D.C. Mun. Regs. tit. 9, r. 9-1102

Current through Register Vol. 71, No. 36, September 6, 2024

Rule 9-1102 - TAX CREDIT TO QHTCS: EMPLOYMENT RELOCATION COSTS

1102.1

A QHTC shall be allowed a credit against the tax imposed by D.C. Official Code § 47-1817.6 for each dollar reimbursed to or paid on behalf of each qualified employee for relocation costs. The credit shall not exceed:

(a) $5,000.00 for each employee who relocates his or her employment to the District from a location outside the District but does not relocate his or her principal residence into the District. The annual credit shall not exceed $ 250,000.00; or

(b) $7,500.00 for each employee who relocates his or her employment to the District from a location outside the District and also relocates his or her principal residence into the District. The annual credit shall not exceed $ 1,000,000.00.

(c) For purposes of this subsection, the principal residence shall be determined as of the last day of the first six months of employment in the District by a QHTC.

(d) This $ 5000 (or $7500) credit can be allocated over 2 years if the relocation costs are incurred in 2 separate tax years.

1102.2

The tax credit for employment relocation costs shall not be allowed:

(a) Until the QHTC relocates at least 2 qualified employees from employment outside the District to inside the District;

(b) Until the QHTC employs the qualified employee for at least 6 months in the District in an activity described in D.C. Official Code § 47-1817.1(5)(A)(iii);

(c) If the qualified employee works less than 35 hours per week;

(d) If the qualified employee is a Key Employee; or

(e) If the QHTC claims a deduction for the relocation costs.

1102.3

If the amount of the credit allowable under this section exceeds the tax otherwise due from a QHTC, the unused amount of the credit shall not be carried forward after the tenth year following the first year the taxpayer files a return claiming employment relocation costs under section 1102.1.

1102.4

Costs qualify as relocation costs if the following conditions are met:

(a) The commencement date of the qualified employee's move or financial assistance must be after December 31, 2000;

(b) The cost is the only relocation cost requested for the qualified employee; and

(c) Deductible expenses do not exceed the limits set forth in this section.

(d) The following are examples of the application of §§ 1102.1 to 1102.4:

(1) Company C, a QHTC, employs 10 people in activities described in D.C. Official Code § 47-1817.1(5)(A)(iii). On January 2, 2001, Company C hires employees X and Y, who are both qualified full time employees, to work at Company C's place of business in the District in an activity described in D.C. Official Code § 47-1817.1(5)(A)(iii). Both employee X and employee Y previously were employed outside the District. Employees X and Y are not Key Employees within the meaning of § 1199. Both employees, X and Y purchase residences outside the District. Company C reimburses employees X and Y for their moving expense of $10,000 and the cost of financing the purchase of their new residences of $15,000. Company C does not plan to take a deduction for the relocation costs paid employees X and Y. After employees X and Y are employed by Company C for 6 months, Company C is entitled to a tax credit of $ 10,000.

(2) Assume the same facts as in example 1, except employee X purchased his residence in the District within six months of employment in the District. Company C is entitled to a tax credit of $7,500 for employee X and $5,000.00 for employee Y.

D.C. Mun. Regs. tit. 9, r. 9-1102

Final Rulemaking published at 49 DCR 2142 (March 8, 2002)