employees.

SB 1474 (Steinberg; D-Sacramento) Increased Agricultural Costs — Undermines the process that now guarantees through secret-ballot elections, a fair vote and the expression of agricultural employees’ true sentiments on the selection of a collective bargaining representative. This act will hurt California’s businesses by driving up costs, making employers less competitive in a global market.

ECONOMIC DEVELOPMENT BARRIERS

AB 656 (Torrico; D-Fremont)/AB 1604 (Nava; D-Santa Barbara)/ABX6 1 (Nava; D-Santa Barbara) Gas Price Increase — Increases gas prices and dependence on foreign oil by targeting the oil industry for a tax on only oil extracted in California, in addition to other taxes not levied in other states.

AB 846 (Torrico; D-Fremont) Anti-Business Cost Increases — Significantly increases the cost of doing business in California by placing an automatic increase on fines and penalties without legislative review and encourages state agencies to levy the highest fine and penalty allowed.

AB 1405 (De León; D-Los Angeles) Climate Change Tax Increase — Increases costs and discourages job growth by granting the Air Resources Board broad authority to implement unlimited fees and taxes with little or no oversight.

AB 1639 (Nava; D-Santa Barbara) Delays Residential Construction Industry Recovery — Hinders the recovery in the residential construction industry by reducing the availability of credit due to delays in resolving delinquent loans by imposing a mandatory mediation program on delinquent residential mortgages.

AB 1836 (Furutani; D-South Los Angeles County) Increased Tax Burden — Harms small businesses, many of whom pay taxes under the personal income tax system, by imposing another temporary personal income tax increase on top of the existing personal income tax increase that was passed in last year’s budget.

AB 1935 (De León; D-Los Angeles)/ SBX6 18 (Steinberg; D-Sacramento) Discourages Business Growth in California — Raises taxes for many companies with significant investments of property and payroll in California by making the single sales factor apportionment method mandatory.

AB 1936 (De León; D-Los Angeles) Creates Inequity in the Tax Structure — Harms struggling small businesses and start-ups by repealing the Net Operating Loss (NOL) carry back deduction, a lifeline that helps employers stay afloat, retain employees, and continue investing in their businesses in an economic downturn.

AB 2100 (Coto; D-San Jose)/ SB 1210 (Florez; D-Shafter) Targeted Tax Increase/Flawed Budget Philosophy Threatens jobs in beverage, retail and restaurant industries by arbitrarily and unfairly targeting certain beverages for a new tax in order to fund obesity-prevention programs and services.

AB 2171 (C. Calderon; D-Montebello) Discourages Investments — Creates substantial uncertainty for employers and discourages future investment in the state by effectively creating an annual sunset for all investment incentives, including tax credits, deductions and exemptions, and caps how much can be claimed each year.

AB 2492 (Ammiano; D-San Francisco) Higher Employer Property Taxes — Undermines Proposition 13 protections and could result in higher property taxes for small businesses by creating an arbitrary and unfair standard for determining that a business property has changed ownership and needs to be reassessed.

AB 2641 (Arambula; I-Fresno) Discourages Investments — Creates uncertainty for California employers making long-term investment decisions by requiring all future-enacted investment incentives to sunset after five years, and eliminating existing incentives that provide no “measurable benefit” without defining how that benefit would be measured.

ACA 6 (C. Calderon; D-Montebello) Discourages Investments — Discourages investments in jobs and operations by imposing an automatic sunset of seven years on any new or extended tax credit, exemption or deduction.

ACA 22 (Torlakson; D-Contra Costa) Targeted Tax Increase/Flawed Budget Philosophy — Exacerbates state budget problems and harms tobacco industry by unfairly targeting it for a new cigarette tax, a declining revenue source, to fund new government spending programs.

SB 967 (Correa; D-Santa Ana) Restricts Business Options — Limits choice and drives up prices for consumers and for state and local government by providing a preference to bidders who commit that 90 percent of the work will be performed by California employees.

SB 974 (Steinberg; D-Sacramento) Undermines Economic Development — Threatens California’s economy and economic recovery by effectively gutting the California Enterprise Zone (EZ) program hiring tax credit and in turn increasing employer taxes in order to fund a new education tax credit.

SB 1113 (Wolk; D-Davis) Undermines Taxpayer Rights — Makes it more costly and difficult for taxpayers to fight meritorious disputes and gives the Franchise Tax Board (FTB) the upper hand by allowing FTB to request a new court trial of tax cases it loses at the administrative level.

SB 1272 (Wolk; D-Davis) Discourages Investment — Creates uncertainty for California employers making long-term investment decisions by requiring all future-enacted investment incentives to sunset after seven years.

