C & I is a group of tax consultants who assist with managing and supplying guidance regarding the California Enterprise Zone Tax Credits. This is a niche area of accounting that saves clients tremendous amounts of taxes. C & I deals directly with clients and subcontract with many accountants to do the Enterprise Zone credits for their clients.
Every year, the state of California gives out hundreds of millions of dollars in enterprise zone tax credits. C & I, the tax credit experts, can help you get these credits.
In good news for local businesses working for the California state government, State Controller John Chiang publicly announced that the IOU program will end on September 4th. This is approximately one month prior to earlier estimations. Chiang has received a wave of public support for this decision and credits the action to a slew of stress tests performed on the new State budget and cash flow analysis.
“The State of California owes a debt of gratitude to the thousands of individuals and businesses that were forced to bear the brunt of the State’s chronic fiscal mismanagement,” Chiang said. “Along with short-term loans that are routinely obtained in the fall, this spending plan should provide sufficient cash to meet all of California’s payment obligations through the fiscal year.”
For anyone not familiar with the situation, Chiang started the state IOU program last month during the budget shortfall. The companies sent these IOUs (also known as registered warrants) have been vigorously fighting for the program to be brought to a conclusion due to the cash flow issues the IOU program was causing their own businesses.
In this economy, everyone is trying to bring in business any way they can. Real estate professionals have been busy touting the EZ benefits to potential buyers. Often, I come across real estate ads touting the EZ benefits for buyers or lessees. Here is a recent video from a Santa Clarita agent.
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.
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.
Dennis Wyatt, reporting from the Manteca Bulletin, has said that the future Spreckles Park and Manteca Commerce Park firms are moving forward with Enterprise Zone strategies.
Wyatt reported that Manteca Chamber of Commerce Chief Executive Officer and Manteca Council Member Debby Moorhead believes not enough businesses know about the advantages of the enterprise zone designation or even what parts of Manteca are included. That is why the chamber made the enterprise zone the focus of its quarterly luncheon on Wednesday, Aug. 5.
If you have a business in the Manteca enterprise zone, please contact us directly for a free tax consultation.
Hesperia, Tulare, Pittsburg, Sacramento and Taft are the five new EZ designations (even though only 4 new slots were open). From the HCD Press Release:
Sacramento – Helping to grow jobs and improve California’s business climate, the California Department of Housing and Community Development today announced the conditional designation for five Enterprise Zones statewide. The zones are Hesperia, Tulare, Pittsburg, Sacramento and Taft.
“California Enterprise Zones give communities a chance to develop their economic potential, improve their quality of life and contribute to the state’s economy. Enterprise Zones are part of the Administration’s ongoing efforts to increase the number of jobs through state and local incentives,” said HCD Director Lynn L. Jacobs.
In what was mostly a redux of the AB1139 hearings a few months ago, the JEDE held the first in what will likely be a series of hearings relating to AB1139. Being pushed hard by the unions, AB1139 is set for vote by the Committee in January 2010. The Committee heard testimony from the usual players. Proponents of the Enterprise Zone program seem to have the upper hand in the presentations by presenting lucid, relevant data and testimony illuminating the EZ benefits. Opponents seemed to repeat the same talking points that have held little traction over the past year with legislators. At one point, a union representative began to berate the EZ consultants prompting Committee Chair Perez to sternly talk him down and ordered him to stick to the facts of his presentation. Over the next few weeks, I will post several of the articles and studies from the hearing as we gear up for more hearings and the eventual vote in January. Below is the Committee’s statement about its goal in examining the EZ program:
The Assembly Committee on Jobs, Economic Development, and the Economy (JEDE) is initiating a comprehensive examination of the California Enterprise Zone Program and the other state programs related to geographically-targeted economic development areas (G-TEDAs).
It is the Committee’s objective in undertaking this review to provide Members of the Legislature and the public with a more comprehensive understanding of where the state’s resources are being expended and the value these types of expenditures have for local communities. Given the current state of the economy, it is imperative that the Legislature ensure that economic and workforce development programs are best used to meet the immediate and longer term economic recovery needs of the state.
The Committee currently plans to hold three public hearings between August 18 and October 17, 2009. Stakeholder meetings are planned for the latter part of October and possibly into early November 2009. A reform proposal is expected to be sent to the Office of the California State Legislative Counsel in early November 2009. Copies of draft amendments will be available through the JEDE Office in early December 2009. Legislation arising from these hearings will, most likely, be heard in the first two weeks of January 2010.
