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State of California Franchise Tax Board

Tax News
Enterprise Zone (EZ) Credit Vouchers – Act Now, Don’t Wait

In our September 2013 edition of Tax News, we let you know all enterprise zones would be repealed on January 1, 2014.

Qualified and vouchered employees hired prior to January 1, 2014, will continue to generate credits for any remaining portion of the 60-month period from the commencement of employment.

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.

The California Department of Housing and Community Development (HCD) administers the enterprise zones, and is the key contact for zone boundaries and voucher issues.

Contact the HCD directly with questions relating to enterprise zone vouchers.

We determine the accuracy of EZ credits claimed on individual and corporate tax returns.

Taxpayers operating in an enterprise zone which was repealed on January 1, 2014, continue to file FTB 3805Z, Enterprise Zone Deduction and Credit Summary, to claim carryover amounts and for hiring credits generated (up to five years) for employees hired on or before December 31, 2013. For taxable years beginning on or after
January 1, 2014, enterprise zone credit carryovers are limited to 10 years.

As always, the credit and any carryover is subject to the Enterprise Zone business income limitation.

Specifically, the credit and any carryover may only be used against the net tax that would have been imposed on the income attributable to activities within the respective former enterprise zone.

Back to March 2014 Tax News

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