California Enterprise Zone

Overview

A California Enterprise Zone (EZ) is an economically distressed area designated and administered by the Department of Housing and Community Development (HCD) and authorized by the state legislature. The program is designed to encourage investment and promote the creation of new jobs by offering tax credits and incentives to businesses operating within the 42 zones throughout the state. Click here for a map of California EZs.

Hiring Credit

The EZ Hiring Credit is available for employers hiring qualified employees who perform at least 50% of their work within the EZ. Qualifying employees may be part-time or full-time and include both hourly and salaried positions. Meeting any one of the following criteria at date of hire will qualify an employee for the EZ Hiring Credit:

• Targeted Employment Area (TEA) resident
• Welfare recipient
• Unemployment recipient
• Food Stamp recipient
• Social Security recipient
• Disabled
• Veteran
• Native American
• Dislocated worker
• Economically disadvantaged
• Workforce Investment Act (WIA) enrolled
• Ex-offender
• WOTC certified

A qualified business may reduce its state income tax by $37,440 per qualified employee over a 5-year period. The credits will carry forward until exhausted.

Sales or Use Tax Credit

The EZ Sales or Use Tax Credit allows taxpayers an income tax credit in the amount of sales tax paid on qualified property operated exclusively in the EZ. Qualified property includes property used in machining, fabricating and assembling as well as data processing equipment. 

Additional Benefits

In addition to the Hiring Credit and Sales or Use Tax Credit, businesses located in an EZ are entitled to the Net Interest Deduction for lenders, favorable Net Operating Loss (NOL) rules, accelerated expense deductions and preference points on state contracts.

FCG

We offer an efficient screening process to identify qualified employees and equipment that is nonintrusive yet thorough with our methodology. Our practitioners include former FTB auditors who have examined hundreds of EZ claims. Each project includes the following steps:

• Issue information request
• Identify qualified employees
• Document qualified employees
• Submit voucher applications
• Identify qualified equipment
• Perform credit calculations
• Deliver final report
• Assist with filing returns
• Provide audit support (as needed)