On Tuesday, July 21, Tonya Dowse, Max Shenker, Gary Buse, Lina German and I had the opportunity to meet with Jeanne Harriman at the Franchise Tax Board offices. Jeanne introduced us to two of her colleagues, who will be assuming her Enterprise Zone program duties and have been welcomed as part of the CAEZ family. James Dudley and Jaymie Mora have a combined 16 years experience handling Enterprise Zone-related issues for FTB and have been working with Jeanne for many years. They are happy to make themselves available to CAEZ Members. They will be attending our Sacramento Board meetings and handling the FTB update portion of our meeting agenda. They have also been invited to attend and participate in our Annual Conference in Fresno.
Following the Board meeting on Wednesday, July 22, the CAEZ Board of Directors and Advisors met with the new HCD senior management team, which is responsible for the Enterprise Zone program. James Nunn, has been appointed Program Manager for the Enterprise Zone program and Tom Bettencourt has been named the Federal Programs Branch Chief. Frank Luera’s position as Section Chief is still open and a search is underway to fill that slot. Another new face is Kristin Power, Deputy Director for Legislation at HCD. Kristin will be assuming an active role in Enterprise Zone legislation and public policy issues related to the program.
This new management structure has also invited CAEZ to form an HCD/CAEZ Advisory Council, to facilitate better and more frequent communication with the HCD administrative team. The exact shape and structure of this Advisory Council will be discussed between the Board of Directors and HCD staff in the coming weeks. I envision this Advisory Council as a forum for the CAEZ Board and our Members to enhance the program, as well as raise questions and concerns about the program and have them discussed and resolved. I will keep you informed as this develops further.
Thank you for your continued support of CAEZ and the Enterprise Zone program.
CRAIG JOHNSON
President
California Association of Enterprise Zones
In case you were on vacation, here is what has been going on in the California Tax space this month.
Registered Warrants Can Pay Your State Income Tax Bill
We accept California registered warrants (IOUs) as payment of current and past due personal and corporate tax obligations./ more+
State’s New Home Tax Credit Gone
We stopped accepting applications for the new home tax credit at midnight, Thursday, July 2, 2009./ more+
FTB Provides Guidance for California Treatment of the Revised Texas Franchise Tax
On July 20, 2009, we responded to the request for taxpayer guidance to determine the general eligibility for the Other State Tax Credit (OSTC) and the deductibility of the Revised Texas Franchise Tax (RTFT)./ more+
Did You Know We Are Working Together?
We came together with the Board of Equalization, Employment Development Department, and the IRS in a cooperative partnership called the Joint Tax Agency Communications Committee./ more+
15th Annual Tax Practitioner/IRS Town Hall Meetings
In September, we will be working with the IRS and other state agencies at the 15th Annual Tax Practitioner/IRS Town Hall Meetings./ more+
Are You a Tax Professional Interested in Saving? Learn More About Doing Your Tax Stuff Online!
Register and attend one of our joint statewide workshops* to learn about the latest in e-services./ more+
Striking Gold in California
Striking Gold in California is an educational tool for small business owners that provide basic tax information from the Internal Revenue Service and the three California tax agencies, all in one place./ more+
Small Business
Converting a California LLC to a Corporation
Does your client want to convert their limited liability company (LLC) to an S-Corporation and continue to have the profits and losses flow through to its members? Did you know that you can convert an LLC into an S-corporation by making an election?/ more+
Ask the Advocate
Systemic Issue Management System (SIMS) at Work
This month, I share the efforts we are taking by discussing an issue that was submitted to us and our response…/ more+
Inside FTB
Tax Practitioner Hotline
Did you know that we have a call center dedicated to serving tax practitioners?/ more+
Criminal Corner
Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time./ more+
FTB issued Notice 2009-5 on July 17, 2009, to extend the due date until October 15, 2009, for taxpayers to file a completed FTB Form 3726, Deferred Intercompany Stack Account (DISA) and Capital Gains Information./ more+
With the current condition of California’s economy, the EZ program has become more important than ever. With that in mind, the California Chamber of Commerce is recommending local businesses to join a new coalition to protect the Enterprise Zone program.
With the recent budget cuts, the California Entperise Zone program is one of the only remaining vestiges of tax relief for the local business community. The California Chamber of Commerce brought several studies to light in their recent posting, “Several studies have established the EZ program’s effectiveness. Most recently, a March 2009 revision of a national study by University of Southern California researchers concluded that state and federal EZ programs ‘have positive, statistically significant, impacts on local labor markets in terms of the unemployment rate, the poverty rate, the fraction with wage and salary income and employment.’ ”
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