November 21, 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 ONE of the following categories:
– Advanced Manufacturing
– Alternative Source Product Manufacturing
– Manufacturing of Advanced Transportation Technologies
– Manufacturing of Products Utilizing Recycled Feedstock
With all 2018 funds exhausted, $100 million is now available from the 2019 budget. These CAEATFA STE funds allow an awardee 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. 2018 awardees that received the maximum single-business award ($20 million), will likely be first in line to pursue 2019 funds. 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 February 19, 2019 CAEATFA Board meeting must have its application submitted by December 21, 2019.
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 (we’ve never lost an applicant) 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 disappears.
