State of Maryland business tax credits

By Cindie S. Rosenzweig, CPA, MS
Hertzbach & Company, P.A.
Member, MACPA State Tax Committee

Maryland has a plethora of business tax incentives available to all taxpayers. Following is a brief summary of available tax credits and data on how to get more information:

1. Businesses that Create New Jobs Credit: This credit is available to businesses that are located in Maryland that create new positions and establish or expand business facilities in Maryland. In addition, a property tax credit for businesses that create new jobs must be granted by a local government of Maryland. The credit can be taken against corporate income tax, personal income tax and insurance premiums tax. For requirements and additional information, contact:

State Department of Assessments and Taxation (SDAT)
301 West Preston St.
Baltimore, MD 21201-2395
Phone: (410) 767-1191
E-mail: webmaster@dat.state.md.us

2. Clean Energy Incentive Tax Credit: Businesses that purchase and install solar water heating property and photovoltaic property or use waste materials to produce electricity may be entitled to an income tax credit for tax years 2001-2004. For information on this credit, contact:

Revenue Administration Division (RAD)
Comptroller of Maryland
Annapolis, MD 21411-0001
Phone: (410) 260-1980 in central Maryland; (800) MD-TAXES elsewhere
E-mail: taxhelp@comp.state.md.us

3. Commuter tax credit: Maryland-based businesses that provide payment of a portion of an employee's commuting cost for transit or van-pool or payments made under Guaranteed Ride Home and Parking "Cash-Out" programs may be entitled to tax credits against corporate income tax, personal income tax and insurance premiums tax. For additional information, contact:

Buddy Alves
MTA Marketing Division
6 St. Paul St., third floor
Baltimore, MD 21202-1614
Phone: 410-767-8755
E-mail: bakves@mdot.state.md.us

Also, contact the Revenue Administration Division (see above).

4. Maryland Disability Employment Tax Credit: This credit is offered to businesses that hire qualified persons with disabilities. The credit can be taken against corporate income tax, personal income tax, insurance premium tax and public service company franchise tax. Tax-exempt organizations that qualify may also take advantage of this credit as exempt entities may apply the credit against state and local withholding. For requirements and additional information, contact:

Maryland Department of Labor, Licensing and Regulations (DLLR)
Division of Employment and Training
1100 North Eutaw St.
Baltimore, MD 21201
Phone: (410) 767-2047
E-mail: ghee@careernet.state.md.us

5. Electric and Gas Utility Tax Credit: There are two credits available to electric and gas companies that are public utilities, a credit against income tax for a portion of property tax paid and a credit for wages paid to qualified employees at an electric company's qualified headquarters. This credit can be taken against corporate income tax and personal income tax. For additional information, contact RAD or SDAT.

6. Employer-Provided Long-Term Care Insurance Credit: Employers that provide long-term care insurance as part of an employee benefit package may be entitled to claim a credit for the costs incurred in providing this benefit. The credit can be taken against corporate income tax, personal income tax, insurance premium tax and public service company franchise tax. For information and questions regarding this credit, contact RAD.

7. Employment Opportunity Tax Credit: Businesses that hire qualified individuals who have previously received Aid to Families with Dependent Children or Family Investment Program entitlements may be entitled to tax credit against corporate income tax, personal income tax, insurance premium tax and public service company franchise tax. Credit also is available against state and local withholding for tax-exempt organizations. For requirements and information, contact DLLR.

