According to an article published this afternoon at CaliforniaNewsWire.com, the California Department of Housing and Community Development (HCD) announced today the conditional designation of three new enterprise zones. The new zones are Anaheim, Harbor Gateway and Santa Clarita Valley. I checked the HCD website minutes ago and find no mention of the announcement there, so I guess we’ll find out more later.
California has authorized 42 enterprise zones state-wide. The three new zones are taking the place of enterprise zones that recently expired — typically after a designation period of 15 years (although some early zones received short extensions after their original 15-year lifespan had expired). New zones receive their designation through an expensive and highly competitive application process.
- Tax benefits associated with the new enterprise zones will be identical to those offered by existing zones.
- Hiring Credit — offers a state income tax credit based on a percentage of the wages paid to qualifying employees
- Sales & Use Tax Credit – offers a state income tax credit based on the amount of sales tax paid in purchasing qualifying equipment for use within the enterprise zone
- Net Interest Deduction – provides tax free interest income to lenders who loan money to qualifying enterprise zone businesses
- Upfront Business Expense Deduction for qualifying capital investments (rather than depreciation)
- Zone Net Operating Loss Carryover
My firm specializes in helping employers identify and document their eligibility for enterprise zone hiring credits. Although the program provides a substantial tax benefit, the qualification is primarily a human resources process. Most businesses already hire qualifying employees, but need assistance to identify and document qualifying factors. It sounds hard — and it is for the uninitiated — but we make it look easy.
If you have questions about the California enterprise zone program, please contact me. I am Vaughn Hromiko. vah@WOTCPlanet.com or (800) 655-5281, extension 101.