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Update On The California Competes Tax Credit & Beneficiaries Thus Far

As the mainstream media wonders where Amazon will locate its HQ2, many states are in the news touting their credits and incentives benefits to draw in company expansions.

As I’ve reported before, the California Competes Tax Credit has been available since January 2014 and isn’t scheduled to sunset until 2025. Every year, the state earmarks funds for the program of approximately $200 million, and companies compete for the funds during three application periods per year.

The CA Competes Tax Credit is an income tax credit available to companies who want to expand their business in CA. (They can be in state businesses expanding or businesses new to the state.) Companies that apply for this credit must submit applications to the state detailing increased investment in CA. Tax credit agreements are negotiated by GO-Biz and approved by a statutorily created “California Competes Tax Credit Committee.” The GO-Biz is a board consisting of representatives from the Governor’s office of Business and Economic Development. Not all companies requesting money receive it. There is a subjective process for allocating the funds annually.

How is the money disbursed to the companies applying for this credit?

Here are a few facts about the credit:

  • This credit is available to companies already in CA who are expanding and out of state businesses expanding to CA.
  • The credit is largely based on the expansion of people (payroll), property (buildings, plants, etc.) and infrastructure within the state.
  • 20% of the total money allocated is reserved for small businesses.
  • Companies expanding in certain geographic areas (including former enterprise zones) get additional “points” in the competitive process.

Current Update

For the fiscal year 2017-18, GO-Biz is accepting applications for the CA Competes Tax Credit during the following periods:

  • July 24, 2017 through August 21, 2017 ($75 million available)
  • January 2, 2018 through January 22, 2018 ($100 million available)
  • March 5, 2018 through March 26, 2018 ($55.4 million plus any remaining unallocated amounts from the previous application periods)

This Year’s Beneficiaries (So Far)

So who took advantage of this credit and who ended up benefiting from this program? At the Committee meeting on June 15, 2017, which represents the last batch of funding for the last fiscal year, businesses qualified for $49,316,781. These funds were awarded to a range of companies all over the state mostly in the medicine and biotechnology fields. Here is how the money was allocated for businesses other than small businesses.

  1. Boehringer Ingelheim Fremont, Inc. (Research and Development in Biotechnology) $7.5 Million (Fremont)
  2. LuLaRoe LLC (Clothing Manufacturing and Wholesaler) $6.4 Million (Corona, Fontana, and Lakewood)
  3. Green Chef Corporation (Natural, Organic, and Specialty Food Distribution) $2.5 Million (Fresno)
  4. Medidata Solutions, Inc. (Research and Development in Biotechnology) $2 Million (San Francisco)
  5. Pharmavite (Medicinal and Botanical Manufacturing) $2 Million (West Hills and Calabasas)

At the same committee meeting, $9,751,580 was allocated to small businesses. These funds were awarded to companies mostly in Southern California in the software and manufacturing fields. Here is how the money was allocated for small businesses:

  1. Charge Bliss, Inc. (Electric Systems Manufacturing and Installation Services) $1.25 Million (Richmond and Carson)
  2. Scenario Cockram USA, Inc. (Architectural and Structural Metals Manufacturing) $1.25 Million (San Fernando)
  3. TraitWare, Inc. (software Development) $850,000 (Nevada City)
  4. Exactuals LLC (Data Processing, Hosting, and Payment Services) $760,000 (Los Angeles)
  5. Signature Analytics LLC (Accounting Services) $550,000 (San Diego, Irvine, and Long Beach)

To view the full report from the last committee meeting on June 15, click here. Information about recipients of funding from the first period in 2017/2018 and will be made public on November 16, 2017.

Have a question? Contact Monika Miles 

Your comments are welcome!

Monika Miles

Monika founded Miles Consulting Group which focuses on multi-state tax consulting, helping clients navigate state tax issues such as sales tax and income tax in interstate commerce, including e-commerce.

Prior to forming the firm, Monika worked for 12 years combined in Big 4 Public Accounting and private industry. Monika has provided such services as federal and state income/franchise tax compliance and consulting, sales/use tax consulting, audit support, and credits and incentives reviews. She has served clients in a variety of industries including manufacturing, technology, telecommunications, construction, utility, retail and financial institutions.

Monika graduated from the University of Texas at El Paso (UTEP) with a BBA in Accounting/Finance and has a Masters in Taxation from San Jose State University.