Md. Code Regs. 24.05.24.06

Current through Register Vol. 51, No. 24, December 2, 2024

Section 24.05.24.06 - Start-Up Tax Credit

A. Eligibility. A qualified business entity may claim a start-up tax credit in the amount provided in §C of this regulation.

B. Limit. The start-up tax credit for a qualified business entity and all of its related entities and successors may not exceed $500,000 for an eligible economic development project. In extraordinary circumstances, the Secretary may make a written determination approving the maximum start-up tax credit for more than one proposed project in the same qualified distressed county if the proposed project is beyond the scope of the original project and is of significant value to the county due to number of jobs to be created, quality of jobs, job training programs to be offered, or other economic development factors.

C. Calculation. The start-up tax credit allowed for eligible startup costs for each credit year equals the lesser of:

(1) 100 percent of the qualified business entity's eligible startup costs associated with an eligible economic development project, less the amount of the credit allowed with respect to the eligible economic development project for prior credit years; or

(2) The product of multiplying $10,000 times the number of qualified employees employed at the new or expanded business facility.

D. Application of Start-Up Tax Credit Against Taxes.

(1) If the tax credits allowed under this regulation for the first credit year exceeds the total tax otherwise due from the qualified business entity for that credit year, the qualified business entity may apply the excess as a credit for succeeding credit years until the earlier of the:

(a) Full amount of the excess is used; or

(b) Expiration of the 14th credit year following the first credit year.

(2) Subject to the limitation based on the amount of qualified employee withholding under §D(3) of this regulation and subject to §D(4) of this regulation, for any credit year after the 4th credit year following the first credit year but before the 15th credit year following the first credit year, the qualified business entity may claim a refund in the amount, if any, by which the qualified business entity's eligible start-up costs exceed the cumulative amount used as a tax credit under this section for the credit year and all prior credit years.

(3) For any credit year, the total amount claimed as a refund as provided in this section may not exceed the amount of taxes that the qualified business entity is required to withhold and has actually remitted for the credit year from the wages of qualified employees under Tax-General Article, §10-908, Annotated Code of Maryland.

(4) If the pay for the majority of the qualified positions created as a result of the establishment or expansion of a business facility is at least 250 percent of the federal minimum wage, the provisions of §D(2) of this regulation shall apply beginning with the credit year after the 2nd credit year following the first credit year.

Md. Code Regs. 24.05.24.06

Regulation .06B, D amended effective April 14, 2003 (30:7 Md. R. 489); adopted effective 45:10 Md. R. 503, eff. 5/21/2018