California Approves $61 Million of California Competes Tax Credits - $100 Million More Up For Grabs Beginning in January
On November 17, 2016, California approved $61 million of California Competes Tax Credits. The next application period begins January 2, 2017. The California Competes Tax Credit (CCTC) provides businesses a potentially significant negotiated income tax credit for increasing or retaining jobs and making capital investments in California. California’s Governor’s Office of Business and Economic Development (GO-Biz) has set aside over $243.3 million in CCTC funds for the current fiscal year that will run through June, 2017.
Does My Business Qualify?
Any business may qualify for the credit. CCTC awards are based on 11 factors that include the number of full-time jobs created in California, compensation (including benefits) paid to California employees, amount of new capital investment in California, the overall economic impact in California, and competition with other states for the project. There is no restriction based upon geography or industry.
How Does a Business Get an Award?
There are three application periods for the CCTC during each fiscal year and the multi-phased application period takes approximately three months from start to finish. The next application periods for the current fiscal year are January 2, 2017 through January 23, 2017 and March 6, 2017 through March 27, 2017. An application must be submitted within these periods and prior to the project commencement.
What is the Benefit?
The CCTC is a dollar-for-dollar offset to California income taxes and may offset alternative minimum tax. The credit is awarded over a five-year period and may be carried over for six years. Each credit award is unique to the company. Previous awards have ranged from $20,000 to $15 million. Small businesses with less than $2 million of gross receipts may be eligible for higher awards as a percentage of investment.
How Can Andersen Tax Help?
Andersen Tax has helped clients obtain millions of dollars in tax credit awards in this latest and prior application periods. Our California state and local tax team helps companies navigate through the three-phase credit application process. Andersen Tax understands how to write proposals to place your business in the best position to achieve an award in a competitive process. Potential applicants should consider preparing an application package prior to the January submission period.
Our highly skilled state and local tax team includes professionals with law, accounting, public sector, and business management backgrounds. This complement of professionals will help align your business goals and tax benefits. We are not just a credit negotiator – we help taxpayers support, report and defend tax credits.