Question: How long does the process take to get the enterprise zone tax credits?

Answer: Typically, it takes a few weeks to gather the necessary information. At that point, it takes us about three weeks to complete our analysis. It then takes the regulating government agencies 2-6 weeks to certify our voucher applications. Once that process is complete, you can claim the credits on your current year return or amend prior year returns. It takes the Franchise Tax board approximately 6 months to process refunds based on amended returns.

This is part 1 of 10 in a series of frequently asked questions and answers from C & I Tax Consultants. For more information, please contact us today.

Thanks to the June 3rd passing of Senate Bill 974, which would replace part of the zone’s hiring tax credit with the Career Pathways Investment Credit, local businesses are coming together to fight the change. “Taking away the enterprise zone (hiring tax credit) or altering it in any way would be a deathblow to keep businesses in California,” said Bruce Ackerman, president and CEO of the Valley Economic Alliance. “We’ve been dealt a nasty hand just in the fact that this is the most expensive state to do business in.”

Jessica Selva, from the SFV Business Journal, had this to say about the news, “The bill, introduced by Senate President Pro Tem Darrell Steinberg on Feb. 8, would narrow the eligibility criteria of hard-to-hire employees, such as ex-offenders, that a business could claim for the hiring tax. It would also eliminate retro-active vouchering for the credit and would remove the credit’s focus on targeted employment areas. The bill is now being considered by the State Assembly’s Committee on Jobs, Economic Development, and the Economy. If passed by the Assembly, the bill would take effect Jan. 1, 2011.”

10 Tips to Complete the LLC Income Worksheet

We compiled a list of common errors we see on the LLC Income Worksheet.  / more+

New IRS Tax Preparer Requirements

Effective January 1, 2011, the IRS will require all paid tax preparers who sign federal tax returns to have a Preparer Tax Identification Number (PTIN).   / more+

New Penalty Chart

As promised at the 2009 Taxpayer Bill of Rights Hearing, we completed the FTB 1024, Penalty Reference Chart.  / more+

Statutes of Limitations on Claims for Refund or Credit

This is the second in a series of four articles on Statutes of Limitations (SOLs) that relate to California tax law. This month’s article addresses common SOLs for claims for refund or credit that are unrelated to federal action.  / more+

RDPs Must Now Use Community Property Rules to File Federal Return

On May 28, 2010, the IRS released Chief Counsel Advice (CCA) 201021050 which changes the federal tax treatment of California registered domestic partners’ (RDP) community income.  / more+

State’s First-Time Buyer Credit Almost Gone

As of June 15, 2010, we estimated receiving more than 15,000 applications claiming more than $78 million.  / more+

Register for the IRS Nationwide Tax Forums

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business

New Reporting Requirements for Small Tax-Exempt Organizations Begins 2011

Beginning January 1, 2011, California conforms to the 2006 federal law that requires smaller tax-exempt organizations with normal gross receipts of $25,000 or less annually, other than churches and church-related organizations, to electronically file an annual informational notice with us under R&TC Section 23772.  / more+

Ask the Advocate

Staff Introductions

The Taxpayers’ Rights Advocate is a legislatively mandated position under R&TC Section 21004. The Taxpayers’ Rights Advocate’s Office identifies systemic problems and find solutions in a cooperative effort, while protecting taxpayers’ rights and recognizing the goals of our audit, collection, and filing programs.  / more+

Inside FTB

Take a look at the changes happening here at FTB.  / more+

Criminal Corner

Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time.  / more+

I hope everyone had a great 4th of July, below are some of the latest Senate Bills from the FTB to cross my desk.

Senate Bills

• SB 516 (DeSaulnier/Torlakson) Establish Voluntary Contribution For California Fund For Youth – Amended 06/15/10
• SB 1056 (Denham, et al.) Employer Credit/Wages Paid To Each Qualified Veteran – Amended 05/24/10
• SB 1071 (DeSaulnier) Prescription Drug Credit/Persons 55 Or Older – Amended 06/16/10
• SB 1316 (Romero) Low Income Community Investment Credit/Non-recognized Gain Doesn’t Include Out-Of-State Property Exchanges – Amended 06/16/10
• SB 1324 (Negrete McLeod) State Agencies Authorized To Impose Additional Fees For Requests Of Public Records For Commercial Use – Introduced 02/19/10
• SB 1425 (Simitian, et al.) California Public Employees’ Retirement System – Retirees Who Have Not Reinstated May Not Perform Services For State Until Separated From Service For At Least 180 Days – Introduced 02/19/10 & Amended 04/05/10 & 05/04/10
• SBX6 19 (Florez) FTB Compile Specified Corporation Tax Expenditure Information & Include On The State Reporting Transparency In Government Internet Web Site – Revised Introduced 05/26/10

