Stockton/San
Joaquin Enterprise Zone
State Incentives |
A
business located in the Stockton/San Joaquin Enterprise Zone
can take advantage of tremendous tax credit programs offered
by the State of California.
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** Important
Enterprise Zone News **
The Stockton/San Joaquin Enterprise Zone needs your help. If you are a business located in the zone, you are no doubt aware of the many California State tax credits available to you and the positive impact they can make on your company's bottom line. The Stockton/San Joaquin Enterprise Zone was designated in 1993 with a 15-year life. It will expire in 2008 unless legislation is enacted to extend the designation of enterprise zones adopted after 1990. Two different bills have been proposed for the 2005-06 legislative session that would extend the life of State Enterprise Zones -- SB 6 (Ducheny) and AB 1361 (Dymally).
How can you help? Contact your elected State representatives with you concern and support for such legislation or call Stockton's Enterprise Zone Administrator, Laura DeAndreis, at 937-8530 for more information.
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| Hiring Credit |
Legislation signed by the Governor of California requires that all Enterprise Zones (EZ) now collect a fee for the issuance of Hiring Tax Credit Vouchers. The fees generated will allow the State to continue administering the EZ Program which can mean huge tax credits to EZ companies (see description below). As a result, the Stockton/San Joaquin Enterprise Zone began collecting $50 for each application it accepts for issuance of a Hiring Tax Credit Voucher as of November 1, 2004.
Businesses may reduce their
tax by claiming a hiring credit which allows employers over $31,000
over a five-year period for every vouchered employee hired. The
San Joaquin County WorkNet will voucher, recruit, screen, and
train eligible employees for your operation (see Employee Recruitment
and Training Assistance). Employees may also take advantage of
a tax credit provided for them that reduces the amount of their
California income tax owed. For an employer claiming this credit,
a new employee is someone who is hired after the area is designated
an Enterprise Zone (June 22, 1993) and who immediately before
starting work for the employer is any of the following:
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- A
displaced worker
- A
resident of a Targeted Employment Area (TEA)
- A
Native American
- A
person eligible for the Jobs Training Act (JTPA) or the Greater
Avenue for Independence (GAIN) program
- An
economically disadvantaged person 14 years or older
- A
disabled individual
- An
ex-offender
- Veteran
- Eligible
recipient of:
- SSI
- AFDC
- Food
Stamps
- General
Assistance
NOTE: For information on Hiring Tax Credits or to obtain a voucher, contact Nicole Wells with San Joaquin WorkNet at (209) 468-3513. |
| Sales and Use Tax Credit |
Businesses can substantially
reduce their California income or franchise tax obligations by
taking advantages of this tax credit. In any year, companies may
claim a tax credit equal to the tax paid on certain machinery
purchases to be used exclusively within the boundaries of the
Stockton/San Joaquin Enterprise Zone. Individuals and partnerships
may make this claim on the first $1 million of machinery purchased;
corporations may claim the credit on the first $20 million of
machinery purchased in any one year. Machinery or parts must be
used for one or more of the following:
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- Manufacture,
Process, Combine or Produce a Product
- Produce
Renewable Energy
- Control
Air Pollution
- Control
Water Pollution
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| Business Expense Deduction |
Businesses
may deduct part of the cost of tangible property as a business
expense in the first year it is placed in service. This includes
most equipment and furnishings purchased for exclusive use in
the Zone (excluding real estate). Depending on the date the property
was placed in service, relative to the Enterprise Zone Final Designation,
the amount deducted per property can be as much as $20,000.
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| Net Operating Loss Carryover
and Net Interest Deduction for Lenders |
Individuals
or corporations in an Enterprise Zone may carry over up to 100%
(versus 50%) of net operating losses (NOL) to future years to
reduce the amount of taxable income for those years. The NOL carryover
is determined by computing the business loss which results strictly
from business activity in the Enterprise Zone. (Suspended
for tax years 2002 and 2003.)
Individuals, non-commercial lenders and commercial institutions
may deduct the net interest earned on a loan to a business operating
solely within the Stockton/San Joaquin Enterprise Zone. The net
effect could be a 3 to 4% increase on return-on-investment! Net
interest deductions are for the life of the Enterprise Zone.
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| Enterprise
Zone Apportionment Formula |
The
average apportionment percentage represents the portion of the
business conducted in California attributable to activities conducted
within the Enterprise Zone. Use this figure to apportion income
and losses where these amounts are to be divided between activities
within and outside an enterprise zone. For more information, contact
the California Franchise Tax Board at (916) 845-3464.
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Stockton,
CA 
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