California State Tax Filing Season Is Officially Open – Part V

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Written by Betty Williams | Posted in Individual • North America • Tax Policy

The Franchise Tax Board (FTB) announced it is now accepting 2013 state tax returns. Also, the FTB provides the following updates on law changes and filing services brought to you in this blog series – Part V.

AB 93 replaces the G-TEDA tax incentives with the New Employment Credit (NEC), the California Competes Credit, and statewide partial sales and use tax exemption for certain manufacturing and research and development equipment.

The New Employment Credit (NEC) is a California income tax credit available to employers for taxable years beginning on or after January 1, 2014, and before January 1, 2021. To obtain a credit a qualified taxpayer must hire a qualified full-time employee on or after January 1, 2014, and pay qualified wages attributable to work performed by the employee in census tracts with the highest unemployment and poverty in the state, or in former EZs (except for census tracts with the lowest unemployment and poverty), or former Local Area Military Base Recovery Areas (LAMBRAs). For simplicity these are referred to as the designated geographic area (DGA).

Employers can determine whether a location is part of the DGA by using the DGA Mapping Tool.

The credit is based on 35 percent of qualified wages (wages between 150 percent and 350 percent of minimum wage). In order to generate an allowable credit, the qualified taxpayer must have a net increase in its total number of full-time employees working in California, when compared to its base year both based on annual full-time equivalents.

In addition, the taxpayer must receive a Tentative Credit Reservation (TCR) from the Franchise Tax Board (within 30 days of complying with the EDD new hire reporting requirement) for the qualified full-time employee. Employers can get a credit reservation by going here.

More information about the requirements for the New Employment Credit can be found here.

The California Competes Tax Credit is an income tax credit available to businesses that want to come to California or stay and grow in California. Tax credit agreements will be negotiated by the Governor’s Office of Business and Economic Development (GO-Biz) approved by a newly created “California Competes Tax Credit Committee.”

More information on the California Competes Credit can be found on GO-BIZ and FTB’s website.

More information on the sales tax exemption can be found on the Board of Equalization Website.

In accordance with Circular 230 Disclosure

Source: FTB Public Affairs Office

Betty Williams

Betty Williams has a broad range of experience handling civil and criminal tax controversy matters including income tax, employment tax, sales and use tax, property tax and IRS, FTB, and SBE audits, protests, and appeals. She has represented clients before the U.S. Tax Court and the U.S. District Courts in California. Betty has obtained penalty abatement for numerous clients ranging from a few thousand to more than $2 million in late filing and late payment penalties. She has assisted numerous clients in the United States and abroad in the 2009, 2011 and 2012 IRS and FTB voluntary disclosure initiatives. She also represents foreign financial institutions regarding Foreign Account Tax Compliance Act (FATCA) compliance. She has experience defending criminal tax matters and negotiating plea agreements in areas such as structuring, tax evasion, and the failure to file a tax return.