As previously discussed in this blog the California Competes Tax Credit is a new income tax credit for which companies submit applications to the state detailing increased investment in California. The submissions are vetted by a five member panel. On June 19th, a committee meeting of the Go-Biz board (representing the Governor’s Office of Business and Economic Development) was held in Sacramento to approve and announce those companies receiving their share of the first $30 million in tax credit available for the fiscal year ending June 30th, 2014. A total of 31 companies will receive a share of the $30 Million, out of almost 400 companies, who requested approximately $500M in credits. Thus, the “winners” were truly an elite group.
The new fiscal year for this credit began July 1st and the total amount of credit allocated has jumped up to $150 million! No more than twenty percent of the credit may go to any one applicant per fiscal year. Again, twenty-five percent of the $150 million will be reserved for small business. There are multiple phases of the application evaluation which is performed by a set group of Go-Biz administrators.
The first phase is based on a formula where the amount of tax credit requested by the applicant is compared to the applicant’s proposed new full-time employee compensation and capital investment commitments. Applicants who sent letters certifying they were at risk of reducing the number of employees in California absent the credit were automatically moved to the second phase of evaluation. The remaining applicants were ordered from lowest to highest based off the compensation versus employee compensation plus capital investment ratio. Ratios within the top 200% were then moved to the second phase of evaluations as well.
In the second phase, Go-Biz administrators evaluated many other factors to include:
- Job Retention
- Opportunity for Future Growth and Expansion
- Economic Impact/Benefit to California
- Incentives available in/out of state
- Benefits/Fringe Benefits Provided to Employees
- Strategic Importance to the State/Region/Locality
- Unemployment/Poverty in Business Area
How to Apply?
The online application forms for the California Competes Tax Credit for the new 2014 – 2015 fiscal year evaluations will be available in the fall of 2014 soon after the regulations are finalized and the online application is upgraded.
The application periods for 2014 – 2015 are as follows:
- To be announced after regulations finalized. ($45 million available)
- January 5, 2015, through February 2, 2015 ($75 million available)
- March 9, 2015, through April 6, 2015 ($30 million available plus any remaining unallocated amount)
Committee hearings will be held on the following dates (Times and locations to be determined):
- January 15, 2015
- April 16, 2015
- June 18, 2015
If you would like more information or assistance with the California Competes Tax Credit program or other state tax credits or incentives, please give us a call!