CAEATFA Sales Tax Incentive – 2019 Funding Update

July 9, 2019 | CIG Tax Insights

For the first time in the program’s decade long history, an entire year’s funding ($100M) will be exhausted by July. Although the last $5 million will be granted next week, the real CAEATFA fireworks took place last month when $37.7 million ($450M+ in future qualified purchases) was granted.

2 of these 7 awardees were represented by CALincentives including Edwards Lifesciences (NYSE: EW) based in Irvine, California. June 2019 represents the largest amount of CAEATFA funds awarded in a single month since Tesla received $98 million in December of 2016.

CIG INSIGHTS: Without an extension from the legislature, 2020 will be the final year for the CAEATFA Sales and Use Tax Exclusion. Between how quickly 2019 funds were exhausted and the complex application timing rules, businesses need to be strategic and ahead of the curve if they want to negotiate/secure a CAEATFA award before the program sunsets next year.

CIG EXPERTISE: Combining our background in California sales/use tax and deep experience with CAEATFA, we have successfully negotiated more than $66 million in CAEATFA awards—with over $35 million in the last year. While we’re proud of this “front-end” success, we 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, please reach out to us for a complimentary assessment. Our team of CPAs, engineers, statisticians and former California government officials are ready to lead your company to a CAEATFA award—before 2020 funding is gone.

PROGRAM OVERVIEW: The Treasurer’s Office established the California Alternative Energy and Advanced Transportation Financing Authority (CAEATFA) Sales and Use Tax Exclusion to promote high-tech and green manufacturing. This program provides select manufactures a 100% sales and use tax exclusion on purchases of qualified tangible property over 3 years. Through a competitive application and negotiation process, California manufacturers may qualify for this lucrative incentive under any of the following categories:

  • Advanced Manufacturing
  • Alternative Source Product Manufacturing
  • Manufacturing of Advanced Transportation Technologies
  • Manufacturing of Products Utilizing Recycled Feedstock