The California Competes Tax Credit Program

The deadline to apply for the California Competes Tax Credit program is October 27th.

The deadline to apply for the California Competes Tax Credit program is October 27th.

The California Competes Tax Credit Program is in full swing. In this article we review the basics about this incentive program as well as important facts and dates to take into consideration.

What Is The California Competes Tax Credit Program?

Earlier in 2014, the State of California announced the innovative California Competes Tax Credit program. The program was implemented to offer California-based businesses an income tax credit if they’re looking to expand, or for non-California organizations looking to relocate to the Golden State.

The project has several phases, and applications from businesses go through a review process to determine which opportunities best meet the state’s objectives for economic development, and to allocate funds to companies that best carry out those objectives.

The application for the California Competes Tax Credit begins with Phase 1, where companies fill out an online form that will determine whether they advance for Phase 2. The Phase 2 portion of the application includes in-depth factors such as economic impact and industry outlook.

Why Should You Apply?

The application season for the California Competes Tax Credit program is in full swing and there’s good news! The amount of funding has been increased for this fiscal year, ending 6/30/2015, to $151 million. Small business owners are especially encouraged to apply as 25 percent of the funding is reserved for those that have revenue of less than $2 million.

The previous application round in June 2014 received more than 400 applications. Those applications requested about $500 million in funding with just $30 million available for qualified recipients. Companies from any industry are encouraged to apply for the California Competes Tax Credit program.

Who Receives Funding?

Although small business owners definitely benefit from the California Competes tax program, last year the most substantial funding went to large companies such as Samsung Semiconductor, Inc. ($6 million), Petco Animal Supplies, Inc. ($2.6 million), Samsung Information Systems America, Inc. ($2 million) and Amazon Fulfillment Services, Inc. ($1.5 million).

When Should You Apply?

The application periods for the 2014 – 2015 California Competes Tax Credits are as follows:

  • Through October 27, 2014 ($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

What Else is Important?

Via regulations passed in August, the state’s Office of Business and Economic Development essentially banned consultants who are helping their clients apply for California Competes Tax Credits from receiving commissions. Consultants can still get paid, but their compensation can’t be based on a contingent fee arrangement. This ban is the first such restriction any state has placed on economic development consultants.

Interested in learning more or applying for this tax incentive program? Contact Miles Consulting today for expert guidance with your California Competes application, state tax credits or incentives. We’re happy to help!

Miles Consulting Group, Inc. is a professional service firm in San Jose, California specializing in multi-state tax solutions. Our firm addresses state and local tax issues for our clients, including general state tax consulting, nexus reviews, tax credit and tax incentive maximization, income tax and sales/use tax planning and other special projects, including the new California Competes Tax Credit. To learn more, contact us today at www.MilesConsultingGroup.com.

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