The Center of the California Enterprise Zone Information Universe

Senators Portman, Cardin and Warner Propose WOTC Expansion in Finance Committee

Finance Committee members Senators Portman (R-OH), Cardin (D-MD) and Warner (R-VA) have submitted an amendment to the Chairman’s Mark on tax extenders to create a new target category in WOTC for the long-term unemployed. The amendment states:

This amendment would add the long-term unemployed to the list of eligible populations. An employer hiring someone who has exhausted their 26 weeks of regular unemployment benefits would be eligible for a 40 percent credit on the first $6,000 of wages paid that first year, or a maximum credit f $2,400 per employee.

Legislators Amend Bill to Correct Uncertain Voucher Application Deadline

AB 2517 has been amended to correct a problem introduced last year in AB 106 in which vouchers need to be both submitted and issued before January 1, 2015. Instead of providing taxpayers with certainty that they would be able to receive all of the Enterprise Zone vouchers that they are eligible for, AB 106 set up a situation in which each zone must figure out when to stop accepting voucher applications ahead of the deadline in order to be able to process them. Some zones have already started setting deadlines as early as April 30, 2014.

AB 2517 proposes a simple fix to maintain the current application deadline of December 31, 2014, but to remove the requirement that zones also issue vouchers by that date, essentially giving the zones as much time as they need to process applications that arrive before the end of the year.

Senator Wyden Proposes Two-Year Extension of Expired Tax Provisions

Senate Finance Committee Chairman Wyden has released his proposed legislation to extend the expired “tax extenders.” Almost all provisions, including the Work Opportunity Tax Credit and the Research and Development tax credit, would be extended retroactively to the beginning of 2014 and through the end of 2015. A notable exception is the federal Empowerment Zone program which would be allowed to expire.

According to Bloomberg BusinessWeek:

Dozens of lapsed U.S. tax breaks, including benefits for corporate research and international finance operations, would be extended through 2015 in a plan released by Ron Wyden, chairman of the Senate Finance Committee.

Wyden scheduled an April 3 vote on his proposal, which was released today and would cost the U.S. government $67 billion over the next decade in forgone revenue. The breaks, which benefit companies including Citigroup Inc. and General Electric Co., expired Dec. 31.

Wyden’s plan is the first test for the new Democratic chairman of the committee. His proposal excluded several tax breaks that may be added through amendments by the committee, including an extension of the production tax credit for wind energy and accelerated depreciation for motor sports tracks.

The Joint Committee on Taxation markup can be found here:

GO-Biz Video: How to Apply for the California Competes Credit

Click here for the video, or see below.

California Competes Tax Credit Applications Now Being Accepted Through April 14

Here is the official announcement from GO-Biz that they are accepting applications.

Here is the application guide.

Here is the website for submitting the application.

Senate Finance Committee Expected to Vote on Extenders

According to Bloomberg, Senator Ron Wyden expected to have the Finance Committee vote on the tax extender package the week of March 31. Apparently, the committee is considering voting on an extension of provisions through 2015:

The U.S. Senate Finance Committee probably will vote during the week of March 31 to revive dozens of tax breaks that expired Dec. 31, said a Democratic aide to the panel.

The tax breaks include the research and development credit and a provision that lets companies such as Citigroup Inc. and General Electric Co. defer U.S. taxes on some of their foreign income. Other expired breaks include the production tax credit for wind energy and a tax credit for manufacturers of energy-efficient appliances such as Whirlpool Corp.

The tax-break vote will be the first test for Senator Ron Wyden, the Oregon Democrat who became the Finance Committee’s chairman last month.

The committee hasn’t decided whether to extend the breaks through the end of 2014 or 2015, said the aide, who spoke on condition of anonymity. Wyden’s proposal probably will exclude or refine some of the 55 breaks, the aide said. The goal is to produce a bipartisan bill in the committee, the aide said.

Wyden has made reviving the lapsed breaks his first priority since taking over for Max Baucus, who is now the U.S. ambassador to China.

The path forward after a committee vote or even Senate passage isn’t clear.

House Republicans have said they won’t consider a short-term extension of the breaks. In that chamber, Ways and Means Committee Chairman Dave Camp on Feb. 26 released a draft revamp of the entire U.S. tax code.

“I am not going to sacrifice important matters like research and development and innovation on the altar of perhaps some inaction on comprehensive reform,” Wyden said Feb. 13 on Bloomberg Television’s “Political Capital with Al Hunt.”

California Competes Credit Regulations Approved

The Office of Administrative Law has approved emergency regulations proposed by GO-Biz for the new California Competes Credit.

The next step will be for GO-Biz to announce the start of an application phase.

FTB On Vouchering Deadlines

In FTB’s March “Tax News” includes a section regarding the timing of obtaining Enterprise Zone vouchers for qualified employees hired before 1/1/2014. FTB makes clear their position that taxpayers will not be be allowed to claim a credit unless they have a voucher from the local zone, even if they have the documentation to support the qualification. FTB also notes that some zones are beginning to announce that they will prematurely stop their vouchering services even before the statutory deadline:

Qualified taxpayers who hire a qualified employee on or before December 31, 2013, may file applications for vouchers during 2014 with their local agents, but all vouchers must be issued on or before December 31, 2014. Your clients do need to be sure they get the required voucher. The applicable enterprise zone hiring credit statutes require a qualified taxpayer to obtain and retain the voucher and provide it to us upon request. We will disallow any hiring credits where these requirements are not met. Any business interested in applying for a hiring credit voucher should contact their local zone administrator.

