The California Competes Tax Credit is an income tax credit for businesses that are expanding or relocating to California. Each fiscal year from 2018–2019 through 2022–2023, the CCTC Committee has up to $180 million to award California businesses. Applicants may request up to 20% of the total amount available each fiscal year. Businesses will commit to certain employment or project investment requirements, they refer to as “milestones,” as part of the credit agreements. The legislation that enacted this credit requires the Franchise Tax Board to review specific businesses books and records to ensure that businesses are in compliance with the agreed upon milestones.
In order to qualify for a portion of the allocation, the business must have expansion plans to create jobs in California over the next five years or be at risk to leave California.
Selection for the CCTC involves a two-phase application process, review, and negotiation with the Governor’s Office of Business and Economic Development (GO-Biz), which administers the credit.
Phase I of the review process takes a detailed look at your business, placing the most weight on certain quantitative information related to your potential contribution to California’s economy through employment and capital investments.
Examining this information closely and well in advance of applying is pivotal to shaping a competitive and accurate application package, because GO-Biz uses this information to calculate a cost-benefit ratio. GO-Biz then compares your cost-benefit ratio against all other applicants to determine if your application will move on to Phase II, which seeks further, more subjective detail from the most competitive applicants.
Following this review process, GO-Biz contacts selected applicants to begin negotiating the terms and conditions of a tax credit agreement.
We’re here to help with this process—from pre-application planning to application and negotiations—we have the experience, resources, and insight to help you benefit from this incentive. We’ve successfully represented and guided a wide range of clients to awards valuing from $100,000 to more than $2.5 million.
Contact us to start your application!
For immediate assistance contact Bernie Paramo or call (562) 249-6010