The California Competes Tax Credit (CCTC) is awarded to businesses based on a competitive application process for a set amount of income tax credits. The California Governor’s Office of Business and Economic Development (GO-BIZ) administers the application process. Tax credits totaling $200 million are available for the state’s fiscal year 2017-2018. Following are the application periods for fiscal year 2017-2018:
- July 24, 2017, through Aug. 21, 2017
- Jan. 2, 2018, through Jan. 22, 2018
- March 5, 2018, through March 26, 2018
Evaluation FactorsGO-BIZ considers a number of factors when determining if a business will receive the CCTC, including:
- The number of jobs the business will create or retain in the state
- Compensation (including wages, benefits, and fringe benefits) paid or proposed to be paid to its employees
- Amount of investment in California by the taxpayer
- Extent of unemployment or poverty in the proposed job location
- Availability of other incentives to the applicant
- Duration of the proposed project and commitment of the taxpayer to remain in the state
- Overall economic effect of the project or business in California
- Strategic importance of the taxpayer’s project or business to the state, region, or locality
- Opportunity for future growth and expansion in California
- The extent to which the anticipated benefit to California exceeds the projected benefit to the taxpayer
Evaluation ProcessThe application process has multiple phases. During the initial phase, each applicant must submit an application to GO-BIZ. An applicant must provide detailed information on its project’s expansion in or relocation to California. GO-BIZ ranks the initial-phase applications by a quantitative analysis formula in which the credit amount requested is compared to the hiring and investment commitments (forecasted for five years) of each applicant. Applicants selected proceed to the next phase of the process.
In the second phase, GO-BIZ considers a variety of qualitative factors, including local employment, competing incentives, economic impact, and industry outlook.
Businesses whose credit requests survive the qualitative factor analysis are notified and negotiate with GO-BIZ the amount of the CCTC and the terms of the incentive agreement.
- All applications must be submitted online during an open application period.
- GO-BIZ anticipates the process will take approximately 90 days from the date the application is submitted to the date the CCTC is awarded.
- Twenty-five percent of CCTCs will be set aside for small businesses, and no single business can receive more than 20 percent of the funds available.
- Applicants not awarded a credit during an application period may resubmit their application during the next application period within the same fiscal year. Applicants not awarded a credit by the end of that fiscal year will need to reapply in the next fiscal year.
- The CCTC provides significant relief to qualifying businesses, but compliance with the complexities and limited time windows of the application process is critical.