Beware the Golden Bear

California Tax Issues – On the Lookout

Jobs Credit

A new California tax credit of up to $3,000 for each additional full-time employee hired is available to small businesses with 20 or fewer employees beginning January 1, 2009. The credit is prorated on an annual full-time equivalent basis for employees employed less than a full year. Each qualified full-time hourly employee must be paid wages for no less than an average of 35 hours per week.

California allocated $400,000,000 for this tax credit. Taxpayers may only claim the credit on an original timely filed return received by the FTB on or before a cut-off date specified by FTB. The cut-off date is the last day of the calendar quarter within which FTB estimates it will have received timely filed original returns claiming the credit that cumulatively total $400 million.

California Net Operating Losses Scheduled to Come Back in 2010

California had suspended net operating losses during 2008 and 2009 for businesses with over $500,000 of net income. Net operating losses are scheduled to come back in 2010 so any unused 2009 loss may be used then. Look for opportunities to offset 2010 income with these suspended losses.

Use Tax

The Legislature has enacted strict new use tax registration and reporting requirements. The Board of Equalization (BOE) has stepped up compliance on businesses that purchase property out of state and fail to pay a use tax. This has placed the burden on the taxpayer to report and pay use tax on assets purchased out of state.

Any business with $100,000 or more in gross receipts that does not currently hold a seller’s permit is required to register with the BOE. A use tax return must be filed each year by April 15th reporting whether any out-of-state purchases were made, and if so, the amount and use tax due.

File an Appeal to Reduce Property Taxes

In light of the recent economic downturn, reassessing the value of one’s home may result in significantly lower property taxes. Property owners who believe their property is overvalued may seek a reappraisal from their local county assessor’s office.

The regular filing period for property tax appeals for most counties is July 2, 2010, through November 30, 2010. Anyone who has purchased property in the past three to five years should consider reviewing their property tax assessments.

Helpful Links

New Jobs Credit

Use Tax

Property Tax Appeals