California’s Gold Rush Continues – GO-Biz Approves Over $62 Million in Tax Credits
Applications for the Next Round Accepted Starting July 24, 2017
On June 15, 2017, the Governor’s Office of Business and Economic Development (GO-Biz) approved $62.8 million in California Competes Tax Credits (CCTCs) for 87 businesses expanding throughout the Golden State. In addition, GO-Biz announced the opening of the next CCTC application period, July 24, 2017.
The third and final round of tax credit allocations for Fiscal Year 2016/2017 is intended to support the creation of more than 6,400 jobs statewide from pharmaceutical manufacturing to fabricated structural metal manufacturing. Awards ranged in size from $20,000 to $7,500,000. The CCTC provides businesses an incentive for increasing or retaining jobs and making capital investments in California. GO-Biz had set aside over $200 million in CCTC funds for the current fiscal year ending June 30, 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 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. To qualify for a credit allocation, a business must anticipate California employment growth over the next five years, be considering the relocation of some or all business operations outside of California, or be considering an expansion inside or outside of California.
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. GO-Biz typically offers three application periods each fiscal year. As noted, the next application period will open July 24, 2017. Businesses must submit an application within designated application periods.
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, and based on project specific information. Previous awards have ranged from $20,000 to $25 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 CCTC awards since the program’s inception in 2014. Our experienced Credits & Incentives (C&I) specialists help companies navigate through the three-phase application process.
Our C&I specialists are a part of our highly skilled state and local tax team which 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 and incentive negotiator – we help taxpayers support, report and defend tax credits and incentives.