For 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:
- July 20, 2015, through August 17, 2015 ($75 million available)
- January 4, 2016, through January 25, 2016 ($75 million available)
- 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:
- April 14, 2016
- 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.
The most recently approved benefits ranged from $20,000 to $4,000,000. Nearly a third of the recommended credits were awarded for San Francisco tech companies; namely, NerdWallet, Inc., Credit Karma, Inc., Stripe Inc., International Machines Corporation, and Kenshoo Inc. In order to qualify, companies must fairly accurately estimate their expansion plans over a multiple year time-frame, to include both investment in property plant & equipment as well as the hiring of employees. In deciding who gets funded, the state also considers factors such as company location, industry and benefit to the California economy. Companies must follow through their planned investment over multiple years in order to receive the full benefit. Consequently, $870,000 of tax credits are set to be voided as the companies are not able to maintain their original business plans in which the credits were awarded. Lynda.com, Inc. has requested the termination of its agreement with the California Competes Tax Program as a result of being acquired by the LinkedIn Corporation. Lynda.com alone, accounted for $750,000 of recaptured tax credit. The remaining recaptured tax credits came from Health One Pharmaceutical, Inc. and Animal Memorial Service, Inc., citing that they will not be pursuing their original investment plans and focusing their resources elsewhere.
To view the last committee meeting’s agenda on Nov. 10, click here.
For instructions, visit www.business.ca.gov/calcompetes.aspx and apply at www.calcompetes.ca.gov.
And for prior Miles Consulting Group posts – click here. The magic is in the application and we can help with that! Contact us for more info.
