California Enterprise Zones

Are you leaving money on the table?

By Sidney Singleton

Many enterprise zone businesses forfeit valuable tax credits year after year, simply because they are unaware of them. Local businesses should not assume that their CPAs or accountants are taking full advantage of the enterprise zone tax credits. The enterprise zone hiring tax credit is perhaps the most under utilized tax incentive offered by the state of California. Enterprise zone businesses should contact their CPA firms or accountants to find out if they are eligible for the California Enterprise Zone tax credits. The hiring tax credit can amount to as much as $37,440 per qualified employee over a five-year period. The tax savings could be very substantial. Oftentimes, businesses miss the potential for recovering these retroactive tax credits.

The California Department of Housing and Community Development awarded Stanislaus County with a new enterprise zone designation effective November 16, 2005. The Stanislaus County Enterprise Zone is in effect for a period of 15 years from the date of designation. Communities in the Stanislaus Enterprise Zone include parts of Modesto, Ceres, Turlock and tracks of unincorporated areas in Stanislaus County. Also, recent expansions of the Stanislaus County Enterprise Zone now include the cities of Keyes, Patterson, Hughson, Oakdale, Riverbank and Salida. If your business is located in one of these communities and you have not claimed any enterprise zone tax credits, you may be leaving money on the table!

On January 31, 2008, Governor Arnold Schwarzenegger announced the conditional designation for eight new enterprise zones to boost California’s Economy and improve California’s business climate. The eight new zones are Siskiyou County, East Los Angeles, Salinas Valley, Kings County, Oakland, West Sacramento, Santa Ana and San Joaquin County.

The new conditionally designated Stockton/San Joaquin Enterprise Zone will include parts of Stockton, Manteca, Lodi, Lathrop and Tracy and tracks of unincorporated areas in San Joaquin County. Address ranges for the new zone have not been posted yet. Stockton’s current enterprise zone expires on June 22, 2008. The effective date of the Stockton/San Joaquin County new conditionally designated enterprise zone is slated to start on June 23, 2008. The new Stockton/San Joaquin Enterprise Zone is considerably larger than the old zone. San Joaquin County is reported to have 22.3 percent of it’s households below the poverty level, with a 16.1 percent unemployment rate. You may contact Fran Aguilera, Economic Development Director San Joaquin County EDA at (209) 468-3512 for additional information about the new Stockton/San Joaquin Enterprise Zone.

Enterprise zone programs target economically distressed areas throughout California. The purpose of the California Enterprise Zone Program is to stimulate economic development, encourage business investment and stimulate local job growth. Enterprise zone programs offer a wide range of state and local business incentives. These incentives include hiring tax credits, sales and use tax credits, property tax abatements, utility tax exemptions, fee deferral programs, business expense deductions, net interest deduction, etc.

Stockton’s enterprise zone has played a vital role in attracting new business development to Stockton. Areas like the Stockton Waterfront Event Center, Airport Business Parks, Airport Gateway Centers, Port of Stockton and Rough & Ready Island have all experienced major business development as a direct result of the Stockton/San Joaquin County Enterprise Zone. The governor announced, on February 28, 2007, that US Gypsum Corp plans to build a $220 million wallboard plant in the Port of Stockton and employ about 150 people. The Port of Stockton is located within the boundary of Stockton/San Joaquin County Enterprise Zone.

The Stockton/San Joaquin County’s newly designated enterprise zone businesses are not eligible to claim tax credits on employees hired prior to June 23, 2008, nor can they claim sales tax credits on equipment purchased and place in service prior to the June 23, 2008 designation date unless their operations were previously listed in the old address ranges of the Stockton/San Joaquin County Enterprise Zone. We would advise businesses with operations in Stockton, Manteca, Lodi, Lathrop and Tracy to consult with their CPA’s if they are considering any major equipment purchases or hiring between now and June 22, 2008. Proper timing of major purchases and hiring new employees could yield significant tax savings. Businesses that were located in Stockton’s old enterprise zone may still file amended tax returns and recover refunds or tax credits for taxes paid in prior years. This is true even if the business is not listed in the newly designated Stockton/San Joaquin County Enterprise Zone.

