Cal. Code Regs. Tit. 10, § 8030 - Application Process for Tax Credit Allocation

Current through Register 2021 Notice, Register No. 40, October 1, 2021

(a) In the event the director announces at the beginning of a fiscal year that applications must be submitted online, applicants shall create a login and password as designated on the website.
(b) Applicants shall be asked to provide some or all of the following information as directed on the application form, which may be divided into multiple phases:
(1) Applicant or entity name (legal name and any other doing business as names), including the type of legal entity;
(2) State of incorporation or organization, if applicable;
(3) Entity Identification Number: California Corporation Number, California Secretary of State Entity Identification Number, Federal Employer Identification Number, Social Security Number;
(4) Contact information (address, contact person(s), one of which must be the applicant or an employee of the applicant and one of which must be designated as the primary contact person, phone numbers, e-mail address); phone numbers, e-mail address);
(5) Amount of California competes tax credit requested;
(6) Proposed timeframe for when applicant would like the California competes tax credit to be provided (i.e. over which taxable years the credit would be allowed);
(7) Disclose whether the applicant's worldwide gross receipts in its taxable year prior to its current taxable year were greater than zero and less than 15 million dollars, 15 million dollars or greater, or if the applicant had no gross receipts;
(8) Consultant, attorney, tax practitioner or any other third party (hereinafter referred to collectively as "consultant") preparing or submitting the application, or providing any services related to the credit, name and contact information (address, contact person, phone numbers, e-mail address), if applicable;
(9) Consultant company Identification Number, if applicable: California Corporation Number, California Secretary of State Entity Identification Number, Federal Employer Identification Number, Social Security Number;
(10) Describe consultant cost of services fee structure and disclose whether payment to consultant is influenced by whether a credit is awarded;
(11) Cost of services for consultant;
(12) Identify parent company, if applicable;
(13) Identify whether applicant is publicly traded;
(14) Identify affiliated corporations as defined in Internal Revenue Code section 1504, if applicable;
(15) If the applicant has an affiliated corporation, identify the percentage of the affiliated corporation owned by the applicant, or the percentage of the applicant owned by its affiliated corporation;
(16) Names of any person authorized by applicant to communicate with GO-Biz and contact information (address, contact person, phone numbers, email address);
(17) List of entities or persons with at least 25% ownership in the applicant, the amount of the percentage and identify the relationship with applicant (e.g., management, investment);
(18) Applicant's North American Industry Classification System ("NAICS") Code;
(19) Proposed project NAICS Code;
(20) Year applicant's business established;
(21) Date applicant commenced or will commence business in California;
(22) Location of applicant's headquarters and project location(s) if known;
(23) Number of full-time and part-time employees in California;
(24) Number of full-time and part-time employees in the United States (list states and number of employees in each state);
(25) Number of full-time and part-time employees worldwide;
(26) If applicable, provide an entity relationship chart, including all operations out of the state and in California and the number of employees in each entity;
(27) Description of proposed project, including whether it is for business growth, retention, or relocation, whether any increase of employees or investment by the applicant is due to an acquisition of, or merger with, another business, or whether any increase of employees is due to any employee leasing arrangement with another business or conversion of employees performing services for the applicant employed by a temporary services business, or whether any increase of employees is due to a transfer of employees from any member of a "controlled group of corporations" (as defined in Revenue and Taxation Code section 23626) in which the applicant is a member of, or whether any of the applicant's investment is due to a conversion from a purchase to a lease or vice versa of real or personal property it already controls or has acquired, or whether any of the applicant's investment will be purchased or leased from a person or entity that is treated as related to the applicant under section 267, 318, or 707 of the Internal Revenue Code or from any member of a "controlled group of corporations" (as defined in Revenue and Taxation Code section 23626) in which the applicant is a member, or whether the project will occur in another state absent award of the credit, or whether the applicant will terminate all or a portion of its employees in California or relocate all or a portion of its employees in California absent award of the credit;
(28) Describe how award of the credit will influence the applicant's ability, willingness, or both, to create new full-time jobs in this state that might not otherwise be created in the state by the applicant or any other business in California.
(29) Describe any loss of full-time employment associated with project and reasons there will be employment losses in connection with the project either in California or out of state;
(30) Location and number of full-time employees affected by the project (additions, consolidations, or lay-offs) and the location, number and nature of part-time employees employed or that will be employed by the applicant;
(31) Describe project timeline;
(32) Describe whether any permits are needed for the project and whether they are approved, pending, or are yet to be applied for;
(33) Describe project financing, if applicable, and whether provided by venture capital, banking institution, other grants, private equity, or other type of financing structure;
(34) Working capital available for project;
(35) Provide additional information about funding and expected costs that have not yet been requested and that applicant deems would be material to share on the application;
(36) Number of full-time employees, determined on an annual full-time equivalent basis, employed by the applicant in its base year and the number of full-time employees, determined on an annual full-time equivalent basis, to be employed by the applicant in the applicant's current taxable year, and each of the four subsequent taxable years;
(37) Aggregate employee compensation;
(38) Type of full-time employment to be created (educational, manual labor, engineering, entry-level, managerial, etc.);
(39) Average and minimum wage for each classification of full-time employee proposed to be hired or retained;
(40) Description and average value of benefit and fringe benefit for each classification of full-time employee proposed to be hired or retained, including the type of, and amount contributed to, any employee retirement plan and the amount of health care benefit premium employees are required to pay and the average costs employees pay versus the amount paid by the health care plan;
(41) Date of anticipated hire of full-time employees;
