GO-Biz tax credit workshop energizes Valley entrepreneurs
The state of California has an equitable proposition for savvy business people who do not want to leave money on the table.
The Governor’s Office of Business and Economic Development (GO-Biz) arrived at the Fairfield Inn & Suites for a tax credit seminar for approximately 70 Imperial County business people Wednesday. It was a diverse group of professionals who looked to capitalize on the state’s Franchise Tax Board credit program.
Introducing the program was Sean Wilcock, vice president of business development and services for the Imperial Valley Economic Development Corporation. The IVEDC is charged with external marketing of Imperial Valley to attract new firms, he explained. And he praised business people for taking time to investigate potential savings.
Workshop facilitator was Kristen Kane, GO-Biz deputy director of the California Competes Tax Credit. Kane noted GO-Biz for fiscal 2017/18 will make available $230.4 million in tax credits in three application periods.
The first is scheduled from July 24 to August 21 with $75 million. Then from January
2 to January 22 there is $100 million and from March 5 to March 26, $55 million plus all the unclaimed funds from prior periods.
“The California Competes Tax Credit is a five year contract between business and the government,” she said. “It’s a credit against income tax due to the Franchise Tax Board that can (some cases) wipe out 11 years of tax liability.”
Yet Kane alerted the audience tax credits are tied to achieving contractual milestones. A manufacturing limited liability corporation may aim to hire from two to four employees each year with average wages of $50,000 and investments of $100,000. This hypothetical company could receive a $120,000 tax credit dispersed in $24,000 annual installments. But the hires or investments do not necessarily have to occur every year but can roll over the following year as long as the company reaches its milestones. Yet there are recapture provisions by the Franchise Tax Board for not complying.
To apply for tax credits people should visit California Competes website: https://www.business. ca.gov, look for the Calcompetes tab and then scroll to the resources button. Credit awards are based on the extent of benefit to the state exceeds the amount of the tax credit and various other factors. No more than 20 percent will go to any one applicant and 25 percent is reserved for small business.
The application process advances through four stages beginning with Phase I, a cost benefit ratio that computes the amount of credit requested divided by the aggregate employee compensation plus the aggregate investment. Phase II is a qualitative evaluation based on economic impact, opportunity for expansion and other aspects.
Next is the Agreement, which includes minimum employee compensation, a credit distribution period and a recapture provision if applicants fail to meet commitments. And it concludes with the Post-Committee Approval posting awardee information. A random sample of credits have ranged from $1.5 million for Caylym Technologies International, LLC to $20,000 for Sandwich Video, Inc.
“I’m the one who pitches your business to the business committee,” said Kane. “The proposed project document is the most important submittal. This is how you tell us your project hires women and minorities or improves the quality of life for your county, or, we hope this never happens, you’ll move the business out of state if you don’t get your credit.”
But GO-Biz supports business expansion and especially backs areas like Imperial County because of its historic high poverty rate. Robert Wishner, a Doctor of Veterinary Medicine attended the workshop as a representative of El Centro Animal Clinic.
“I think Imperial County is situated to do a lot more international business because it’s on the Mexican border,” said Wishner. “It’s away from the big cities but not too far away to serve as a gateway to the U.S. west coast. And vice versa, we want exports down there. The website is user friendly that invites people to participate. And it’s self-intuitive, that if California gives away all this tax credit, it gets something in return. It retains businesses, increases revenue and employment. I think it’s a great thing to publicize and we need more of it.”