Tax Alert: Newly Expanded California Enterprise Zone Credits Offer Numerous Tax Incentives for Companies in the San Fernando Valley, LAX, and Glendale Areas
6/17/2010
Credits May Mean Tax Savings in Your Pocket if Your Company Operates in a Designated Area
California’s Enterprise Zone Tax Incentives program offers significant tax advantages to qualified companies that are located within, hire qualified employees within, or make qualified purchases within its designated areas. Recently, the California Technology, Trade, and Commerce Agency expanded its “Enterprise Zones” within additional economically depressed areas throughout the state to encourage and stimulate growth, development, and investment in those areas. California has 42 designated Enterprise Zones (click
here for a highlighted state map).
Los Angeles and the surrounding areas have a number of designated zones, which have been in existence since the 1980s, as well as a Federal Empowerment Zone and a Renewal Community designation. Within these areas, businesses can take advantage of state and/or Federal tax credits and deductions not available to businesses elsewhere. Credits and other tax benefits carry through January 10, 2023. Even businesses in “expired” areas may still take advantage of the Enterprise Zone tax credits on a retroactive basis.
Within these designated Enterprise Zones, “for-profit” taxpayers (including C-Corporations, S-Corporations, Partnerships, LLC’s, and Sole Proprietorships) who invest, operate, or locate a trade or business may be eligible for significant tax incentives, including but not limited to:
- Hiring Credits – Eligible employers are entitled to a hiring tax credit of up to $37,440 per eligible employee over a five-year period. Employees may be full-time, part-time, seasonal, and commission-based and must meet certain other criteria.
- Sales or Use Tax Credits – The sales or use tax paid on the purchase or lease of qualified equipment that is used within a Zone may qualify for a 100 percent tax credit. Qualified equipment is defined as manufacturing, data processing, office, audio/video, and computer equipment.
For more information about these and other Enterprise Zone tax incentives and to determine whether your business and its investments qualify, please contact Maier N. Rosenberg, CPA and partner, via
email or at 818-205-2681; your J.H. Cohn engagement partner; or a member of J.H. Cohn's State and Local Tax Group at 800-823-6375.
Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.