The next round of applications for the California Competes Tax Credit (CCTC) begins January 3, 2023. Businesses looking to relocate, or stay and grow, in California should take into consideration the CCTC offering. Those seriously interested should prepare for the upcoming second round of tax credits, especially considering there is no application fee to apply for the funds.
Early in 2022, the Governor’s Office of Business and Economic Development (GO-Biz) approved the extra tax credits to entice businesses to move to California, as well as keep companies in California, and help them grow and expand.
The CCTC is open to businesses of any industry, size, or location. GO-Biz expects the competition for these funds to be intense, as the funds are to be split between three brief application periods. The first of which offered $85 mm, closed this past August. Applications for the next two rounds are January 3, 2023 to January 23, 2023 with $120 mm available, while the final $99.7 mm (plus any remaining funds) will be allocated during the March 6, 2023 to March 20, 2023 period.
The intent of the CCTC is to attract and retain high-value employers in California who provide high economic indicators and offer good wages and benefits to employees. GO-Biz requires applicants to show how the credit will influence the business’s ability to create new, full-time jobs in the state that might not otherwise be created by California taxpayers. A successful application for funds must prove the capital investment and job creation will occur in California.
Applicants will be evaluated based on these 12 criteria:
• Number of jobs created or kept
• Strategic importance to the state, region, or locality
• Training opportunities offered to employees
• Incentives available from in-state, out-of-state, and federal government sources
• Opportunity for future growth and expansion
• Amount of investment
• Compensation paid to employees, including wages and fringe benefits
• Extent of unemployment and poverty in the current or proposed site location
• Economic impact
• Duration of the proposed project and commitment to remain in California
• Extent to which the benefit to California exceeds the benefits to the applicant
• Extent to which the credit influences the creation of new California jobs
The application-to-award process takes approximately 90 days. This includes the period when applications are reviewed and presented to the CCTC committee for approval. If an application is denied, the business can update and resubmit their application in the following round. (Note: The final application period is set for March 6, 2023 to March 20, 2023.)
Author, Jeff Spiegel, CPA
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.