For several decades, the California Enterprise Zone Program has been one of the only state-wide economic development tools to help under-served communities attract and retain businesses. The program has been responsible for the creation of tens of thousands of jobs and significant investments in equipment and machinery.
In 2012, Californians witnessed the elimination of Redevelopment Agencies across the state. These agencies had been credited with accelerating the gentrification and development of our urban and blighted communities for many years.
In 2013, following the elimination of Redevelopment Agencies and the passing of Proposition 30 to increase personal (state) income taxes to the highest rates in the country, our state legislature passed AB 93 to eliminate the long-standing Enterprise Zone Program.
The 42 Enterprise Zones were repealed as of December 31, 2013, including a large regional Enterprise Zone in San Diego. The San Diego Enterprise Zone stretched from Rancho Bernardo down through Sorrento Mesa and Mira Mesa into Downtown and its surrounding neighborhoods and carried on through the South Bay down to the border. In the Southern California region alone, we are losing Enterprise Zones in San Diego, Santa Ana, Anaheim, Long Beach and several throughout Los Angeles County including the Central Los Angeles Zone that covers most of downtown and Hollywood.
For companies operating in one or more of the 42 Enterprise Zones, as of January 1, 2014, you can no longer earn state income tax credits for qualified job creation or investments in qualified assets. Enterprise Zone based companies can, however, still qualify employees hired retroactively through the end of 2013 to generate credits. The credits for a qualified hire can be up to $37,000 over a five year period (even if that period extends beyond the end of 2013). Companies and shareholders will have until 2023 to utilize any carry-over Enterprise Zone credits that they have not been able to use before 12/31/13.
Bottom line, there is still a small window of time to claim your tax credits as an Enterprise Zone business and those credits could benefit you for up to ten years moving forward. If you have been putting it off, now is the time to act. Please contact us for a complimentary review or to find out if you are in the Enterprise Zone. There are only a few months left to apply!
Our TCS team has generated more than $60 million in tax savings and refunds for our more than 350 clients since 2006. Email us at taxcredits@hughesmarino.com.
