January 9, 2019 | CIG Tax Insights
To promote high-tech manufacturing, the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) provides select manufacturers a 100% sales and use tax exclusion (STE) on purchases of qualified tangible property. Through a competitive application and negotiation process, California manufacturers may qualify for this lucrative incentive under any of the following categories:
With 2018 funds exhausted, $100 million was made available on January 1 to allow awardees to purchase property associated with these activities—completely free of California sales and use tax for 3 years. Applications are accepted on a rolling monthly basis.
CIG INSIGHTS: We anticipate all 2019 funds will be exhausted before year end. Although 2019 is less than two weeks old, approximately $15 million of award funding has already been captured. Because the rules require all applications receive a 60-day review, businesses need to be ahead of the game in order to negotiate/execute a CAEATFA award before funding runs out. For example, businesses seeking an award approval at the April 16, 2019 CAEATFA Board meeting must have its application submitted by February 15, 2019.
CIG EXPERTISE: Combining our background in California sales/use tax and deep experience with CAEATFA, we have successfully negotiated over $32 million in CAEATFA awards—including three in the last 60 days. Further, we have found that the average CAEATFA applicant can spend months preparing an application. We have refined our process to where we can prepare a quality application in 2 to 3 weeks.
While we are proud of this “front-end” success, we strongly believe our deepest value is our ability to seamlessly implement CAEATFA into our client’s day-to-day business operations. We hold strong to this belief by linking our professional fees to the amount of actual cash value realized by our clients.
WE’RE HERE TO HELP: If you’re interested in learning more about how we can lead your business to a CAEATFA award, please reach out to us for a complimentary assessment. CAEATFA applies more broadly than most businesses believe. Our team of incentive experts, engineers, statisticians and former California government officials are ready to assist your business capture a CAEATFA Sales and Use Tax Exclusion Award Contract—before 2019 funding is gone.