Enterprise Zones Are a Boon to Consultants
It is unclear how much enterprise zones have helped California’s poor, but one group of workers clearly has benefited: accountants.
The zones have spawned a cottage industry of tax consultants who help companies chase the tax breaks that the state program offers. They comb through years of hiring records seeking employees whose circumstances qualify their companies for credits.
The consulting specialty took off in the late 1990s, and its rise paralleled the dramatic growth in tax credits claimed by businesses. Now, there are about 100 such consultants, most working in exchange for a percentage of the tax credits -- up to $34,000 per eligible employee -- they secure.
“The proposition is: Look, if we can save you $10,000, we want you to pay us $2,000,” said Tom Flanagan, director of Zone Credit Consulting in Pasadena.
The Oakhurst-based California Enterprise Zone Tax Savings Group boasts on its website, “Our history proves we qualify 30% to 45% of ALL the employees interviewed.” Sun West Consultants in Redondo Beach reports that clients are “amazed” to learn how many of their hires qualify.
Local officials, who administer the zone programs, say the firms can be aggressive.
“There are some I don’t feel comfortable meeting with unless I have my city attorney next to me,” said Lina German, enterprise zone manager for Santa Ana.
Meanwhile, the state’s largest enterprise zone consulting firm, California Credits Group, is aiding an aggressive lobbying effort in Sacramento against proposals that would cut into their business.