(42) Describe the training opportunities provided to employees including, but not limited to: the type(s) of training offered, the training topic(s) covered, the training objective(s), the delivery method for the training, the number of training hours provided, whether the training is provided through a vendor or developed internally by the applicant, if provided by the vendor, whether that vendor is accredited by the Accrediting Commission for Schools, Western Association of Schools and Colleges, the California Bureau for Private Postsecondary Education, or a similar accrediting agency, whether employees receive full or partial pay during the training, whether the training may result in higher wages being paid to the employees in the future or may open new career paths to the employees in the future, whether the training is an apprenticeship approved by the California Department of Industrial Relations, Division of Apprenticeship Standards, or the United States Department of Labor, and whether special training programs are offered to any particular groups, including, but not limited to, veterans, at-risk youth, ex-offenders, and individuals with disabilities.
(43) Aggregate investment;
(44) Disclose whether applicant is looking at relocating to another state;
(45) Disclose if applicant expects to claim the New Employment Credit under Revenue and Taxation Code section 17053.74 or 23626, and the estimated amount of credit to be claimed during each applicable taxable year;
(46) Disclose if applicant expects to utilize the Sales Tax Exemption under Revenue and Taxation Code section 6377.1 and the estimated amount of exemption for each applicable taxable year;
(47) Disclose any other incentives or credits available or offered to the applicant in the state, including state, local, and other entities;
(48) Disclose and describe any material litigation, any pending or resolved California Environmental Quality Act litigation relating to the project, any pending or resolved litigation, violations, citations, fines, or penalties relating to any state or federal labor law offenses within the last 10 years, any pending or resolved litigation, violations, citations, fines, or penalties relating to any state or federal occupational safety and health offenses within the last 10 years, any pending or resolved local, regional, state or federal environmental (including but not limited to air, water and ground) litigation, violations, citations, fines, or penalties within the last 10 years; all of which not only involve the applicant but any person or entity with a 25% or greater ownership interest in the applicant;
(49) Certify applicant and any person or entity with a 25% or greater ownership interest in the applicant does not owe any delinquent federal, California or any other state tax liabilities, or is in an approved installment agreement with the respective tax agency and disclose any outstanding or resolved federal, California, or any other state tax liens recorded against the applicant, or any person or entity with a 25% or greater ownership interest in the applicant, within the last 10 years.
(50) Applicant's base year from any previously approved California competes tax credit agreement and net increase of full-time employees, determined on an annual full-time equivalent basis, per taxable year from any previously approved California competes tax credit agreement.
(51) Applicant's current taxable year.
(52) Applicant's accounting period end date for state income tax purposes.
(53) Number of and minimum and average annual wage of California full-time employees hired and proposed to be hired by the applicant in its current taxable year and each of the four subsequent taxable years and the number of California full-time employees proposed to be hired after the deadline to submit an application during the application period for the applicant's current taxable year.
(54) Number of hourly California full-time employees employed by the applicant in its base year that worked 1,750 hours or more, and the number of hourly California full-time employees that worked less than 1,750 hours, and the total number of hours worked by those full-time employees.
(55) Number of salaried California full-time employees employed by the applicant in its base year that worked 50 weeks or more, and the number of salaried California full-time employees that worked less than 50 weeks, and the total number of weeks worked by those full-time employees.
(56) Number of hourly California full-time employees proposed to be employed by the applicant that will work 1,750 hours or more, and the number of hourly California full-time employees that will work less than 1,750 hours, and the total number of hours that will be worked by those full-time employees for the applicant's current taxable year and each of the four subsequent taxable years.
(57) Number of salaried California full-time employees proposed to be employed by the applicant that will work 50 weeks or more, and the number of salaried California full-time employees that will work less than 50 weeks, and the total number of weeks that will be worked by those full-time employees for the applicant's current taxable year and each of the four subsequent taxable years.
(58) Applicant's investment for its current taxable year and each of the four subsequent taxable years.
(59) If not awarded the California competes tax credit, disclose whether the applicant wants to be contacted by GO-Biz to learn about other economic development incentives that may be available.
(60) Describe the applicant's recruitment and/or hiring practices to promote a diverse and inclusive workforce.
(61) Will at least 75% of the applicant's net increase of full-time employees work at least 75% of the time in an area of high unemployment or high poverty?
(c) Applications shall be completed by using the application form designated by the director at the beginning of each fiscal year, which may require applications be submitted in paper or electronic form.
(d) In all applications, the applicant must represent and warrant that all statements in the application are true and complete to the best of the applicant's knowledge. Such representation and warranty must be made by a person who is most knowledgeable of the project. The applicant may be required to certify any information provided in the application by written, electronic signature, or the equivalent.
(e) Any information submitted to GO-Biz that the applicant considers to be a trade secret, confidential, privileged or otherwise exempt from disclosure under the Public Records Act (California Government Code section 6250, et seq.) shall not be publically disclosed by GO-Biz unless it is required to do so by court order or applicable law. An applicant shall assert a claim of exemption by identifying each of the items to be restricted and the section of law that provides for the exemption (e.g., Government Code section 6254.15) at the time its application form is submitted to GO-Biz. In the event GO-Biz is required to publically disclose information identified by the applicant as a trade secret, confidential, privileged, or otherwise exempt from disclosure, GO-Biz shall notify the applicant at least five (5) business days prior to the release of such information in order to allow the applicant to seek an injunction, as applicable, unless a court order or the equivalent prevents such timely notice.
(f) Based on the information requested in the application, GO-Biz shall implement a two-phase review process.
(g)
