Cal. Code Regs. Tit. 10, § 8000 - Definitions

Current through Register 2021 Notice Reg. No. 52, December 24, 2021

For purposes of this article, the following definitions shall apply:

(a)

(1) "Aggregate employee compensation" means the sum of the wages for the net increase of full-time employees that will be employed in this state by the applicant, as determined pursuant to paragraph (2), for the applicant's current taxable year and the four subsequent taxable years.

(2) The net increase of full-time employees shall be calculated by subtracting the total number of full-time employees, determined on an annual full-time equivalent basis, employed in this state by the applicant during the base year from the total number of full-time employees, determined on an annual full-time equivalent basis, that will be employed in this state by the applicant for each taxable year referenced in paragraph (1). The net increase of full-time employees for each taxable year shall be multiplied by the cumulative average annual wage of the full-time employees hired and that will be hired in each taxable year referenced in paragraph (1).

(3) If an applicant has been previously awarded a California competes tax credit, the applicant's aggregate employee compensation in any future application for the credit shall be calculated by reducing the net increase of full-time employees determined pursuant to paragraph (2) for each taxable year by the net increase of full-time employees committed to for each taxable year in its previously approved California competes tax credit agreement.

(b)

(1) "Aggregate investment" means the sum of the investment for the applicant's current taxable year and the four subsequent taxable years. Aggregate investment shall not include any amounts paid on or before the last day to submit an application during the application period.

(2) If an applicant has been previously awarded a California competes tax credit, the applicant's aggregate investment in any future application for the credit shall exclude any investment committed to in its previously approved California competes tax credit agreement.

(c) "Agreement" or "California competes tax credit agreement" means the agreement as negotiated between the applicant and GO-Biz prescribing the terms and conditions that must be met in order to award the applicant an allocation.

(d) "Allocation" means the portion of the allocated tax credit for the then-current fiscal year awarded by the committee to an applicant.

(e) "Allocation period" means the taxable years the credit requested by the applicant will be allowed.

(f) "Annual full-time equivalent" means either of the following:

(1) In the case of a full-time employee paid hourly wages, "annual full-time equivalent" means the total number of hours worked for the applicant by the employee during the taxable year, not to exceed 1,750 hours per employee, divided by 1,750.

(2) In the case of a salaried full-time employee, "annual full-time equivalent" means the total number of weeks worked for the applicant by the employee during the taxable year, not to exceed 50, divided by 50.

(3) For purposes of this subdivision, the use of the term "worked" means the number of hours or weeks for which an employee receives paid wages including, but not limited to paid vacation, sick leave, or holidays.

(g) "Applicant" means any taxpayer, including but not limited to an individual, corporation, or partnership, submitting a California competes tax credit application to GO-Biz for tax credit allocation consideration and must be a person or entity legally authorized to do business in California or that shall incorporate, qualify, or register with the Secretary of State to do business in California prior to the execution of the California competes tax credit agreement.

(h) "Application" means the request by an applicant for a tax credit allocation by submitting the information as specified in the application form.

(i) "Application form" means the California competes tax credit application form which shall contain the information requested in section 8030 and shall be available on the website.

(j) "Application period" means the period during a fiscal year designated by the director when applications shall be accepted, reviewed, and awarded.

(k)

(1) "Base year" means the 2013 taxable year, for an application submitted during the applicant's 2014 taxable year. In the case of an application submitted during the applicant's taxable year beginning on or after January 1, 2015, the base year means the taxable year immediately preceding the taxable year in which the application is submitted. The last day during an application period in which an applicant may submit an application shall be deemed the date an application is submitted for purposes of this subdivision. For applicants that first commence doing business in California during the taxable year in which an application is submitted, the number of full-time employees for the base year shall be zero.

(2) Notwithstanding paragraph (1), if an applicant has been previously awarded a California competes tax credit, the base year in any future application for the credit shall be the taxable year that was the base year in the applicant's previously approved California competes tax credit agreement.

(l) "Benefits" means health, medical, dental, and vision premiums paid by an applicant on behalf of any of the following:

(1) an employee;

(2) an employee's spouse;

(3) an employee's dependents.

(m) "California competes tax credit" or "credit" means the total amount of tax credit requested by an applicant in the application.

(n) "California competes tax credit committee" or "committee" means the committee established under Revenue and Taxation Code section 18410.2.

(o) "Current assets" means the value of all assets of the applicant that are reasonably expected to be converted into cash within one year in the normal course of business. Current assets include cash, accounts receivable, inventory, marketable securities, prepaid expenses, and other liquid assets that can be readily converted to cash.

(p) "Current liabilities" means the applicant's debts or obligations that are due within one year. Current liabilities appear on the applicant's balance sheet and include short-term debt (less than one-year), accounts payable, accrued liabilities and other debts.

(q) "Current taxable year" means the applicant's taxable year for state income tax purposes as of the last day to submit an application during the application period.

(r) "Director" means the director of GO-Biz, or his or her designee.

(s) "Directly related" means actions, purchases, or the like made in connection with the project that would not have been otherwise purchased or incurred but for the project.

