Posts Tagged ‘hiring tax credits’
Today, the Governor’s Go “Away” Biz think tank offered up a version of its new and improved tax credit. The Governor proposes to eliminate the current Enterprise Zone program and replace it with a program so chock full of limitations and strings attached that surely the only person smiling today is Rick Perry. Here is a link to the proposed new credit. Here is a link to the short version of what the Go-”Away” Biz credit actually provides.
Brown’s Budget Shows Anti Business Sentiment By Increasing Regulations Aimed At Limiting Employer Access To Enterprise Zone CreditsThursday, January 10th, 2013 | Enterprise Zones, Legislation, Tax News
Governor Brown released his 2013-2014 budget today which seeks to make it more difficult for businesses to utilize the Enterprise Zone credits. At least a step up from last year when Brown proposed to eliminate the EZ program altogether, this year’s approach is more subtle. Brown seeks to limit retroactive vouchering to one year, despite significant evidence and testimony that most of the businesses for which the credit is intended cannot process all their employee paperwork so quickly, i.e. the small businesses. It seems that everyone but Brown recognizes that small businesses are the engine that runs California’s job market. By making it more difficult for them, Brown is doing a disservice to the job market and to a large part of his constituency.
Brown also wants to require “third party” verification of employee residence in a TEA. Assuming he means driver’s licenses instead of I-9s, again many of the lower income workers have no such third party verification and would thus be excluded from the credit. The immediate result would be reduced hiring of those without California issued identification a result that I suspect Brown’s backers haven’t fully thought through yet. Under Brown’s budget, there is a higher level of identification required for a tax credit than the law currently requires to allow someone to vote. Perhaps an intended distinction….
Below is the full text of the Budget section discussing the Enterprise Zone:
Enterprise Zone Regulatory Reform
The Budget includes savings relating to new regulations for the Enterprise Zone program. The proposed regulations will accomplish the following reforms:
Limit retrovouchering by requiring all voucher applications to be made within one year of the date of hire.
Require third party verification of employee residence within a Targeted Employment Area.
Streamline the vouchering process for hiring veterans and recipients of public assistance.
Create stricter zone audit procedures and audit failure procedures.
These regulatory reforms will primarily affect Corporation Tax revenue, but will also have an impact on Personal Income Tax revenue. The regulations, in total, are expected to increase General Fund revenue by $10 million in 2012‑13 and $50 million in 2013‑14. The Administration will be pursuing further Enterprise Zone reform through legislation.
I guess it could be worse. Forbes ranked California as the 41st worst state to do business in. An unfavorable tax structure tops the list of why California ranks so low. Here is the study.
This posted yesterday in the San Francisco Sentinel.
Allows San Francisco Businesses to Access Valuable Hiring Tax Credits Through Simple Web-Based Tool; Advances Mayor’s Jobs Plan Goal of Using Technology to Make the City Easier Navigate for Business
Mayor Edwin M. Lee today announced the launch of the San Francisco Enterprise Zone Web App, a web-based tool that allows San Francisco businesses to apply online for the City’s popular Enterprise Zone hiring tax credit program. The Enterprise Zone Web App will replace a completely paper-based process with a web based tool which increases government efficiency and makes it easier for businesses to utilize the program.
“I am committed to making it easier for local businesses to operate and grow jobs in San Francisco,” said Mayor Lee. “The Enterprise Zone Web App takes a powerful tax incentive program and brings it online so small businesses, manufacturers and other firms can save time while they save money.”
“At SFMade we make sure that all of our manufacturers are aware of the Enterprise Zone hiring tax credits and the potential savings it offers,” said SFMade Executive Director Kate Sofis. “My staff works closely with small business owners with limited resources. Having the Enterprise Zone Web App instead of a paper process will make a big difference in terms of administrative costs, time and use of this important tax credit.”
“The Enterprise Zone hiring tax credit is really important to our company,” said Marissa Andres, Controller at Mackenzie Warehouse, an auto parts distributor located in Potrero Hill. “The savings we earn in tax credits are used for hiring and retaining employees. The online tool is simple and straight-forward and saves me valuable time.”
The Enterprise Zone is a State of California program which provides tax credits and other incentives to encourage business investment and promote the creation of new jobs. In place since 1997, the San Francisco Enterprise Zone is one of 42 Enterprise Zones in the state and is administered locally by the Office of Economic and Workforce Development (OEWD). The San Francisco Enterprise Zone areas include the following areas: Bay View Hunters Point/ South Bayshore; Chinatown; the Mission; Mission Bay Project Area; Potrero Hill; south of Market; the Tenderloin; and the Western Addition and some portions of North Beach and Financial District.
The tool was developed using Firmstep’s AchieveForms software. The switch to an on-line app will not only decrease costs in paper and postage, but will also speed up the processing time getting businesses approved for tax credits more quickly and efficiently.
The San Francisco Enterprise Zone Web App can be found at http://sfezapp.oewd.org For more information on the San Francisco Enterprise Zone Program, go to: http://www.oewd.org/Enterprise-Zone.aspx For more information from the State on the Enterprise Zones Program, go to: www.hcd.ca.gov/fa/ez/ <http://www.hcd.ca.gov/fa/ez/>
The Sacramento Bee is reporting that the Democrats have gained a two thirds majority in both legislative houses. Consequently, they can raise taxes without any Republican opposition. What this means for the EZs is yet to be seen. There are some bright spots. First, many Democratic legislators have EZs in their districts and they have come out in favor of continuing the program. Second, given that Prop 30 passed, it is yet to be seen how aggressively the democrats will pursue further tax hikes, particularly employment related credits, in a still sensitive economy. Stay tuned….
Governor Brown’s May Revise does not specifically mention enterprise zones. In a number of places, the budget blames lower revenues on increased and “unpredictable” use of corporate tax credits as well as the lack of the type of credit limitations that existed in 2008-2009.
“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.”
In an unanimous opinion today, the California Supreme Court ruled that the FTB can in fact audit behind the EZ voucher. The voucher certificate is no longer considered “prima facie” evidence that the worker is qualified for the EZ program. The opinion states:
We reverse the Court of Appeal’s holding that a certification issued by a governmental agency for purposes of the hiring tax credit under Revenue and Taxation Code section 23622.7 constitutes “prima facie proof of a worker is a ‘qualified employee,’ ” which shifts to the Franchise Tax board the “burden of demonstrating an employee is not a qualified worker for which no voucher should have issued. ” In all other respects, the Franchise Tax Board does not challenge the Court of Appeal’s judgment, and it is affirmed. Majority Opinion by Liu, J. — joined by Cantil-Sakauye, C.J., Kennard, Baxter, Werdegar, Chin, and Corrigan, JJ.
Amid Tough Business Climate, California Entrepreneurs Flourish In Part Becuase Of The Enterprise ZoneThursday, April 5th, 2012 | Enterprise Zones, Tax News
An article in Fox Business lists all the reasons NOT to do business in California. Yet despite all the negatives, entrepeneurs seem to flourish in the state. One of the bright spots is undoubtedly the Enterprise Zone tax credits. “Other business ventures that benefit California’s populace may be eligible for numerous tax credits, including enterprise zone credits, economic development area credits and targeted tax area credits.”
Read the full article.