Below is what has been happening with the FTB over the past week:

Assembly Bills

• AB 1662 (Portantino, et al.) Disaster Loss Deduction/Excess Loss Carryover/August 2009 Los Angeles & Monterey County Wildfires & January 2010 Calaveras, Imperial, Los Angeles, Orange, Riverside, San Bernardino, San Francisco, & Siskiyou County Winter Storms – Original Analysis Revised 01/19/10
• AB 1690 (Chesbro) Disaster Loss Deduction/Excess Loss Carryover/January 2010 Humboldt County Earthquake – Original Analysis Revised 01/27/10
• AB 1766 (Gaines) Disaster Loss Deductions/Excess Loss Carryover/August 2009 Placer County Wildfires – Original Analysis Revised 04/06/10 & 04/15/10;
• AB 1973 (Swanson) Jobs Tax Credit – Amended 05/28/10
• AB 1993 (Strickland) State Agency Written Reports Required To Be Submitted To The Legislature, Any State Legislative Or Executive Body Shall Include Signed Statement By The Head Of The Agency – Amended 05/11/10 & 05/20/10
• AB 2091 (Conway) Public Records/Exempts Public Agency Information Security Records From Disclosure – Introduced 02/18/10
• AB 2136 (Perez, et al.) Disaster Loss Deduction/Excess Loss Carryover/April 2010 Imperial County Earthquake – Amended 06/16/10
• AB 2666 (Skinner) Employer Tax Credits/Information Reporting/Failure To File Information Penalty/FTB Compile Information Received & Submit To State Chief Information Officer For Publication On The Reporting Transparency In Government Internet Web Site – Amended 05/28/10
• AB 2671 (Cook) Minimum Franchise Tax/Exempt Corporations And Limited Liability Companies Owned Solely By Deployed Member Of U.S. Armed Forces That Operate At A Loss Or Ceases Operation – Amended 06/16/10

Senate Bills

• SB 1426 (DeSaulnier, et al.) State Budget/Two-Year Spending Plan – Amended 05/26/10

Assembly Bills

• AB 1779 (Niello, et al.) Mortgage Forgiveness Debt Relief Modification and Extension – Amended 05/03/10
• AB 1899 (Eng/Lieu) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Amended 05/28/10
• AB 2017 (Hall, et al.) California YMCA Youth And Government Fund – Amended 05/28/10
• AB 2041 (Villiness/Smyth) Health Savings Account Deduction Conformity – Amended 05/11/10
• AB 2126 (Garrick, et al.) Minimum Franchise Tax/Small Businesses That First Commence Business On Or After January 1, 2011, Exempt First Taxable Year And $100 Succeeding 9 Taxable Years – Amended 05/18/10
• AB 2148 (Tran/Portantino) Deduction For Physician’s Medical Services Performed Free Of Charge To Local Community Clinic Or Emergency Department Of General Acute Care Hospital – Amended 05/18/10
• AB 2403 (Strickland) State Agencies Post Specified Audits & Contracts To The Reporting Transparency In Government Internet Web Site – Introduced 02/19/10 & Amended 04/26/10
• AB 2528 (Knight) Exclusion/Payments Or Vouchers From Federal Consumer Assistance To Recycle & Save Act Of 2009 (aka “Cash For Clunkers”) – Amended 05/05/10
• AB 2559 (Perez, John A.) State Agencies/Prohibits Requiring Social Security Numbers For Benefit, Service, Privilege, Or Participation In Any Program – Introduced 02/19/10
• AB 2589 (Tran) Dual Renewable Energy Device Credit – Amended 04/08/10
• AB 2605 (De La Torre) State Property Sales Or Long-Term Leases – Amended 06/01/10
• AB 2630 (Emmerson/Cook, et al.) Jobs Tax Credit – Amended 05/18/10

Senate Bills

• SB 1008 (Padilla) Limited Partnerships & Foreign Limited Partnerships/Engineers & Land Surveyors – Amended 03/15/10 & 04/28/10
• SB 1391 (Yee) Employer Tax Credit/Reporting Information/New Credits Chaptered After January 1, 2011, Would Be Recaptured If Taxpayer Has Net Decrease In Full-Time Employees – Amended 05/19/10
• SB 1426 (De Saulnier, et al.) State Budget/ Two-Year Spending Plan – Introduced 02/19/10
• SB 1463 (De Saulnier) Corporate Flexibility Act Of 2010/Flexible Purpose Corporation – Introduced 02/19/10 & Amended 04/05/10
• SBX6 19 (Florez) FTB Compile Specified Corporation Tax Expenditure Information & Include On The State Reporting Transparency In Government Internet Web Site – Introduced 05/26/10

In potentially great news for Los Angeles, Mayor Antonio Villaraigosa has proposed a 3 year tax holiday for new businesses that move to or launch in the city of Los Angeles.