If your business has operations located within the boundary of any of California’s 42 Enterprise Zones, substantial state income tax credits may be available. Many of the businesses located within the enterprise zones have yet to stake a claim! Most are unaware of the significant tax credits they forfeit year after year. Quite often, firms are just too busy or do not have the in-house expertise required to recover the enterprise zone tax credits. In many cases, the hiring tax credit and the sales tax credit will remain unclaimed.

The primary enterprise zone tax credits are the Hiring Tax Credit and the Sales & Use Tax Credit. These enterprise zone tax credits can be very substantial. Enterprise zone businesses may claim tax credits on up to 50% of the qualified wages paid to an eligible employee. For example, in the first year of employment, a business can claim up to $12,480 in hiring tax credit for each eligible employee hired in 2008. Over a period of five years, enterprise zone businesses can claim enterprise zone hiring tax credits in excess of $37,440 per qualified employee. Employers must base the hiring tax credit on the lesser of the hourly wage paid or 150% of the state minimum wage. (The minimum wage in California is currently at $8.00; 150% of the minimum wage is $12.00.)

Enterprise zone businesses may also claim an income tax credit for sales or use tax paid or incurred on certain “qualified” items purchased for exclusive use inside the enterprise zone. Individuals can claim a tax credit for sales & use tax paid or incurred on the first $1,000,000 of “qualified” equipment or parts purchased each year. Corporations can claim sales or use tax credits on up to $20 million of “qualified” equipment or parts purchased each year. Businesses may carry forward unused tax credits and apply them to offset tax liabilities in future years.

San Joaquin County and Stanislaus County Enterprise Zone businesses may wish to contact an outside consulting firm that specializes in recovering California Enterprise Zone tax credits. Most offer free consultations and work on a contingency fee basis. They administer the entire tax recovery process from start to finish. If you are too busy to recover the tax credits, it is not too late!

Sidney Singleton is from Wincentive Corporation and an expert on Enterprise Zones. Wincentive can be found at wincentivecorp.com.

To Schedule a Free Enterprise Zone Consultation

Contact: Sidney Singleton, COO
Wincentive Corporation (408) 977-7788

The California Department of Housing and Community Development have awarded San Francisco a new conditional enterprise zone designation effective June 1, 2007. San Francisco’s old enterprise zone expired on May 27, 2007. The newly designated San Francisco Enterprise Zone will be in effect for a period of 15 years from the date of designation. The new zone is considerably larger than the old zone.

Businesses that are located within the boundaries of the old enterprise zone may still file amended tax returns to recover refunds or tax credits on taxes paid in prior years. This is true even if the business is not listed in the newly designated San Francisco Enterprise Zone address ranges. Unfortunately, many enterprise zone businesses don’t have the in-house expertise needed to recover the enterprise zone hiring tax credits. Therefore, they will forfeit these valuable tax credits unless they engage an outside consulting firm to recover them.

The enterprise zone tax credits can be very substantial. Businesses may claim tax credits on up to 50% of the qualified wages paid to an eligible employee. For example, in the first year of employment, up to $11,700 in hiring tax credit can be claimed for each eligible employee hired in 2007. Over a period of five years businesses can claim enterprise zone hiring tax credits in excess of $35,000 per qualified employee. Also, enterprise zone businesses may claim an income tax credit for sales & use tax paid or incurred on certain “qualified” items purchased for exclusive use inside an enterprise zone. Individuals can claim a tax credit for sales & use tax paid or incurred on the first $1,000,000 of “qualified” equipment or parts purchased each year. Corporations can claim tax credits on up to $20 million of “qualified” equipment or parts purchased each year. Unused tax credits can be carried forward and applied to offset tax liabilities in future years. Businesses located in San Francisco’s newly designated enterprise zone are not eligible to claim tax credits prior to the June 1, 2007 designation date unless their operations were also listed in the address ranges of the old San Francisco Enterprise Zone.

The enterprise zone hiring tax credit is perhaps the most under utilized tax incentive offered by the state of California. Therefore, enterprise zone businesses should not assume that their CPAs are taking full advantage of this tax credit. Businesses should contact their CPA firms to find out if they are taking full advantage of the California Enterprise Zone hiring tax credit. Also, you can engage an outside consulting firm that specializes in recovering California Enterprise Zone tax credits. Most offer free consultations and work on a contingency fee basis. If there is no savings there is no fee.

