CA Enterprise zones; Improved, expanded and additional compliance.

• Author: Abdallah, Joseph
• Position: Californiatax

Over the past two years, the California Enterprise Zone Tax Credit Program has witnessed significant changes, including major expansions, new regulations and additional tax compliance measures that will certainly affect CPAs across California. Some of the major changes include:

* Jan. 1, 2006--A significant court case was decided by Board of Equalization: Appeal of Deluxe Corporation, giving the FTB the authority to audit the vouchers previously issued by local administrative agencies.

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* Nov. 3, 2006--Twenty-three EZs were either renewed or expanded significantly.

* Jan. 1, 2007--Housing and Community Development Department (HCD) issued new vouchering regulations that standardized documentation requirements.

* Nov. 15, 2007--Franchise Tax Board (FTB) issued Notice 2007-4 requiring new compliance requirements for tax credits secured under contingency fee arrangements.

* Jan. 1, 2008--HCD implemented new state vouchering forms.

* Jan. 31, 2008--Gov. Schwarzenegger announced eight new enterprise zones to boost California's economy.

With the substantial geographic expansions of existing EZs, new 15-year designations for both expiring and entirely new EZs, plus improvements to the Hiring Credit vouchering process, what do these changes mean to you?

Enterprise Zones--Significant Expansions the Past Two Years

Review your client list annually to determine if they reside in a new or expanded EZ.

Between October 2006 and September 2008, 31 of California's 42 enterprise zones were scheduled to expire. At the conclusion of a competitive bid process, HCD awarded five new enterprise zone designations and re-designated 26 previous zones for an additional 15 years. Most of the communities that received a re-designation were able to significantly expand the enterprise zone boundaries of their original designation.

For example, Sacramento's enterprise zone doubled in size to 3,500 acres. Los Angeles and San Francisco substantially expanded their zones to include major portions of their downtown financial districts. And Stanislaus County, one of the newest enterprise zones, has expanded three times to approximately 67,000 acres.

HCD maintains the state's official website of EZ street addresses, at www.hed.ca.gov/fa/cdbg/ez/enterprise/#maps. While this site has not posted the addresses of many of the new, conditionally designated zones, the local communities have posted the addresses on their websites.

New Vouchering Regulations and...