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State
Enterprise Zones
The
City of Los Angeles has three State Enterprise Zones as well as
a Federal Empowerment Zone and a Renewal Community designation. Within these areas, businesses
can take advantage of State and/or Federal tax credits and deductions
not available to businesses elsewhere. The goal of the incentives
is to stimulate business attraction, growth, and increased employment
opportunities within economically challenged areas of the City.
Enterprise Zones assist businesses located in the zones to lower their operating costs by providing them with tax credits and deductions. The state offers incentives such as: hiring
credits, sales & use tax credits, expense and interest deductions. The City of Los Angeles offers local incentives such as, DWP rate
discount, site fee waivers, sewer facility hookup payment plans, Work Opportunity Tax Credit, and reduced parking rates.
The Los Angeles Enterprise Zone was conditionally designated by
the State on October 15, 2006. When the designation becomes permanent
it will be valid for 15 years. In addition, the Eastside State Enterprise
Zone designation is valid through January 10, 2008, and the Harbor
Zone through March 3, 2009
EMPLOYER
HIRING CREDITS
Up
to $37,440 over a 5-year period per each qualified employee can
be claimed by an Enterprise Zone business as a tax credit. An
employee can qualify under any one of 13 different categories.
For
more information, call CDD at 213-744-7111, (TTY) 213-744-9395, or the Franchise Tax Board at (800) 400-7115, TTY (800) 735-2929. You can also visit the Franchise Tax Board website.
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SALES
and USE TAX CREDITS
An
Enterprise Zone business can receive a tax credit of 100% of the
sales/use tax paid for equipment purchases for use in the zone.
Machinery, machinery parts, telecommunications equipment and office
equipment such as copiers, printers, fax machines and telephone
systems also qualify.
For
more information, call CDD at 213-744-7111, (TTY) 213-744-9395, or the Franchise Tax Board at (800) 400-7115, TTY (800) 735-2929. You can also visit the Franchise Tax Board website and refer to Publication 1047.
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BUSINESS
EXPENSE DEDUCTION
An
accelerated depreciation is available for tangible personal property
the first year it is placed in service in an Enterprise Zone.
Office supplies and inventory do not qualify. Limits: $20,000.
For
more information, call CDD at 213-744-7111, (TTY) 213-744-9395, or the Franchise Tax Board at (800) 400-7115, TTY (800) 735-2929. You can also visit the visit
the Franchise Tax Board website and refer to Publication 1047.
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NET
INTEREST DEDUCTION
Lenders
can earn tax-free interest on loans made to Enterprise Zone businesses.
For
more information, call CDD at 213-744-7111, (TTY) 213-744-9395, or the Franchise Tax Board at (800) 400-7115, TTY (800) 735-2929. You can also visit the visit
the Franchise Tax Board website and refer to Publication 1047.
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NET
OPERATING LOSS CARRYOVER
100%
of Net Operating Losses may be carried forward for 15 years to
reduce the amount of taxable income for those years.
For
more information, call CDD at 213-744-7111, (TTY) 213-744-9395, or the Franchise Tax Board at (800) 400-7115, TTY (800) 735-2929. You can also visit the visit
the Franchise Tax Board website and refer to Publication 1047.
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DEPARTMENT of WATER and POWER RATE DISCOUNT
The Department of Water and Power offers a five-year electric rate
discount to new businesses that are moving into the zone and apply within 18 months for the discount. Existing businesses whose energy
consumption in the 6-month period before the date of application was at least 35% greater than the monthly average in the prior 12 months also qualify.
For more information, call 213-744-7111, (TTY) 213-744-9395, or visit the LADWP website.
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SITE
PLAN REVIEW and FEE WAIVER
The
City provides a fee waiver for review of commercial or industrial
architectural plans for projects of 40,000 square feet or greater
located in an Enterprise Zone during an initial application for
a site plan review.
For
more information, visit the Building
& Safety website.
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SEWER FACILITY CHARGE EXTENDED PAYMENT OPTION
The
City allows Enterprise Zone businesses qualify for a one-time lump sum payment exemption if the Sewer Facility Charge is over $17,000. The fee can be paid in installments over five years but interest is payable on any unpaid balance.
For
more information, visit the Bureau of Engineering website or call their Central District permit counter at 213-482-7474.
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REDUCED PARKING ORDINANCE
This
ordinance provides reduced parking requirements for Enterprise
Zone businesses compared with other areas of the City.
For
more information, visit the Building
& Safety website.
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WORK OPPORTUNITY TAX CREDIT (WOTC)
The Work Opportunity Tax Credit (WOTC) has been IMPROVED! The WOTC program is now good through 2011. Now any business anywhere can qualify for the credits as long as they hire persons between the ages of 18-39 who reside in either the Federal Empowerment Zone (EZ) or the Federal Renewal Community (RC) area. Los Angeles contains both an EZ and an RC. There are eight (8) additional eligibility categories, some of which are not dependent on the employee’s address. The WOTC hiring credit is worth up to $2,400 per year for each eligible hire.
For additional information, call the WOTC Center at (866) 593-0173, or visit the California State Employment Development Department website.
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