(1) Phase I. Phase I is an automated phase in which the applicant's amount of tax credit requested, aggregate employee compensation, and aggregate investment provided on the application form shall be evaluated to determine the rate of return. The aggregate employee compensation shall be added to the aggregate investment and the sum of these two numbers will be the total proposal by the applicant. The amount of the California competes credit requested by the applicant shall be divided by the total proposal to create the cost-benefit ratio of the credit requested to total proposal provided. Each applicant shall be listed according to the lowest percentage of the cost-benefit ratio, with the lowest percentage being positioned the highest and so forth. Based on this order, GO-Biz shall then work down the list and engage the most competitive applicants to move forward to Phase II, specifically including a pooled review of the most competitive applicants whose aggregate California competes credit requested is at least two hundred percent of the tax credit available for the application period. For example, if the amount of tax credit available in an application period is $30 million, GO-Biz will review the most competitive applicants whose aggregate California competes tax credit requested is at least $60 million. Notwithstanding the foregoing, GO-Biz may move an applicant to Phase II in the event of either condition identified in subparagraphs (A) or (B).
(A) The owner, president, chief executive officer, chief financial officer, or other equivalent person of the applicant certifies in writing to GO-Biz that, absent award of the tax credit, the project may occur in another state or the applicant may terminate all or a portion of its employees in this state or may relocate all or a portion of its employees in this state to another state.
(B) At least 75% of the applicant's net increase of full-time employees will work at least 75% of the time in an area of high unemployment or high poverty.
(2) Phase II. GO-Biz shall evaluate the applicants moved into Phase II based on the following factors:
(A) Extent of unemployment or poverty in the area according to the United States Census in which the applicant's project is proposed or located, as supplemented by the information provided by California's Employment Development Department on http://www.labormarketinfo.edd.ca.gov/ or the equivalent website, as it may change from time to time;
(B) Whether incentives are available to the applicant in other states and the incentives available to the applicant in this state, including the utilization of such incentives in this state;
(C) Economic impact in the state;
(D) Strategic importance of the applicant's project or business in the state, region or locality;
(E) Number of existing employees expected to be retained in California related to the project;
(F) Opportunity for future growth and expansion in the state;
(G) The wages, benefits, fringe benefits, and training opportunities provided by the applicant to its employees;
(H) Any other information requested in the application; including, but not limited to, the reasonableness of the fee arrangement between the applicant and any consultant, attorney, tax practitioner or any other third party that prepared or submitted the application, or provided any services related to the credit.
(3) GO-Biz may request financial statements and other relevant business documents related to the project in Phase II to confirm or verify any information provided in the application.
(h) Readiness and site control. Depending on the type of project submitted by an applicant, if readiness and site control are factors in the evaluation as to whether a tax credit will be awarded, site control may be evidenced by any of the following:
(1) Fee title held by applicant;
(2) Executed lease agreement or lease option;
(3) Executed development agreement;
(4) Valid purchase and sale agreement or contingent purchase and sale agreement, or lease, or the equivalent.
(i) Evidence. GO-Biz shall ask an applicant to provide supplemental information that substantiates the information provided in the application, as needed. The applicant may be asked to submit the information electronically or in hard-copy as designated by GO-Biz. Upon review of such documentation, if GO-Biz determines that documentation is insufficient to support the information provided in the application, GO-Biz shall request that the applicant provide additional information. If the applicant fails to provide the additional information to the satisfaction of GO-Biz, GO-Biz shall place the application on hold until the appropriate documentation is provided or until the then-current application period expires.
(j) Amending and withdrawal of an application. If an applicant intends to revise a portion of a previously submitted application form, the applicant shall notify GO-Biz via the website and either withdraw the application and submit a new one or provide an amendment to the existing application. An applicant may amend an application form at any time until the last day for applications to be submitted during the application period. An applicant may withdraw an application at any time prior to committee approval by submitting a request for application withdrawal on the website.
(k) Negotiation. At the discretion of GO-Biz, GO-Biz may contact the applicant to schedule telephone conferences, video conferences, in-person meetings, or other similar types of communication to negotiate the terms and conditions of the tax credit agreement. Negotiations will be based on the following factors:
(1) The number of employment positions applicant will create or retain in this state.
(2) The compensation paid or proposed to be paid by the applicant to its employees, including wages, benefits, and fringe benefits.
(3) The amount of investment in this state by the applicant.
(4) The extent of unemployment or poverty in the area according to the United States Census in which the applicant's project or business is proposed or located, as supplemented by the information provided by California's Employment Development Department on http://www.labormarketinfo.edd.ca.gov/ or the equivalent website, as it may change from time to time.
(5) The incentives available to the applicant in this state, including incentives from the state, local government, and other entities.
(6) The incentives available to the applicant in other states.
(7) The duration of the proposed project and the duration the applicant commits to remain in this state.
(8) The economic impact in this state of the applicant's project or business.
(9) The strategic importance of the applicant's project or business to the state, region, or locality.
(10) The opportunity for future growth and expansion in this state by the applicant's business.
(11) The extent to which the anticipated benefit to the state exceeds the projected benefit to the applicant from the tax credit.
(l) If any quantifiable information (e.g., number of employees) provided by the applicant in Phase I is reduced by more than five percent during negotiations, GO-Biz may reject the application.
(m) Pending applications shall not be eligible for a tax credit. Application shall be deemed pending if any information requested by GO-Biz is not provided within the requested timeframe or GO-Biz and applicant fail to reach an agreement. GO-Biz shall notify applicants of a pending application that, if not cured, shall not be considered for an allocation until the deficiency is cured.
(n) If an applicant is not awarded any allocation in the then-current application period and the applicant would like its application to be considered in the next application period of that fiscal year, the applicant shall revise and resubmit its application during the subsequent application period to update its investment and hiring commitments in addition to any other revisions necessary, such as its current taxable year and base year, as a result of the applicant's taxable year ending after the last day to submit an application during the prior application period.
(o) Upon commencement of a new fiscal year, any application submitted in the prior fiscal year and not awarded during the prior fiscal year shall expire. Applicants shall submit a new application for consideration during the next application period of the then-current fiscal year.

