November 20, 2017

Window for California Competes Tax Credit is Fast Approaching

By Peter Downing, National Principal-in-Charge, Tax Credits and Incentives

Window for California Competes Tax Credit is Fast Approaching State & Local Tax

The California Competes Tax Credit (“CCTC”) program is an award-based program that is funded through the state’s general fund. The purpose of the California Competes Tax Credit is to offer incentives to employers who are creating new jobs in California or making significant capital investments in the state. The current fiscal 2018 budget for CCTC is approximately $200 million, with tax credits awarded through three rounds during the fiscal year.

The remaining application dates for the 2018 fiscal year are fast approaching and should be calendared immediately by any company considering its eligibility. The application dates are:

Round 2: January 2, 2018 – January 22, 2018
Round 3: March 5, 2018 – March 26, 2018

The CCTC application process is structured in phases.

Phase 1

The initial application phase is completed online. During the application process, the applicant must estimate the number of new full-time jobs it will create and total capital investments it plans to make over the next several years. The applicant should include a narrative about its expansion plans and begin to formulate projections that will be needed, if the application is approved, for the next phase.

Phase 2

If the applicant is selected by the governor’s GoBiz team to proceed to Phase 2, then more detailed information must be submitted to the GoBiz office. During this phase, an applicant must determine with reasonable certainty the number of new jobs being created and the amounts of additional payroll, benefits and taxes. In addition to the payroll investments, the applicant needs to estimate the capital investments it plans to make in additional leased space for new employees, additional equipment costs, and improvements needed for job expansion.

Phase 3

Applicants awarded tax credits through the GoBiz office will enter into a tax credit agreement with the state that will schedule out how much, and when, the tax credits can be utilized.

Marcum’s Credit and Incentives Group (“C&I”) can assist CCTC applicants with complete turn-key services, beginning with analyzing the data and preparing the initial application in Phase 1. During Phase 2, Marcum’s C&I group can assist applicants with the deliverables required by the GoBiz office for submission of the formal application. If the applicant is successful and proceeds to Phase 3, the Marcum C&I Group can negotiate the tax credit award and subsequent Tax Credit Agreement with the state.

As the Round 2 application deadline is fast approaching, contact your Marcum Tax Advisor as soon as possible if your California company is considering expansion and believes it may be eligible for this incentive program.

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Peter  Downing

Peter Downing

National Principal-in-Charge, Tax Credits and Incentives

  • Tax & Business
  • Costa Mesa, CA