After seeing the success of the city’s local enterprise zone, Villaraigosa suggested that the new policy would help increase overall revenues for the city.

So what do the experts think about the policy? “The new policy will lead to the creation of up to 55,000 jobs and generate additional revenue for the city of Los Angeles,” said Charles Swenson, a USC professor who conducted research specifically for the initiative. “In addition, the multiplier effect of additional economic activity in the city nets a positive revenue impact.”

This announcement was posted by the LA Business Journal, you can read the full article by clicking here.

Heads-Up – Changes in Pass-through Entity Return Penalties

Recently signed legislation, SB 401, changed the partnership late filing penalty and added a new late filing penalty for S corporation returns.  / more+

How do I Report a Short Sale?

In prior issues of Tax News we have addressed several issues related to foreclosures. In our February 2010 issue, we addressed how the State of California civil procedures interact with the Internal Revenue Code 108.  / more+

Tax Relief to Baja California Quake Victims

We offer taxpayers affected by the Baja California earthquake in the federally-declared disaster area special tax relief.  / more+

Statutes of Limitations on Assessments

This is the first in a series of four articles on Statutes of Limitations (SOL) that relate to California tax law. This month’s article addresses common SOLs for assessments unrelated to federal action.  / more+

Available Now: Free California Source Income Withholding Webinar in June 2010

We will host a free California source income withholding webinar in June 2010. The topic is Property Management Withholding. / more+

IRS Nationwide Tax Forums Registration Available!

Join tax professionals from across the country for three days of the latest tax law information, hands-on workshops, networking opportunities, and exhibits of the latest tax products and financial services to improve your business.  / more+

Small Business

Does Your Client Know that the Estimated Tax Payment Percentages Changed for 2010?

In 2009, the estimated payment percentages were 30 percent, 30 percent, 20 percent, and 20 percent for respective quarters. For taxable years beginning on or after January 1, 2010, the estimated tax payment percentages have changed for individuals and corporations.  / more+

Ask the Advocate

What You Should Know About FTB Wage Garnishments

An Earnings Withholding Order for Taxes (EWOT) is a continuing wage garnishment on earnings due to a taxpayer from an employer and is subject to the provisions of the Code of Civil Procedure Section 706.010 et seg.   / more+

Inside FTB

Take a look at the changes happening here at FTB.  / more+

Criminal Corner

Our monthly summary on bringing tax criminals to justice, and closing the tax gap one case at a time.  / more+

Big Business

Estimated Fee for LLCs Due

For most calendar year LLCs, June 15 is the date that their 2010 estimated LLC fee is due. For fiscal year LLCs, the estimated fee is due on the 15th day of the sixth month of the current taxable year. LLCs use Form 3536, Estimated Fee for LLCs, to make their estimated fee payments.  / more+

The Pacific Research Institute poses an interesting question that many business owners across the state have been pondering: should all of California become an Enterprise Zone?

K. Lloyd Billingsley proposes the following ideas below:

An enterprise zone is an economically depressed area targeted for revitalization through tax and regulatory relief. Such relief attracts business, provides jobs, reduces poverty and generally improves conditions. California has 42 enterprise zones, recently criticized as “ineffective” by scholars David Neumark and Jed Kolko. That prompted some business owners to fire back.

“The Enterprise Zones scattered throughout the state are like a business-friendly oasis in the desert of high-cost and regulation that is California,” wrote Daniel Morrow in the February 12, 2009, Capitol Weekly. “The tax breaks for buying equipment and hiring people provide exactly the kind of incentive that is necessary to get business to stay in California in the first place and serve as an attraction for new businesses as well, one of the very few California has to offer.”

California could also use another idea favored by Jack Kemp, an advocate of the flat tax. This means everybody pays the same rate, instead of a more punitive (what “progressive” really means) rate for high-income workers. During an economic downturn, punitive rates make for revenue instability. In Ending the Revenue Rollercoaster (2008), PRI’s Robert P. Murphy made the case for a flat state income tax of 3 percent. Said Steve Forbes, “A 3 percent flat tax would trigger the biggest boom in California since the Gold Rush!” And a flat income tax would help prevent the boom from being followed by a bust, our current condition.