Notes

Cal. Code Regs. Tit. 10, § 8030

Note: Authority cited: Sections 17059.2 and 23689, Revenue and Taxation Code. Reference: Sections 17059.2, 18410.2 and 23689, Revenue and Taxation Code.

1. New section filed 2-20-2014 as an emergency; operative 2-20-2014 (Register 2014, No. 8). A Certificate of Compliance must be transmitted to OAL by 8-19-2014 or emergency language will be repealed by operation of law on the following day.
2. New section refiled 8-18-2014 as an emergency, including amendments operative 8-18-2014 (Register 2014, No. 34). A Certificate of Compliance must be transmitted to OAL by 11-17-2014 or emergency language will be repealed by operation of law on the following day.
3. New section refiled with further amendments 11-17-2014 as an emergency; operative 11-17-2014 (Register 2014, No. 47). A Certificate of Compliance must be transmitted to OAL by 2-16-2015 or emergency language will be repealed by operation of law on the following day.
4. Certificate of Compliance as to 11-17-2014 order, including amendment of subsections (g)(1) and (g)(2)(H), transmitted to OAL 12-31-2014 and filed 2-5-2015; amendments effective 2-5-2015 pursuant to Government Code section 11343.4(b)(3) (Register 2015, No. 8).
5. Amendment of subsections (b)(38) and (b)(51), new subsections (b)(58)-(59), amendment of subsection (g)(1), new subsections (g)(1)(A)-(B) and amendment of subsections (g)(2)(G)-(H) filed 11-21-2016; operative 1-1-2017 (Register 2016, No. 48).
6. Editorial correction of subsection (b)(7) (Register 2017, No. 4).
7. Amendment of subsection (b)(7), new subsections (b)(28) and (b)(42), subsection renumbering and amendment of subsection (g)(2)(G) filed 11-20-2018; operative 1-1-2019 (Register 2018, No. 47).

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