GO-Biz has announced the application deadlines for the next year of California Competes Credits: July 20, 2015, through August 17, 2015 ($75 million available) January 4, 2016, through January 25, 2016 ($75 million available) March 7, 2016, through March 28, […]
The controlled group provisions were first added to the Internal Revenue Code in 1964 to provide tax incentives for small businesses operating as corporate entities.  Under I.R.C. § 1563, a controlled group is a combination of two or more corporations […]
Summary On May 31, 2015, the Court of Federal Claims (“Court”) granted partial summary judgement in favor of the U.S. government on the issue of “funded research” under I.R.C. § 41(d)(4)(H) in Dynetics, Inc. and Subsidiaries v. United States, No. […]
Ways and Means member, Congressman Tom Reed (R-NY) and Congressman Charlie Rangel (D-NY) have introduced H.R. 2754 to permanently extend WOTC. Apparently this bill was introduced with the blessing of Chairman Ryan and is going to be part of the […]
While the federal Empowerment Zones were extended legislatively as part of tax extender legislation at the end of 2014, the IRS requires that the states extend the expiration dates of their zones. In the past, the IRS decided to deem […]
In a press release on June 2, Illinois Governor Bruce Rauner announced the suspension of “all future incentive offers for business attraction and retention.” The move is part of the Governor’s attempt to deal with a multi-billion dollar budget deficit. […]
The White House issued a statement saying that the President would likely veto H.R. 880 which seeks to enhance and make permanent the federal R&D tax credit: The Administration supports enhancing, simplifying, and making permanent the Research and Experimentation Credit […]
In a press release, the Treasury Inspector General for Tax Administration (TIGTA) said: TIGTA found that the Treasury Department has delayed employer and insurer reporting of health insurance information until March 2016. Therefore, the IRS has not developed processes and […]
GO-Biz updated its FAQ for the California Competes Credit on April 29. Of interest is their update to the table listing historical credit to investment ratios for applications accepted into the second round of the application process: In addition, the […]
California Assembly Speaker Toni Atkins has introduced legislation (AB 437) that would allow California small businesses the ability to receive a grant based on R&D credits they have earned but cannot utilize due to lack of tax liability. Atkins asserts […]
On April 29 Ways and Means Chairman Paul Ryan spoke at an event for the Christian Science Monitor. The following a a transcript and video of an exchange with reporters regarding the status of tax extender legislation this year: Question: […]
Majority Leader Kevin McCarthy, in a memo released May 1, lists the simplification and permanent extension of the Research and Development Tax Credit a top priority for Congress: Innovation is essential to achieving and maintaining economic prosperity in this increasingly […]
As reported in the Portland Business Journal (http://www.bizjournals.com/portland/blog/techflash/2015/04/oregon-small-businesses-could-soon-collect-2m-for.html?page=all), Oregon House Representative Tobias Read (D) has sponsored a bill (House Bill 2752) that would provide a boost to Oregon companies’ R&D tax credit claims. The key items in the bill include […]
As always, Laura Mahoney provides detailed clarity on California’s tax incentive programs: Demand for a new tax credit aimed at business expansion in California continues to outstrip supply as state regulators iron out details for awarding the credit and recouping […]
BNA’s “Incentive Watch” on the next round of California Competes credit and the ongoing legal controversy regarding regulating consulting fees:
As the deadline looms for another round of California Competes tax credit applications, demand is certainly going to outpace the supply of available credits. With recently issued final regulations for the credit, taxpayers have new considerations in submitting their applications, including a divisive requirement that applicants must disclose contingency fee arrangements.
The California Competes tax credit, first available to taxpayers in 2014, is aimed at fostering business relocation and expansion in California, and replaces the Enterprise Zone Tax Credit in California, which has been phased out. It gives credits to businesses based on several criteria, including job creation. For the most recent application period that closed Feb. 2, the California Competes program received 253 applications, requesting a total of $289 million. Unfortunately for applicants, the Governor’s Office of Business and Economic Development (GO-Biz) will only award $75 million in tax credits during the February application period. California will also award $31.1 million in credits, plus any unallocated funds from previous applications periods, for the final round of applications, which are being accepted starting March 9.
In the January application round, GO-Biz received 286 applications requesting $329 million in credits. Ultimately, 56 companies received $31 million in tax credits. This brought the total amount of credits awarded through the program up to $60 million.
In February, final regulations governing the California Competes credit took effect. Although the final regulations are similar to emergency regulations adopted last year, there are a few changes, including a provision that allows companies to apply for the credit multiple times, provided they meet additional investment and employment requirements.
One of the more controversial regulations is the requirements regarding contingency fee arrangements between applicants and third parties that prepare the credit application. Not only are applicants required to disclose these fee arrangements, but the arrangements will be reviewed by GO-Biz to ensure that fees are reasonable. This regulation led to a lawsuit by Ryan LLC, a tax services firm headquartered in Dallas, Texas, challenging the contingency fee disclosure requirements.
This is not the first time that California has tried to restrict contingency fees. According to the complaint in the Ryan case, California has twice introduced legislation that restricts contingency fee arrangements in tax-related matters, but neither was enacted into law. On the federal level, the DC District Court, in Ridgely v. Lew, invalidated the I.R.S. Circular 230 contingency fee ban on tax practitioners.
The Ryan complaint alleges that GO-Biz abused their rulemaking powers by adopting regulations which conflict with California law. The complaint alleges that California law specifies the factors used in determining which businesses receive California Competes credits and that consideration of the contingency fee arrangement imposes an additional condition on tax credit applicants. California issued an answer to the complaint on Feb. 20.
AB 437, sponsored by California Assembly Speaker Toni Atkins, would provide businesses with less than $5 million in gross receipts to receive a cash grant for between 10 and 15 percent of any unused R&D tax credits. According to the […]
In March of 2013, because of Congress’ retroactive authorization of the WOTC program, the IRS allowed a brief period of “transition relief” to allow taxpayers to file WOTC applications for employees hired in 2012 retroactively. Normally, the WOTC program requires […]
The Ways and Means Committee today passed H.R. 880 making the R&D tax credit permanent. A similar bill was passed by the House last year, and despite the President calling for the same policy,* has little chance of passage on […]
GO-Biz updated its FAQ for the California Competes Credit on Feb. 6. Among the changes is an updated table of investment to tax credit ratios that were accepted into the second round: In addition, final regulations were approved on 2/5/2015, […]
According to Politico: Chairman Paul Ryan during the [Ways and Means Committee] hearing said he wants to pass extenders earlier this year rather than waiting until the end of the year and making everyone frantic about whether they’ll be continued.
- New post: California Competes Fiscal Year 2015-2016 Application Dates Announced taxcreditology.com/2015/07/01/cal…
about 2 days ago
- Post Edited: Final and Temporary Treasury Regulations on the Allocation of a Controlled Group’s Research Credit to I taxcreditology.com/2015/06/30/fin…
about 3 days ago
- New post: Final and Temporary Treasury Regulations on the Allocation of a Controlled Group’s Research Credit to Its M taxcreditology.com/2015/06/30/fin…
about 3 days ago