8. Enterprise Zone Tax Credit: This credit is available to businesses located in enterprise zones in Maryland that have been certified by the local enterprise zone administrator. The credit can be taken against corporate income tax and personal income tax. For requirements and additional information, contact:

Maryland Department of Business and Economic Development
Division of Business Development, Tax Incentives Group (DBED)
217 East Redwood St.
Baltimore, MD 21202
Phone: (410) 767-6438
E-mail: jwade@mdbusiness.state.md.us

9. Heritage Preservation Tax Credit/Mortgage Credit Certificate: A credit is available for substantial rehabilitation expenditures of a certified heritage structure located in Maryland or in a state with a reciprocal agreement with regards to this credit. The credit is available for owner-occupied residential property as well as income-producing property. The credit can be taken against corporate income tax and personal income tax. Unused credits may be transferred to new owners. For requirements and additional information, contact:

Maryland Historical Trust
100 Community Place
Crownsville, MD 21032-2023
Phone: (410) 514-7626
E-mail: goodrow@dhcd.state.md.us

10. Job Creation Tax Credit: Qualified businesses that create new positions in Maryland via expansion or establishment of a facility in Maryland may be entitled to this credit. The credit can be taken against corporate income tax, personal income tax, insurance premium tax and public service company franchise tax. For information and requirements, contact DBED.

11. Maryland-Mined Coal Tax Credit: This credit is available to a co-generator, a public service company or an electric supplier that purchases coal mined in Maryland. The credit can be taken against corporate income tax, personal income tax and public service company franchise tax. For information, contact RAD or SDAT.

12. Neighborhood Partnership Program Tax Credit: Understanding of this credit is a must for taxpayers and tax practitioners. This credit is available to businesses that contribute cash or goods to approved projects operated by tax-exempt organizations. The credit is in addition to charitable contribution deductions allowed for federal and state tax purposes.

One of the projects that receives support from this program is Healthy Family Baltimore County. This organization is working with high risk families to prevent child abuse.

There are many other worthwhile projects under this program. For taxpayers who are making charitable contributions, this is a program that offers significant tax savings while helping to fund critical projects in Maryland. This credit can be taken against corporate income tax, personal income tax, insurance premium tax, public service company franchise tax and financial institutions franchise tax. For additional information, contact:

Maryland Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032-2023
Phone: (410) 514-7241
E-mail: keel@dhcd.state.md.us

13. One Maryland Economic Development Tax Credit: Businesses that establish or expand a business facility as part of an approved project located in a distressed Maryland county may be entitled to a tax credit for the related costs. The credit can be taken against corporate income tax, personal income tax and insurance premium tax (start-up credit only). For additional information, contact DBED.

14. Research and Development Tax Credit: As the name implies, this credit is available to businesses that incur qualified research and development expenses in Maryland. The credit can be taken against corporate income tax and personal income. For information, contact DBED.

15. Telecommunications Property Tax Credit: This is a credit for a portion of property taxes paid by a public utility that is a telecommunications company. This credit can be taken only against corporate income tax. For additional information, contact RAD.

16. Water Quality Improvement Credit: This credit may be claimed for the additional commercial fertilizer costs necessary to convert agricultural production to a certified nutrient management plan. The credit can be taken against corporate income tax and personal income tax. For additional information and requirements, contact:

Maryland Department of Agriculture
Nutrient Management Program
Annapolis, MD 21401
E-mail: lawrenl@mda.state.md.us

17. Work-Based Learning Program Credit: A tax credit is available to employers who hire students as part of an approved work-based learning program. This credit was scheduled to sunset on June 30, 2001, but has been extended. The credit can be taken against corporate income tax, personal income tax and public service company franchise tax. For information, contact:

Maryland State Department of Education
Division of Career Technology and Adult Learning
200 West Baltimore St.
Baltimore, MD 21201
Phone: (410) 767-0182
E-mail: jholly@msde.state.md.ud

The discussion above is limited to providing a brief summary of each credit listed so that taxpayers and tax practitioners are aware of the credits available. Also, the summary is meant to provide a quick reference to the appropriate resource for each credit.

Note that the list is not all-inclusive. Most of the information provided above is a summary of information printed in A Guide To Business Tax Credits, a booklet available from the Maryland Comptroller's office. Information about the credits and other tax issues can be found on the Comptroller's Web site, www.marylandtaxes.com.

If any of the credits discussed above possibly applies to any of your clients or your business, contact the appropriate resource for information and requirements.

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