“Enterprise Zones play a key role in revitalizing economically challenged parts of our state.  By helping businesses create well-paying jobs, we empower communities to climb the economic ladder and build the state’s overall economy,” said Governor Schwarzenegger.

Purpose
The Enterprise Zone Program targets economically distressed areas throughout California. Special state and local incentives encourage business investment and promote the creation of new jobs. The purpose of the program is to stimulate development by providing tax incentives to businesses and allow private sector market forces to revive the local economy.

Business Eligibility
Businesses located at qualified addresses in designated Enterprise Zones are eligible for program benefits.  CA statute allows for a total of 42 enterprise zones located throughout California, some of which expired in late 2006, 2007, and 2008. Effective January 2008, Governor Arnold Schwarzenegger announced the conditional designation for eight additional enterprise zones statewide including Siskiyou County, San Joaquin County, East Los Angeles, Salinas Valley, Kings County, Oakland, West Sacramento and Santa Ana.

Some important changes to note:

  • All of the major Los Angeles zones have been renewed and their geographic footprints have expanded  significantly, including communities in East Los Angeles, Huntington Park, Long Beach, Los Angeles, Lynwood and South Gate, among many others.
  • The footprint of the former Los Angeles Mid-Alameda Corridor was replaced with a new zone encompassing the cities of Lynwood and South Gate.
  • The new San Bernardino zone includes a small part of the former Agua Mansa zone (many areas of Riverside County did not renew), but has expanded to include a larger geographic area of San Bernardino County
  • San Diego’s expanded zone includes Chula Vista and National City
  • In June 2008, Stockton’s zone expired but was re-designated in January 2008 as part of the San Joaquin County zone which now covers almost half of the County.
  • Bakersfield, Porterville and Pittsburg are not receiving re-designations.
  • Entirely new designated enterprise zones include Compton, Santa Clarita, and Salinas Valley.

Tax Benefits
Companies located in the designated Enterprise Zones are eligible for substantial tax credits and benefits from the State of California.

Enterprise Zone businesses may reduce their state income tax by a percentage of the wages paid to one or more qualified employees (part-time and full-time).  Potentially up to $37,440 (*) or more in tax credits per qualifying employee can be earned over a five-year period.

* over-time hours can be included and may result in tax credit being worth more than $37,440

Who counts as a ‘qualified employee’?
A qualfied employee only need to meet one of thirteen eligibility criterias including: local residents living in a designated Targeted Employment Area (most common), Veterans, Native Americans, government assistance recipients, etc.

The TEA allows residents of certain designated low-income areas to qualify Enterprise Zone employers for substantial hiring credits through an approval system with the local and state authorities.  Over the years, our firm has developed close relationships with the Enterprise Zone Representatives throughout California to facilitate the process.

How can you benefit?
Please call Enterprise Tax Services, LLC to immediately take advantage of the tax benefits that you are entitled to under the Enterprise Zone tax incentives program.  Each designated zone has a different expiry date, some as far out as year 2022 while some are set to expire this year.   Inquire now so our tax consultants can tailor a strategy to help your business maximize the tax credits and reduce your tax liability up to the expiry date of your Enterprise Zone.

Wait, there’s more.  Section 19306 of the Revenue and Taxation Code allows taxpayers to amend tax returns up to four years after the return’s due date, which means we can help to recapture hiring tax credit opportunities that was previously overlooked.  In almost a decade, our team of tax experts and consultants have helped businesses claim substantial cash refunds for previous tax years, which includes a generous interest payment on top of all refunds which you are entitled from the Franchise Tax Board (FTB).

Another benefit to you is that unused tax credits earned under this program can be carried forward indefinitely, as long the business continues to operate within the enterprise zone, even after the designation expires.  This is how many of our Enterprise Zone clients are able to benefit from zero to minimal state tax liability for years to come.