Huge tax credits ignored

Few Valley businesses tap enterprise zone benefits

SUN VALLEY - Businesses in the eastern San Fernando Valley are eligible for thousands of dollars in tax credits as part of the Los Angeles Enterprise Zone, but fewer than 20 percent use them, according to the Economic Alliance of the San Fernando Valley.

Few businesses know about the credits and the expanded eligibility. And if they do, many don't think they are qualified to use them.

So the alliance, a nonprofit group dedicated to improving the Valley's economy, asked two accountants to explain how businesses can reduce their tax bills by claiming the credits. Almost 40 business owners and employees gathered Tuesday at the Burbank Commerce Center to learn how the credits work.

Council members Wendy Greuel and Tony Cardenas, who represent parts of the enterprise zone, also attended.

Armando Jamjian, a partner at Rivera & Jamjian LLP in Pasadena, and his partner, Luis Rivera, detailed for which expenses businesses can and cannot claim credits.

"If you're a profitable business, it definitely makes sense to look into these credits," Jamjian said. If not, sit back and wait a few years until the red turns to black.

The company charges between $5,000 and $100,000 to create a report detailing which credits a business can claim. The process takes three to four months. It has netted clients from about $20,000 to $2.7million in credits, Jamjian said.

About 25 of the 150 reports they completed were audited and none of those was adjusted, Rivera said.
Manufacturers will likely be able to claim the most credits.

Don Alecock, vice president of operations at Rem Eyewear in Sun Valley, said the company never knew it could claim the enterprise credits.

"I think there's a lot of opportunity for us," Alecock said after the two-hour presentation.
At Wet Design, maker of water fountains, executives knew about the credits but didn't use them, said Gordon Olsen, controller at the Sun Valley company.

"This is the first year we could take advantage on a scale that makes it worthwhile," Olsen said.
The zone was expanded in October to include parts of Pacoima, Sun Valley, Sylmar, North Hollywood, Van Nuys, Panorama City and Arleta.

In 2006, the enterprise zone - the only one in the Valley - unexpectedly lost its status. But, weeks later, Gov. Arnold Schwarzenegger restored the designation.

For more information on enterprise zone tax credits, call Ken Hitts at the Economic Alliance at (818) 379-7000.

Source: Los Angeles Daily News
July 31, 2007

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