California Competes Tax Credit

The California Competes Tax Credit (CCTC) is an income tax credit available to businesses that wish to come to California or stay and grow in California. Tax credit agreements will be negotiated by the Governor's Office of Business and Economic Development (GO-Biz) and approved by a statutorily created "California Competes Tax Credit Committee," consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, one appointee each by the Speaker of the Assembly and Senate Committee on Rules.

How SDTCG Can Help

Our team of professionals have extensive experience in successfully representing large, mid-sized and small businesses through the CCTC process. Our experience includes working with a broad range of clients including those in manufacturing, technology, alternative energy, engineering, apparel and retail.

With a significant amount of taxpayer dollars at stake ($200 million annually), GO-Biz's multi-phased application and review process leaves no stone unturned. For this reason, SDTCG is here to guide your business through this competitive program from beginning to end.

Program Updates

For fiscal year 2016-17, GO-Biz will accept applications for the CCTC during the following periods:

CALIFORNIA ETP

Established in 1982, California's Employment Training Panel (ETP) exists to provide funding to California businesses that are working to develop their employees working skills. The grants provided by the ETP are funded through businesses subject to California's Employment Training Tax.

The ETP has established fixed reimbursement rates that are used to compute how much of your training costs can be reimbursed through an ETP grant. ETP qualified training includes, but is not limited to training current, new and re-hired employees through: A single employer can receive upwards of $900,000 in ETP grants. Unlike a tax credit or other tax incentives, these grants do not require taxable income to exist or the filing of tax return. ETP grants are paid directly to a qualified employer as they invest in their employees.

How SDTCG Can Help

California's ETP grants are awarded through a competitive process. Although all industries are welcome, certain industries and businesses are favored more than others. Let us share our knowledge and experience of this program with you to help your business further invest in the skills of your employees.

Program Updates

The California ETP recently awarded $6.1 million in training grants through 16 ETP agreements (July 2016). With this funding, it is expected that these 16 recipients will train over 6,300 California workers.

FEDERAL WORK OPPORTUNITY TAX CREDIT

The Work Opportunity Tax Credit (WOTC) is a federal tax credit incentive available to businesses who hire and retain veterans and other qualified individuals from specifically targeted groups. Employers nationwide claim approximately $1 billion annually in WOTC incentives.

Examples of a targeted group would include individuals who receive Food Stamps, Supplemental Security Income, those that are ex-felons, veterans or those living in geographic areas deemed to be distressed.

This federal income tax credit (per employee) can range anywhere from $2,400 to approximately $10,000. The credit is based on the amount of hours and wages worked by the new employee in their first several weeks/months of employment.

How SDTCG Can Help

Unlike other hiring programs that may require a net increase in overall employment headcount, the WOTC does not. So whether your business is starting out, expanding, or simply replacing turnover—the WOTC can be of significant assistance.

Our professionals are knowledgeable in the intricacies of the program, particularly around how and when new hires need to be screened and certified for purposes of qualifying for the credit. Let us help you take advantage of this program that is designed to help get the less fortunate back on their feet.

Program Updates

Through the Protecting Americans from Tax Hikes (PATH) Act of 2015, the WOTC was extended through December 31, 2019. Moreover, the PATH Act allows businesses to retroactively certify qualified employees that were hired between 1/1/2015 – 8/31/2016.
This retroactive transitional relief can only be taken through September 28, 2016.

Reach out to us so we may help you secure this incentive and review whether or not your business should consider its previous hires in conjunction with this retroactive relief.

California Alternative Energy & Advanced Transportation Finance Authority: Sales & Use Tax Exclusion (STE) Program

Through a competitive application and approval process, the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) provides a sales and use tax exclusion for advanced manufacturers, manufacturers of alternative source and advanced transportation products, components or systems.

Businesses that are approved by the CAEATFA Board to receive an STE award agreement may purchase qualified property (property used directly in their qualified business activity) free from California sales and use tax for a period of 36 months from the date that their STE award agreement is executed.

The STE Program was recently expanded by Assembly Bill 199 to include equipment that processes or utilizes recycled feedstock. The amount of approved sales and use tax exclusion is limited to $100 million per calendar year.

How SDTCG Can Help

Often considered one of the most competitive incentive programs in California, our team of professionals have had exceptional success in representing clients through the STE application and approval process. This includes a very recent success with one of our Southern California manufacturing clients—resulting in a tax benefit in excess of $10.5 million.

From our pre-application planning, application preparation and STE award agreement negotiations, we have the technical expertise, resources, insight and proven track record to help your business take advantage of this highly lucrative and sought after California tax incentive.

Program Updates

Although the acceptance of new STE applications has been suspended since November of 2015, CAEATFA is currently working on finalizing proposed regulations to incorporate Assembly Bill 199 (as discussed above) as well as other modifications to the STE Program.

It is anticipated that CAEATFA will begin accepting Assembly Bill 199 applications in August, in order for applications to go before the CAEATFA Board in October. Similarly, it is anticipated that non-AB 199 applications will be accepted in September for CAEATFA Board review in November of 2016. Consistent with years passed (and once the application suspension is lifted), CAEATFA will accept applications on a rolling basis, with CAEATFA Board approval meetings to occur on a monthly basis.