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CA Economic Development Area (EDA) Tax Incentives
California Enterprise Zones
Businesses located within a California Enterprise Zone (EZ) area are eligible to claim various CA income tax incentives that significantly reduce CA income tax.

The most significant of these incentives are income tax credits that will offset a company's and/or its shareholders/partners (for pass-through entities) CA income taxes dollar for dollar.

California Sales or Use Tax Credit
EZ businesses that purchase qualified property that is placed and used exclusively in the EZ designation can claim an income tax credit equal to the amount of California sales or use tax paid on that equipment. This includes, but is not limited to: data processing, communication, fabrication, processing, and assembling equipment.

California Hiring Credit
These credits are generated from a portion of wages paid to employees of EZ businesses hired after the EZ designation date that meet the EZ program's eligibility criteria at their time of hire with the business. The criteria include, but are not limited to: low income individuals (based on the 3 month period immediately prior to that employees date of hire), individuals laid off in their previous employment due to business closures, massive layoffs, business relocations, individuals who resided in high unemployment areas of the county (target employment areas) at their time of hire, individuals who were receiving public assistance or state disability prior to hire, military veterans, individuals of native American descent, etc.

The local economic development agency attributed to a specific Enterprise Zone location is responsible for overseeing the issuance of certificate of eligibility (voucher) certificates for every employee for whom a voucher application is submitted. However the burden of proof in showing the employee meets any of the eligibility requirements falls on the employer. Marquez Business Incentives will identify employees of a business who met the eligibility criteria at their time of hire with the client through file review and brief employee interviews (2-7 minutes each). We gather the third party supporting documentation needed to verify that employee's eligibility through access to various proprietary and public databases. Our extensive experience in securing EZ certification for employees ensures that the available tax incentives are maximized each tax year for the client.

A handful of employees can generate enough tax credits to significantly offset the businesses' or shareholders/principals (in case of S Corps, Partnerships or LLCs) CA income tax liabilities. Just one employee can generate as much as $11,000 in income tax credits their first year of employment with the business and up to $37,000 over their first five years employment. The tax credits generated that exceed the income tax available for offset can be carried over to subsequent tax years until they are completely exhausted.

Other CA Economic Development Areas that offer similar tax benefits include Local Agency Military Base Recovery Areas (LAMBRAS), Manufacturing Enhancement Areas (MEAs) and Targeted Tax Areas (TTAs).
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Federal Economic Development Area Incentives
Renewal Community Employment Credit
The renewal community employment credit provides businesses with an incentive to hire individuals who both live and work in a renewal community. You can claim the credit if you pay or incur "qualified wages" to a "qualified employee." The credit is for wages paid or incurred after 2001.

The credit is 15% of the qualified wages paid or incurred during a calendar year. The amount of qualified wages you can use to figure the credit cannot be more than $10,000 for each employee for each calendar year. As a result, the credit can be as much as $1,500 (15% of $10,000) per qualified employee each year. Both full-time and part-time employees may qualify for the credit.

Empowerment Zone Employment Credit
A similar federal hiring incentive is the Empowerment Zone Employment Credit. A qualified employee must both live and work within an Empowerment Zone. The amount of the tax credit allowable for each eligible employee is 20% of the qualified wages paid or incurred during a calendar year. The credit can therefore be as much as $3,000 (20% of $15,000) per qualified employee each year. Both full-time and part-time employees may qualify for the credit.

Federal Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credits (WOTC) are federal income tax credits available to any business operating within the United States that hires employees meeting the programs eligibility criteria. This includes: IV-A recipients (member of a family receiving Temporary Assistance for Needy Families); qualified military veterans, qualified ex-felons, employees between the ages of 18-39 who reside in Federally designated communities (Renewal, Enterprise, or Empowerment Zones), vocational rehabilitation referrals, recipients of SSI or food stamps, and long-term family assistance recipients.

With the passage of the American Economic Recovery Act of 2009, Congress added two new qualifying categories for military veterans (recently discharged and who received unemployment benefits for at least four weeks during the year prior to their hire date) and underemployed disconnected youth (employees ages 16-25 years of age) who have not earned a degree of graduation from, or attended a secondary, technical, or post-secondary school in the past six months for more than ten hours per week. These additional categories are scheduled to expire on 12/31/2010 but may be extended thereafter.

Each qualifying employee can generate anywhere from $1,500, $2,400, $3,000, $4,800, and $9,000 (depending on hours worked and eligibility category) in federal income tax credits over their first 2 years of employment.

As the period allowed for applying for an individual's qualification is limited to their first 28 days of employment, the process we incorporate and our attention is critical to securing these credits.

"At Marquez Business Incentives we treat every client with personal attention."
         -Joe Marquez, President

We will work with your business to efficiently maximize and secure the tax breaks you deserve in a method that is least disruptive to your business operations.

Marquez Business Incentives
4949 Windplay Drive, Suite 260
El Dorado Hills, CA 95762
Mailing: PO Box 4800
     El Dorado Hills, CA 95762
Phone: (916) 933-9501
Fax: (916) 933-9509
Email: info@marquezincentives.com

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