Category Archives: California Tax Incentives

Reminder to CA Manufacturers: Sales Tax Exemption!

Does your manufacturing equipment qualify for the CA partial exemption? Read this article to find out more.

Remember when the California Manufacturing Sales Tax Exemption first came into fruition, on July 1, 2014? It seems like so long ago. But maybe it’s a good time to remind companies about this useful partial exemption available to manufacturing companies.

What exactly is this exemption?

It allows certain manufacturers and biotech companies to exempt a portion of California sales and use tax on purchases of qualified equipment used in manufacturing and R&D (research and development).

This exemption went into effect July 1, 2014 and applies to any sale, purchase, and lease of qualified tangible personal property on or after this date.  However, this exemption won’t be around forever- it sunsets on July 1, 2022.

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FOCUS ON CALIFORNIA

Golden Gate Bridge in San Francisco, California

This month, we travel back to the mainland (and the home state of Miles Consulting Group) to the 3rd largest state in the country and the 6th largest economy in the world- the Golden State of California! With its sunny and dry coastal climate year round (except for January 2017!) and easy access to the ocean and mountains, California has always been seen as an ideal resort destination. In the 1960s, popular music groups such as The Beach Boys promoted the image of Californians as laid-back, tanned beach-goers – which, of course we all are!

California is home to the second most populous city in the United States- Los Angeles, which is home to the Hollywood entertainment industry. San Francisco, 400 miles to the north, is where you will find the Golden Gate Bridge, Alcatraz Island and cable cars.

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New: Important California State Tax Credits and Incentives Updates

side view of a piggy bank with the flag design of California.

Don’t miss these California state tax credits and incentives updates!

Are you trying to pursue California’s state tax credits and incentives? If so, there are three recent updates you may want to know about:

California Competes State Tax Credit and Online Reporting Requirements

As of January 1, 2017, the Governor’s Office of Business and Economic Development (Go-Biz) will be required to report more detail about businesses taking advantage of the the California Competes State Tax Credit.

Current law requires Go-Biz to report the following online:

  • The name of each taxpayer that receives a state tax credit
  • The estimated number of jobs that are created or retained by the credit
  • The amount of credit the taxpayer is allocated
  • The amount of state tax credit recaptured from the taxpayer

The new law requires Go-Biz to additionally post the following information online:

  • The primary location where the taxpayer will increase the net number of jobs or investments
  • Information identifying credits considered priority due to being located in a high unemployment or poverty area
  • Information that identifies if the state tax credit awarded is counted toward the amount allocated for small businesses

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Revisiting the California Competes Tax Credit Program

Here's why the tax credit program is showing itself to be very difficult for companies to actually receive benefits from.

Here’s why the tax credit program is showing itself to be very difficult for companies to actually receive benefits from.

Do you operate a business in California? Have you taken advantage of the state’s tax credits offered through the California Competes program? The truth is, this program is showing itself to be very difficult for companies to actually receive benefits from.

As Susan Shelley, columnist for the Los Angeles Daily News, explains:

How does a business qualify for the California Competes tax credit and how much money can it save on taxes? There doesn’t seem to be a clear answer. “Tax credit agreements will be negotiated,” the [Governor’s Office of Business and Economic Development] website states.

The negotiating is done by the governor’s appointees at GO-Biz, then approved by the California Competes Tax Credit Committee. The CCTC committee is made up of the state treasurer, the director of the Department of Finance, the director of GO-Biz, one person appointed by the Assembly Speaker, and one person appointed by the Senate Rules Committee.

They meet several times a year to consider applications…one after another, company representatives are brought before the committee to be grilled about their application for a tax credit.

Shelley goes on to explain that the questions asked are harsh – so harsh that California Compete’s legal counsel was brought in to tell the committee they are limited regarding types of data they collect, especially when it comes to company demographics. However, the Assembly’s political appointee hired their own legal counsel to insist that the tax credit program could be used for the state legislature to, “pursue other ‘underlying goals.’”

I don’t know about you, but I’d like to see the program be more objective, less subjective, and more transparent. Companies applying for the credit currently receive little guidance on how to draft a success application, and while 25% of the funds are supposed to go directly to small businesses, they are precisely the types of companies that often don’t have the wherewithal to apply. Continue reading

California Tax Incentives: Are They Beneficial or Not?

Here are a few notable opinions regarding California's tax incentives.

Here are a few notable opinions regarding California’s tax incentives.

As California has rolled out additional tax incentives for businesses, the debate over their value has endured. Are they good for the state budget? Do they help give businesses reasons to stay? Keep reading to see two common opinions, as well as how we think California should continue.

For Tax Incentives

In a recent Lodi News-Sentinel article, Steve Hansen writes that California needs to become more business friendly and it seems legislators prefer to turn, “A blind eye.” His piece calls for the state to encourage business, rather than to make it so difficult.

As he points out:

  • For every 100 people in the private sector, there are now 114 people receiving a government check who are dependent on income created by large and small businesses.
  • [California] has been labeled by “Chief Executive” magazine as the worst state out of 50 for doing business. California has received this “award” for the last 10 years in a row.
  • [Legislators’] solutions have been to raise taxes, along with adding additional burdens, regulations and restrictions to those companies still trying to survive here. California has the highest income tax rate in the nation. Another has been to raise the minimum wage to one of the highest in the country.