To Schedule a Free Enterprise Zone Consultation

Contact: Sidney Singleton, COO
Wincentive Corporation (408) 977-7788

By Sidney Singleton
COO Wincentive Corporation

SEPTEMBER 2007 –  Eight California Enterprise Zones are set to expire in 2008, including the Stockton/San Joaquin County Enterprise Zone. The state designated Stockton/San Joaquin County Enterprise Zone on June 22, 1993 and it will expire on June 21, 2008. City and County officials are in the process of applying for a new enterprise zone designation. The area’s success in its bid for a new enterprise zone designation will require community support. You may contact Fran Aguilera, Economic Development Director at 468-3512 for information about the new enterprise zone designation.

Enterprise zone programs target economically distressed areas throughout California. The purpose of the California Enterprise Zone Program is to stimulate economic development, encourage business investment and stimulate local job growth. There are 42 Enterprise Zones located throughout California. Each enterprise zone is in effect for a period of 15 years from their date of designation. Enterprise zone programs offer a wide range of state and local business incentives. These incentives include hiring tax credits, sales and use tax credits, property tax abatements, utility tax exemptions, fee deferral programs, business expense deductions, net interest deduction, etc.

The Stockton/San Joaquin County Enterprise Zone has played a vital role in attracting new business development to Stockton. The vital ity of areas like the Stockton Waterfront Event Center, Airport Business Parks, Airport Gateway Centers and the Port of Stockton have all experienced major business development as a direct result of the enterprise zone. The governor announced, on February 28, 2007, that US Gypsum Corp plans to build a $220 million wallboard plant t the Port of Stockton and employ about 150 people. The port is located within the boundary of the Stockton Enterprise Zone.

If your business has operations located within the boundary of the Enterprise Zone, substantial state income tax credits may be available. Many of the businesses located within the Enterprise Zone have yet to stake a claim! Most are unaware of the significant tax credits they forfeit year after year. Quite often, firms are just too busy or do not have the in-house expertise required to recover the enterprise zone tax credits. In many cases, the hiring tax credits will remain unclaimed unless the business engages an outside consulting firm to recover them.

The two primary enterprise zone tax incentives are the Hiring Tax Credit and the Sales & Use Tax Credit. These enterprise zone tax credits can be very substantial. Enterprise zone businesses may claim tax credits on up to 50% of the qualified wages paid to an eligible employee. For example , in the first year of employment, business can claim up to $11,700 in hiring tax credit for each eligible employee hired in 2007. Over a period of five years, Enterprise Zone businesses can claim enterprise zone hiring tax credits in excess of $35,100 per qualified employee. Employers must base the hiring tax credit on the lesser of the hourly wage paid or 150% of the minimum wage. (The minimum wage is currently $7.50; 150% of the minimum wage is $11.25.)

Enterprise Zone businesses may also claim an income tax credit for sales or use tax paid or incurred on certain “qualified” items purchased for exclusive use inside the enterprise zone. Individuals can claim a tax credit for sales & use tax paid or incurred on the first $1,000,000 of “qualified” equipment or parts purchased each year. Corporations can claim sales or use tax credits on up to $20 million of “qualified” equipment or parts purchased each year. Business may carry forward unused tax credits and apply them to offset tax liabilities in future years. Oftentimes, businesses miss the potential for recovering these retroactive tax credits.

Many enterprise zone businesses forfeit these valuable tax credits year after year, simply because they are unaware of them. Local businesses should not assume that their CPAs are taking full advantage of the hiring tax credit. Since, the enterprise zone hiring tax credit is perhaps the most under utilized tax incentive offered by the state of California. Stockton businesses should contact their CPA firms to find out if they are eligible for the California Enterprise Zone hiring tax credit and sales tax credit. The hiring tax credit can amount to as much as $35,100 per qualified employee over a five-year period. The tax savings could be very substantial. These tax credits have retroactive provisions and any unused tax credits can carry forward until exhausted.

Stockton businesses may wish to contact an outside consulting firm that specializes in recovering California Enterprise Zone tax credits. Most offer free consultations and work on a contingency fee basis. They also administer the entire recovery process for hiring tax credit, calculate the tax credits, and prepare reports detailing the tax credits recovered. If you are too busy to recover the tax credits, it is not too late!

To schedule a free consultation, contact Sidney Singleton, COO, Wincentive Corporation 408-835-3936 or visit www.wincentivecorp.com