Are You Familiar With California's Enterprise Zones?
June 2009 - The Enterprise Zone (EZ) tax incentive program was created in 1986 to help local businesses, and encourage outside businesses to locate in economically depressed areas. The federal government does not have a comparable economic development program or business tax incentives.
The EZ program has been around for quite some time, but there have been changes to the program that could affect your clients' businesses.
Between October 2006 and March 2009, 34 California’s enterprise zones expired. Many of these jurisdictions chose to apply again with the California Department of Housing and Community Development (HCD) for a new designation along with new jurisdictions. Today there are 42 active or conditional designated enterprise zones. For a listing of expired, active, and conditional enterprise zones, go to hcd.ca.gov and search for EDA.
The re-designated zones are treated as two zones, the “Old Zone” that expired and the “New Zone.” In some cases, the jurisdictions added new geographic areas to the “New Zone” and in other cases, the jurisdictions removed areas that were once in the “Old Zone.” The following five business-related tax incentives are potentially available to a taxpayer doing business in an enterprise zone, so you may need to see if your client is doing business within one of these new geographic areas.
- Hiring credit.
- Sales or use tax credit.
- Business expense deduction.
- Net operating loss deduction.
- Net interest deduction for lenders.
Enterprise zone tax incentives apply only to business activities and investments that take place after an enterprise zone has received final designation.
For more information on the EZ Credit, please visit ftb.ca.gov.