The CCC is an income tax credit that is available to reduce income tax. There is a 5 year carryover and the CCC can be timed to allow 10 years to utilize the Credit. In addition, the Credit can be assigned to an affiliated corporation that is a member of the same
Our services are provided based on the different phases of the CCC application, approval and compliance phases.
The purpose of the Application Phase is to collect the information necessary to present to Go-Biz for CCC consideration. Go-Biz has fifty (50) questions that must be answered in the application. We assist with the quantitative and qualitative information required to apply for the CCC.
- Coordinate interviews with appropriate personnel;
- Collect information regarding new hiring data;
- Calculate enterprise zone foregone credits;
- Calculate cost-benefit ratio based on collected data on new employment and new investment;
- Project the number of employment positions your business will create or retain in this state;
- Project the new compensation paid or proposed to be paid to employees, including wages, benefits, and fringe benefits over 5 years;
- Project the amount of new investment over 5 years;
- Research the level of unemployment and poverty in the prospective area based on the United States census data;
- Identify the incentives available to your business in California, including incentives from the state, local government, and other entities;
- Identify the incentives available to you in other states;
- Identify the duration of the proposed project and the duration committed to remain in this state;
- Coordinate the economic impact study in the state of projects and businesses;
- Evaluate the strategic importance of your businessís presence in the state, region, and localities;
- Present the opportunity for your businessís future growth and expansion;
- Coordinate the computation of the anticipated benefits to the state in excess of the projected tax credit.
We coordinate presentation of a ìtotal package proposalî based on the ìaggregate compensation packageî plus the ìaggregate investment packageî. The compensation element is based on new full-time payroll over five years and the investment element is new personal and real property acquired or leased that is directly related to the project measured one year prior to the application and five years after.
There are two alternative methods to potentially qualify for Phase II Go-Biz consideration.
- Lowest cost-benefit ratio application; or
- Certify in writing that your business (or portion of your business and affiliates) is at risk of terminating or relocating to another state.
- Identify the appropriate senior company official (i.e. CEO, CFO, owner, President, or equivalent) who must certify in writing that absent consideration for the tax credit, the applicant is at risk of terminating or relocating all or a portion of its employees in this state to another state.
Collection and presentation of the criteria used to evaluate the CCC application in Phase II.
- Extent of unemployment or poverty in the area;
- Whether incentives are available to your business in other states;
- Economic impact in the state;
- Strategic importance of your businessís projects and business in the state, region and locality;
- Number of existing employees expected to be retained in California locations;
- Opportunity for future growth and expansion in the state;
- The benefits and fringe benefits provided to your businessís employees;
- Any other information requested in the application.
Go-Biz will review a variety of factors in determining the amount of the CCC and terms associated with the CCC. We assist with the presentation of credible data and supporting documentation for the application. The statute directs Go-Biz to give priority to a taxpayer whose project is located in an area of high unemployment or poverty. We evaluate the prospective areas based on census and other information sources to address this award factor.
In addition to the evaluation criteria described above, negotiations will be based on the following factors:
- The number of employment positions your business will create and retain in the state;
- The compensation paid or proposed to be paid to your businessís employees, including wages, benefits, and fringe benefits;
- The amount of investment in this state by your business;
- The incentives available to your business in the state, including incentives from the state, local government, and other entities;
- The duration of the commitments made for each element of the application to remain in the state;
- The extent to which the anticipated benefits to the state exceeds the projected benefit to your business from the tax credit.
If approved, it will be documented in a CCC tax credit agreement. The agreement will specify:
- Taxable year or years for which the tax credit allocated will be claimed;
- Minimum compensation level to be provided to the new full-time employees;
- Minimum employee retention period for your business net increase in annual full-time equivalent employees.
The agreement could provide that the CCC be granted:
- In full upon approval; or
- In increments based on mutually agreed upon milestones.
We assist with the timing of CCC based on your businessís ability to utilize the credits in California and the ability to perform on the commitments made in the contract. For example, timing of the government contracting CCC could be deferred until the new contract is awarded. We assist with the type of milestones that would trigger use of the CCC:
- The agreed upon net increase of annual full-time equivalent employees;
- The amount of investment made;
- Other similar objective criteria.
The agreement will also contain claw-back provisions if the contract terms are not fulfilled. It will be important to consider the nature of the underlying project when negotiating these terms.
After the CCC agreement is negotiated with GO-Biz, it must also be approved by the California Competes Tax Credit Committee, consisting of the State Treasurer, the Director of the Department of Finance, the Director of GO-Biz, one appointee from the Senate, and one appointee of the Assembly. We assist you with preparation in advance of this meeting.
Certain high-level information about the CCC agreement will be posted on the GO-Biz Website within 5 business days of approval by the Committee:
- Name of each applicant allocated a tax credit;
- The estimated amount of the investment by each applicant;
- The estimated number of employees created or retained by each applicant;
- The amount of tax credit allocated to the applicant;
- The amount of the tax credit recaptured from the applicant, if applicable.
The final regulations added Section 8030(e) to protect from public disclosure certain confidential information submitted during the application process, including anything considered to be a trade secret, confidential, privileged or otherwise exempt from disclosure under the Public Records Act.
Before filing the CCC application and whenever information is submitted to Go-Biz in the application process, we assist your business by asserting claims of exemption from disclosure.
If a committee approves a contract, then the contract must be monitored for compliance with the terms and conditions of the award. Go-Biz may require a CPA review of employment and investment records to confirm whether the contract terms have been satisfied. We assist you with this annual compliance responsibility including:
- Preparation of annual compliance reporting forms;
- Preparation of forms and computations to claim the CCC on your businessís tax return;
- Review of wage reports to identify whether new full time employment meets the contract requirements;
- Review of wage reports to identify whether new wages meets the contract requirements;
- Review of benefits to identify whether fringe benefits meets the contract requirements;
- Calculation of new investment for compliance.
We review your progress on the terms of the contract by calendaring specific dates for a high-level review. If events develop that may impact your ability to meet the CCC agreement, we assist you by contacting Go-Biz before falling out of compliance.
The Franchise Tax Board will be provided with a copy of the negotiated agreements along with all documentation provided by your business and relied on by GO-Biz or the committee in the decision to approve the agreement and allocate a credit. The FTB must review the books and records of all taxpayers who have been allocated the CCC to ensure compliance with the terms and conditions of agreement with GO-Biz. These reviews are not to be treated as an audit of the tax return. We assist you with representation of your CCC compliance.
The FTB must report any material breach to Go-Biz, which will determine whether any portion of the CCC must be recaptured.