SB 1275 (Leno; D-San Francisco) Delays Residential Construction Industry Recovery — Hinders the recovery in the residential construction industry by reducing the availability of credit due to delays in resolving delinquent loans by requiring lenders to determine a borrower’s eligibility for a loan modification prior to the filing of a notice of default.

SB 1316 (Romero; D-East Los Angeles) Employer Tax Increase — Places California out of step with federal law and creates a disincentive for multi-state companies to invest in California by making it the only state to impose a tax liability when a company needs flexibility to exchange a California property with one owned in another state.

SB 1391 (Yee; D-San Francisco) Creates Employer Tax Credit Uncertainty — Eliminates the incentive effect of future-enacted tax credits by requiring employers to repay the state for credits claimed in years where their businesses experience a net loss of employees, whether or not the reduction of employees was connected to the effectiveness of the credit.

EXPENSIVE, UNNECESSARY REGULATORY BURDENS

AB 479/AB 737 (Chesbro; D-North Coast) Expanded Waste Bureaucracy — Exposes employers to new requirements that are not cost effective or are unworkable by giving government broad new authority to impose programs that achieve a statewide solid waste diversion rate of 75 percent by 2020.

AB 2138 (Chesbro; D-North Coast) Unworkable Mandate — Imposes new and costly mandates on California’s food service industry by imposing an unworkable framework aimed at reducing marine debris.

AB 2578 (Jones; D-Sacramento) Inappropriate Price Control — Reduces health care choices, access and quality by creating additional bureaucracy to impose price controls on health insurance policies while failing to address the major cost drivers of rising medical costs.

INFLATED LIABILITY COSTS

AB 1680 (Saldaña; D-San Diego) Interferes with Contractual Agreements — Burdens businesses with unnecessary litigation costs and slows resolution of disputes by prohibiting enforcement of voluntary arbitration agreements if someone is being sued for a hate crime.

AB 2773 (Swanson; D-Alameda) Undermines Judicial Discretion — Unreasonably increases business litigation costs by removing judicial discretion to reduce or eliminate exorbitant legal fees in fair employment and housing cases.

City of Clovis Enterprise Zone Update

May 17th, 2010

Since July 24, 2008, the City of Clovis has participated in the Enterprise Zone Program. During the past 20 months 33 businesses have begun to participate in the program, assisting with 160 being created or retained. The tax credits available through the program provide a total first-year potential savings of $1,996,800 and a potential five year potential savings of $5,990,400 for participating businesses. The attached resolution requests that the State of California continue to support the Enterprise Zone Program. The resolution is necessary because the state legislature is currently considering legislative bills that would cut or eliminate the Enterprise Zone Program.

Click here to read the full summary from the city (PDF Download Link).

The Report About High Taxes Hindering Growth

May 14th, 2010

A new report from a conservative think tank says California’s high taxes and spending practices hinder economic growth.

Titled “Taxifornia,” the study by Robert P. Murphy and Jason Clemens found that state and local government spending in California is the nation’s fourth-highest at 18.4 percent of its economic input. Alaska is highest at 20 percent and South Dakota lowest at 11.6 percent.

The data represent a new wrinkle in California’s perpetual debate over spending and taxes, since comparisons usually focus on tax burdens. The authors said they looked at total spending so that it include spending out of fees and borrowed money, as well as tax receipts.

However, the report doesn’t ignore taxes, placing California among the nation’s highest-taxing states, especially personal and corporate income and sales taxes, and suggests that they are inhibiting California’s economic progress. A liberal counterpart organization, the California Budget Project, has labeled California a moderate tax state.

The PRI report was especially critical of California’s high marginal income tax rate and its reliance on high-income taxpayers. “If policy makers want to understand why the Golden State is lagging behind other states economically,” the report said, “the punitive and steeply progressive personal income tax code is a good place to start looking.”

The full report can be found here.

Breaking News: San Fernando Valley Receives Enterprise Zone Designation

May 11th, 2010

With news that should have thousands of local Valley businesses very pleased, state officials have announced that the San Fernando Valley is now part of the Enterprise Zone program.

So what areas will be included in the EZ program? The expansion area includes portions of:

  • Chatsworth
  • Canoga Park
  • The Van Nuys Airport area
  • Woodland Hills
  • The Northeast Valley

The LA Times covered the announcement and what is means for the region, “The California Enterprise Zone Program targets economically distressed areas, providing tax breaks and other incentives to attract new businesses and foster job creation. Enterprise zones already exist in the Hollywood, Central City and Pacoima regions. Under the program, firms can earn state tax credits for hiring additional employees, receive sales tax credits on purchases of $20 million per year of machinery, receive preference on state contracts and receive a 35% cut in city utility rates for five years.”

News from the California Enterprise Zone

May 10th, 2010

Click here to view the latest newsletter for the CAEZ.

If you have a business in a California Enterprise Zone, contact us today for a free consultation.

 
 
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