July 26, 2018 | CIG Tax Insights
To promote in-state 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 an annual budget of $100 million, the CAEATFA STE allows an awardee to purchase property associated with these activities—completely free of California sales and use tax for 3 years. As a highly sought after financial incentive, less than $39 million remains in CAEATFA STE funding for the remainder of calendar year 2018. Applications are accepted on a rolling basis.
CIG INSIGHTS: We anticipate all funds will be awarded before year end. 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 becomes exhausted. For example, a business seeking an award approval at the October 16th CAEATFA Board meeting must have its application submitted by August 17th.
CIG EXPERTISE: Combining our background in California sales/use tax and deep experience with CAEATFA, we have successfully negotiated over $31 million in CAEATFA awards. 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 help 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 and former California government officials are ready to assist your business capture a CAEATFA Sales and Use Tax Exclusion Award Contract—before 2018 funding is gone.