Deadline Approaching for California’s New Employment Credit

Beginning January 1, 2014, California has replaced the Enterprise Zone Hiring Credit with the New Employment Credit and the California Competes Credit, each of which may be used to offset the Personal Income Tax and Corporation Tax.

For taxable years beginning on or after January 1, 2014, and before January 1, 2021, the New Employment Credit (“NEC”) is allowed for qualified taxpayers who:

- 1. hire qualified full-time employees,

- 2. pay qualified wages attributable to work performed by qualified employees in designated census tract or economic development areas, and

- 3. receive a tentative credit reservation from the Franchise Tax Board (“FTB”) for each qualified full-time employee.

A qualified taxpayer must request a tentative credit reservation from the FTB within 30 days of reporting the hiring of a new employee to the Employment Development Department (“EDD”). Employers must report the hiring of new employees to the EDD within 20 days from the first day of work. Employers that hire new employees are advised to consider whether they qualify for the NEC, and request a tentative credit reservation from the FTB within this short timeframe to maintain NEC eligibility.

Please see full Alert below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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