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State
Enterprise Zones
The
City of Los Angeles has two State Enterprise Zones (SEZs). Within these areas, businesses can take advantage of State 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.
SEZs 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. Los Angeles City offers local incentives such as, DWP rate discount, sewer facility hookup payment plans, Work Opportunity Tax Credit, and reduced parking requirements.
The Los Angeles SEZ was designated by the State on October 15, 2006, and is valid through October 15, 2021. In addition, the East Los Angeles SEZ designation was renewed on January 11, 2008, and is valid through January 11, 2023.
An expansion of the Los Angeles - Hollywood SEZ, was approved on May 10, 2010, and includes the Warner Center portion of Woodland Hills; the Canoga Park, Chatsworth and Northridge industrial areas; the area surrounding Van Nuys Airport; and Van Nuys Boulevard from Saticoy Street to Oxnard Street in Van Nuys. On May 18, 2010, the State approved additional expansion to include the areas surrounding LAX; portions of San Fernando Road and Foothill Boulevard in Sylmar; and Washington Boulevard and Glendale Boulevard in Echo Park. Click to see a selection of SEZ expansion area maps.
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) 852-5711, 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) 852-5711, 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) 852-5711, 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) 852-5711, 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) 852-5711, 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.
Fill out and submit this Rate Discount Application form. For more information, call the LADWP Economic Development Group at 800-864-4409, (TTY) 213-744-9395, or visit the LADWP 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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