Although the law allows for the issuance of voucher through December 31, 2014, the voucher certificates are issued by the local zone administrators. A few zone administrators have issued announcements that they will only accept applications for vouchers until June 30, 2014, and other zone administrators are also limiting applications on various other dates, so be sure to check with your local zone administrators for dates.

FTB New Employment Credit Updates

The FTB has made numerous updates to its New Employment Credit page.

New Senate Finance Chairman Wyden Prioritizing Extenders

Senator Ron Wyden (D-OR) is expected to officially become the chairman of the Senate Finance Committee on Thursday. A number of sources are reporting that he will prioritize a speedy passage of the expired tax extenders.


But in an acknowledgement of the challenges of tax reform, Wyden said he wants to quickly extend dozens of expiring tax provisions for another year as a “bridge” to reform and he even embraced some new tax subsidies.

The Wall Street Journal:

Legislation to renew tax breaks for several industries will be at the top of incoming Senate Finance Committee Chairman Ron Wyden’s to-do list once he takes that panel’s gavel, he told reporters Tuesday.

“My sense is that the focus at the outset is likely to be the extender package,” Wyden said after meeting with Democrats at a regular party luncheon on Capitol Hill.

A total of 55 tax provisions for everything from biodiesel fuel to Hollywood movie sets expired at the end of last year because Congress did not act to extend them.

Wyden said he feels there’s an opportunity to make renewing the tax breaks “a bridge” to more fundamental tax reform.

“I think the tax system as a whole is a rotten, dysfunctional mess,” the Oregon Democrat told reporters.

Enterprise Zones Begin to Impose Arbitrary Voucher Application Deadlines

Last year AB 106 was passed to allow taxpayers to continue to apply for Enterprise Zone vouchers through 2014. Unfortunately, the bill says that zones “may continue to accept applications for the certification and to issue the certifications up to but no later than January 1, 2015.” The requirement that zones must also issue the voucher by the end of the year creates a dynamic that will result in uncertainty for taxpayers.

The City of San Francisco has already published on their website that they will only be accepting voucher applications through June 30, 2014 – a full six months before the statute requires.


San Jose has also notified Enterprise Zone businesses that the last day they will accept voucher applications will be June 30, 2014.

Here is a table of stated application deadlines that will be updated as more information becomes available:

FTB Tax News February 2014 – Includes Enterprise Zone Wind Down Details

Here is the FTB Tax News newsletter for February 2014. Pages 5-7 explain changes related to the elimination of the Enterprise Zone credits.

Page 15 discusses the New Employment Credit.

GO-Biz Initiates Emergency Regulation Procedure for California Competes Credit

After a series of interested party meetings, GO-Biz has issued a new draft of regulations for the new California Competes Credit and is attempting to fast-track these regulations using the emergency procedure.

Assemblymember Manuel Pérez Introduces Bill to Enhance State R&D Tax Credit

According to the Imperial Valley News:

AB 1564 Research & Development Tax Credit: With the goal of spurring innovation, business development, and job creation, AB 1564 bill would double the state’s research and development tax credit from 15% to 30%.

“An enhanced R&D tax credit helps to incentivize businesses to risk their capital to develop new products and technologies, helping to keep California at the front of the pack as an innovation leader,” said Pérez. “And when businesses are able to transform an idea into a product, it spurs economic development and local investment in the form of business creation and jobs.”

An increased research and development tax credit was also proposed as one element of Pérez’s 2013 bill, AB 653, the California Jobs and Innovation Act, which was held on suspense last year in Assembly Appropriations.

President to Announce Five New “Promise Zones”

According to the Washington Post:

President Obama on Thursday will unveil the first five so-called economic “Promise Zones” — areas where the administration will focus on creating jobs and cutting poverty, a White House official said.

The official said chosen areas are: San Antonio, Texas; Philadelphia; Los Angeles; Southeastern Kentucky; and the Choctaw Nation of Oklahoma.
The White House has said the initiative will focus on reducing crime in high-poverty areas, attracting private investment to replace “distressed” housing with “mixed-income” housing, ensuring that more students graduate from high school and providing tax incentives to stimulate economic growth.

Obama announced the initiative during last year’s State of the Union Address.

The White House Fact Sheet on Promise Zones lists tax incentives as part of the initiative:

Promise Zone tax incentives to stimulate growth and investments in targeted communities. These incentives will includes tax credits for hiring workers and tax write-offs for capital investment within the Zone.

However, since Congress has not passed any legislation yet regarding tax incentives in Promise Zones, any such credits currently remain just a Presidential proposal, as explained in this HUD document:

Promise Zones tax incentives, if enacted: Should Congress enact the Promise Zones tax credit (crafted on the proven model of Empowerment Zones tax credits), private businesses would receive tax incentives for hiring and investing in Promise Zones, to create jobs and attract additional private investments

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