Md. Code Regs. 24.05.24.07

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

Section 24.05.24.07 - Carryover of Tax Credit

A. Eligibility. A qualified business entity may claim a project tax credit for the costs of an eligible economic development project in a qualified distressed county if the amount of the qualified business entity's total eligible project costs for the eligible economic development project is at least $500,000.

B. Limit. The project tax credit for a qualified business entity and all of its related entities and successors may not exceed $5,000,000 for an eligible economic development project. In extraordinary circumstances, the Secretary may make a written determination approving the maximum project 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.

(1) Subject to the limitation under §C(2) of this regulation, the project tax credit allowed for an eligible economic development project is equal to 100 percent of the eligible project costs for the eligible economic development project, less the amount of the credit allowed with respect to the eligible economic development project for prior credit years.

(2) Except as provided in §D(1) and (2) of this regulation, the credit allowed under this regulation for any credit year may not exceed the State tax for the credit year on the qualified business entity's income generated by or arising out of the eligible economic development project (the "project income"), as determined by the Comptroller and the Department of Assessments and Taxation.

D. Application of Project Tax Credit Against Taxes.

(1) If the eligible project costs for the eligible economic development project exceed the State tax on the qualified business entity's income generated by or arising out of the eligible economic development project for the first credit year, the qualified business entity may apply any excess as a credit for succeeding credit years against the State tax on the qualified business entity's project income 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) In addition to taking the tax credit against State tax on project income, subject to the limitations under §§D(3), E, and F 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, a qualified business entity other than a person subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland:

(a) May apply any excess of eligible project costs for the eligible economic development project over the cumulative amount used as a tax credit under this section for the credit year and all prior credit years as a tax credit against the State tax for the credit year on the qualified business entity's income other than income generated by or arising out of the eligible economic development project (the "non-project income"); and

(b) May claim a refund in the amount, if any, by which the unused excess exceeds the State tax for the credit year on the qualified business entity's non-project income.

(3) For any credit year, the total of the amount used as a tax credit against State tax on non-project income plus the 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.

E. Insurer Ineligible for 4 years. A qualified business entity that is subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland, may not claim the credit under this regulation for the first credit year or for the first 4 credit years following the first credit year.

F. Insurer Eligibility.

(1) A qualified business entity that is subject to taxation under Insurance Article, Title 6, Annotated Code of Maryland:

(a) May apply any excess of eligible project costs for the eligible economic development project over the cumulative amount used as a tax credit under this regulation for the credit year and all prior credit years as a tax credit against the premium tax imposed for the credit year; and

(b) May claim a refund in the amount, if any, by which the unused excess exceeds the premium tax for the credit year.

(2) For any credit year, the total of the amount used as a tax credit against the premium tax plus the amount claimed as a refund as provided in this regulation 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.

Md. Code Regs. 24.05.24.07

Regulation .07 amended effective April 14, 2003 (30:7 Md. R. 489)
Regulation .07F amended effective April 11, 2005 (32:7 Md. R. 686); adopted effective 45:10 Md. R. 503, eff. 5/21/2018