(t) "Economic impact" means the impact of a project or business on the state, a region, or locality, and may include, but not be limited to, the review of the type of industry, type of employment created, potential for growth, saturation in a particular market or saturation of a type of industry or employment in the state or a particular region or locality, direct, indirect, and induced employment creation, temporary employment and any other similar factors.

(u) "Fringe benefits" means any taxable or non-taxable amenity provided to the employee by the applicant including, but not limited to, group-term life insurance coverage, childcare and assistance reimbursement, employee discounts, personal use of a company owned vehicle, paid parking, public transportation supplement, gym subsidy, and education reimbursement.

(v) "Full-time employee" means an individual that is paid wages for services in this state of not less than an average of 35 hours per week.

(w) "GO-Biz" means the Governor's Office of Business and Economic Development.

(x) "High poverty area" means a city and/or county within California with a poverty rate of at least 150% of the California statewide poverty rate per the most recently updated data available from the U.S. Census Bureau's American Community Survey 1-Year Estimates thirty days prior to the first day of the applicable application period.

(y) "High unemployment area" means a city and/or county within California with an unemployment rate of at least 150% of the California statewide unemployment rate per the most recently updated data available from the California Employment Development Department on http://www.labormarketinfo.edd.ca.gov/ or the equivalent website thirty days prior to the first day of the applicable application period.

(z) "Investment" means the amount paid after the deadline to submit an application during the application period for all personal property and real property directly related to the project that will be purchased or leased by the applicant after the deadline to submit an application during the application period.

(aa) "Material litigation" means any litigation that, according to generally accepted accounting principles, is deemed significant to an applicant's financial health and would be required to be referenced in the applicant's annual audited financial statements (if audited financial statements are required), or would be the type of information that is reported to shareholders, members, or similar individuals, or, in documents about the financial condition of the applicant, would be deemed material information that an investor or person providing any capital or investment in the entity would deem material in making a financial decision regarding the applicant.

(bb) "Personal property" means property, other than real property, directly related to the project and placed in service in this state by the applicant, that is tangible, movable property, including, but not limited to, vehicles, movable fixtures, equipment, electronic devices purchased for the business use of the applicant, intangible property, including, but not limited to, software licenses, intellectual property that has a quantifiable value acquired in connection with the project, and other business assets which are subject to depreciation under Internal Revenue Code section 167(a), or depreciable property that will be expensed under Internal Revenue Code section 179.

(cc) "Project" means the applicant's proposed business venture, investment, or expansion in this state that is the basis for the allocation.

(dd) "Project financing" means financing that the applicant may rely on to fund the project which may include, but not be limited to, loans through banks or other financial institutions, lines of credit, stock issuance, private equity, grants, venture capitalist investment, or any other form of financing.

(ee) "Real property" means any property located in this state that is attached directly to land, as well as the land itself, that is used in connection with the project. Real property includes, but is not limited to, all land, structures, firmly attached and integrated equipment (such as light fixtures or a well pump), anything growing on the land, and all other "interests" in the property which may be the right to future ownership (remainder), right to occupy for a period of time (tenancy or lease), or an easement across another's property. With the exception of the land itself, real property includes structures and other business assets affixed to the land that are subject to depreciation under Internal Revenue Code section 167(a), or depreciable property expensed under Internal Revenue Code section 179. Real property also includes capitalized costs related to new construction, reconstruction, or expansion of buildings or other structures which will be used in the applicant's trade or business in connection with the project and will be subject to depreciation under Internal Revenue Code section 167(a) or is depreciable property that will be expensed under Internal Revenue Code section 179. Real property does not include idle bare land held for investment purposes.

(ff) "Strategic importance" means the value of the type of business to be developed in the state or a particular region or locality due to lack of current presence of the type of business or industry, the assistance to the employment market or potential-employment pool, the growth of a particular region or locality, the will of the community to accept the business or industry, and any other similar factors.

(gg) "Wage or Wages" means the amount of monetary compensation a full-time employee (whether paid by the hour or a salary) is paid by the applicant per year and does not include tips, overtime, bonuses, commissions, stock options, benefits or other compensation of any kind.

(hh) "Website" means the GO-Biz website found at www.business.ca.gov.

(ii) "Working capital" means the applicant's operating liquidity determined by subtracting the applicant's current liabilities from the applicant's current assets.

Notes

Cal. Code Regs. Tit. 10, § 8000

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 chapter 13, article 1 (sections 8000-8070) and 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 chapter 13, article 1 (sections 8000-8070) and 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 chapter 13, article 1 (sections 8000-8070) and 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 transmitted to OAL 12-31-2014 and filed 2-5-2015 (Register 2015, No. 8).
5. Amendment of subsections (a)(1)-(2), new subsections (x)-(y) and (hh), repealer of subsection (dd) and subsection relettering filed 11-21-2016; operative 1-1-2017 (Register 2016, No. 48).
6. Amendment of subsections (f)(3) and (k)(1), repealer of subsection (ff) and subsection relettering filed 11-20-2018; operative 1-1-2019 (Register 2018, No. 47).