Updates on Enterprise Zone Credit Vouchers – Act NOW

Act Now, Don’t Wait — Get Your Enterprise Zone Credit Vouchers in ASAP

As you probably are aware if you are a business owner taking advantage of the Enterprise Zone Tax Credits, state enterprise zones were repealed on January 1, 2014.  Additionally, 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.  You do need to be sure that you get your required vouchers.

The applicable enterprise zone hiring credit statutes require a qualified taxpayer to obtain and retain the voucher and provide it to the Franchise Tax Board upon request.  They 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 vouchers through December 31, 2014, the voucher certificates are issued by the local zone administrators.  A few local 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 administrator for your cut-off date.

The California Department of Housing and Community Development (HCD) administers the enterprise zones, and is the key contact for zone boundaries and voucher issues.  You can contact the HCD directly with questions relating to enterprise zone vouchers.  They 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  Taxpayers operating in an enterprise zone which was repealed on January 1, 2014, may continue to file FTB 3805Z, Enterprise Zone Deduction and Credit Summary, to claim carryover amounts and for hiring credits generated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.

For the latest information, check the Franchise Tax Board online:  New Employment Credit Reservation.

If you are a Bressler & Company client, you know that you can provide your employee information to us and we will obtain the credit voucher for you.  Please get the information into us as soon after hire as possible so we can make sure you get credits for all eligible employees.

Give us, Bressler & Company, a call at 559.924.1225  if you have any questions on this subject.