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California Business’ Take on the State’s Recent Legislation

This is a picture of a California flag with a gavel in front of it.

How does recent state legislation affect California businesses? This post explains!

You may remember that back in November, the Tax Foundation released its State Business Tax Climate Index, which ranked states based on the various tax systems companies need to work within. California businesses were less than thrilled the state ranked 48th out of the 50 states.

Because the report is intended to help lawmakers see areas where they could improve, we thought it would be interesting to take a look at ways the Golden State is both improving and declining.

Legislation California Businesses Appreciate

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Permanent R&D Credit

It’s nice to start 2016 with some good tax news. Right before 2015 ended, the US Congress passed a significant bill that seeks to help American taxpayers keep their money and grow our economy. Last December, Congress passed a bill, referred to as “Protecting Americans from Tax Hikes Act of 2015” (PATH). For many years, there have been essential tax credits and benefits that expired every year with no certainty of extension. With PATH, that uncertainty goes away as it permanently extends more than 20 tax relief provisions.

The bill includes provisions for individuals, families, and businesses. A major provision that we want to focus on is the extension and modification of the R&D credit which is stated in section 121 of the bill. To see the entire bill, click here.

The provision permanently extends the research and development (R&D) tax credit. For years, the R&D credit had to be renewed by Congress annually (and some years wasn’t at all). Continue reading

Conducting Business in the Golden State [California State Tax Woes]

Is the California state tax system scaring you away? Be sure you make an informed decision!

Is the California state tax system scaring you away? Be sure you make an informed decision!

Do you conduct business is California? The state is known for a less-than-friendly atmosphere for clients, yet the economy is responsible for $2 trillion in business annually. With 1.37 million businesses and 17 million workers, many companies are choosing to maintain a presence despite California’s state tax system scaring many others away. In fact, another article recently concluded that California is one of the best places for new business. So what’s the real story? It’s probably something in between! The truth is, as the nation’s largest state, California is a hub for commerce, and many businesses can’t afford NOT to be here.

Why do businesses stay?

In a recent article, Joe Vranich, a corporate relocation specialist and harsh critic of the Golden State’s business climate, still says, “This is the single most beautiful state I’ve ever lived in…I have the best quality of life I’ve ever had here. And the weather, I tell people I think this is the weather we’ll find when we get to heaven.”

As a resident myself, I have to agree the state does have an appealing draw. It’s not all weather and beauty, either. There are particular fields California has a stronghold on, such as technology and entertainment. And, the state has started doing what it can to try to entice companies to stay too, by providing some credits and incentives to offset the hefty California state tax costs (see our recent blog about the state’s California Competes Tax Credit). Of course, other states offer credits and incentives as well, so some of that is just California trying to keep up. Continue reading

California Competes Tax Credit Program

californiaFor some companies, the California Competes Tax Credit Program may be a gift from the government during this holiday season (or early 2016). This program is designed to assist companies that plan to re-locate to or stay and expand in the state of California. It appears that more businesses should take advantage of this program which has a budget of over $200 million in tax credit annually. There are three filing periods for the current fiscal year of 2015-2016:

 

  1. July 20, 2015, through August 17, 2015 ($75 million available)
  2. January 4, 2016, through January 25, 2016 ($75 million available)
  3. March 7, 2016, through March 28, 2016 ($50.9 million plus any remaining unallocated amounts from the previous application periods)

The upcoming committee meetings to review and approve applications are as follows:

  1. April 14, 2016
  2. June 16, 2016

Even though the first filing period has passed, it is not too late to apply in January. In the most recent committee meeting held in November, less than $45 million out of the $75 million available was requested for approval. A total of 59 large companies filed for $33 million in tax credits and only 30 small businesses filed for $10 million of tax credits. The California government has created this pool of tax credits for businesses to thrive in the industry, and a huge portion of it is left untouched. Continue reading

What’s out and what’s in for California Legislation

 

 

 

Last Saturday, October 10th was a very busy day for Gov. Jerry Brown as decisions were made on the status of multiple bills. The Governor of California vetoed a package of nine bills that would have created new tax credits for the state. Here is a list of vetoed Assembly and Senate bills:

WHAT’S OUT

  • A.B. 35 by Assembly member David S. Chiu (D-San Francisco) – Income taxes: credits: low-income housing: allocation increase.
  • A.B. 88 by Assembly member Jimmy Gomez (D-Los Angeles) – Sales and use taxes: exemption: energy or water efficient home appliances.
  • A.B. 99 by Assembly member Henry T. Perea (D-Fresno) – Personal income taxes: income exclusion: mortgage debt forgiveness.
  • A.B. 428 by Assembly member Adrin Nazarian (D-Sherman Oaks) – Income taxes: credit: seismic retrofits.
  • A.B. 437 by Assembly member Toni G. Atkins (D-San Diego) – Research and Development: Small Business Grant Program.
  • A.B. 515 by Assembly member Susan Talamantes Eggman (D-Stockton) – Income taxes: credits: food bank donations.
  • A.B. 931 by Assembly member Jacqui V. Irwin (D-Thousand Oaks) – Taxation: credit: hiring.
  • S.B. 251 by Senator Richard D. Roth (D-Riverside) – Disability access: civil rights: income tax credit.
  • S.B. 377 by Senator Jim Beall (D-San Jose) – Income taxes: insurance taxes: credits

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