QUEEN ANNE'S COUNTY ENTERPRISE ZONE PROGRAM
If you are planning to relocate your company, or are already located within the Queen Anne’s County Enterprise Zone, you may be eligible for Maryland Enterprise Zone tax credits. There are two Enterprise Zone Tax Credits that are available, the Real Property Tax Credit and the State Income Tax Credit. A business is eligible for the Real Property Tax Credit if it makes a capital investment in its property (i.e., constructs or renovates a building, or expands an existing facility). A business is eligible for the State Income Tax Credit if hires new full time employees in the zone. The following businesses are not eligible to participate in the program: Adult entertainment and gambling/casinos; Fast food restaurants; Convenience stores; and Gas stations, except those gas stations incidental to a retail use of 35,000 s.f. or more located on the same property.
The Enterprise Zone State Income Tax Credit
This credit is applied to your state income taxes, and its value is based on the number and type of new employees hired by the business. To receive the credit the business must meet the following criteria.
The Enterprise Zone Real Property Tax Credit
A ten-year credit against local property taxes is available to companies that locate, expand, or substantially improve business properties in the Enterprise Zone. The property tax credit is equal to 80% of the difference between the base value of the property (the assessment in the year prior to new construction, expansion, or substantial improvement) and the newly assessed value of the property after the investment is made. The property tax credit is 80% for five years. During the last five years, the property tax credit declines 10% annually; the credit is 70%, 60%, 50%, 40%, and 30% respectively. This tax credit is administered to the real property owner in their Property Taxes.
- Applicant must plan to make a capital investment in its property (there is no minimum investment required);
- Applicant should be mindful of having a base assessment done before commencing work as the tax credit is applied to the increase in the assessed value;
- Applicant should apply for the tax credit after receiving all required building permits and before or at the beginning of construction (see How to Apply below);
- Only commercial properties may apply. In a mixed use development, only the portion assessed as commercial will receive the tax credit. Any portion of the property devoted to residential use will not receive the credit;
- In order to receive a property tax credit for the next taxable year (beginning on July 1 when the tax bill is issued), the local Zone Administrator, the Queen Anne’s Department of Economic Development, must certify to the MD Department of Assessments and Taxation (SDAT) the eligibility of a particular business by no later than the end of the preceding calendar year on December 31st . Eligible projects will receive a certification letter and notification will be provided to SDAT.
- The granting of an Enterprise Zone property tax credit is affected by the timing of the completion of capital improvements, the assessment cycle, and how the improvements are assessed. (I.E. the improvement must change the value of the real property);
- The law states that the credit shall be granted to the “owner” of a qualified property. In cases where a lessee makes the capital improvements, the lessees should make a contractual provision with the owner of the qualified property regarding receipt of the property tax credit.
- There is no minimum on the number of employees to meet the necessary qualifications.
- Must have been hired after the date on which the Enterprise Zone was designated or the date on which the business relocated in the Enterprise Zone, whichever is later.
- Must be filling a new position or replacing an employee who was previously certified as economically disadvantaged.
- Must have been employed at least 35 hours a week for at least six months.
- Must be paid at least 150% of the federal minimum wage throughout his or her employment by a business entity before or during the taxable year for which the entity claims a credit.
- Must have spent at least half of his or her working hours in the Enterprise Zone or on activities directly resulting from the business location in the zone.
- Must be a new employee or an employee rehired after being laid off by the business for more than one year.
There are two types of income tax credits. If the employee is not economically disadvantaged, you may qualify for a one-time credit of $1,000 per employee. If the employee is economically disadvantaged, as determined by the Maryland Jobs Service, you may take a credit up to $3,000 of the employee's wages in the first year of employment. The credit is $2,000 in the second year and $1,000 in the third. DLLR must certified that the employee is economically disadvantaged. Please refer to the DLLR website link below for the criteria. A Voucher must be submitted to DLLR within 28 to 30 days of hiring a disadvantaged worker. Download the DLLR Income Tax Credit Voucher (PDF).
Once/if a business has been certified, the credits can be claimed upon filing a Tax Return using a Form 500CR and a copy of the Certification Letter. For more information, see:
- Download the application (PDF), complete it and submit to the Queen Anne’s Department of Economic and Tourism Development, Jean Fabi, Zone Administrator and Economic Development Coordinator via email. The application will be reviewed to determine whether or not your business is eligible to receive Enterprise Zone benefits. You will receive a letter acknowledging the receipt of your application.
- The Zone Administrator will review and forward to the appropriate State entities for approval.
- If determined eligible, you will receive a letter certifying this determination from the Department of Economic Development. Keep this letter as proof of your Enterprise Zone certification.
- If you are applying for the Real Property Tax Credit, you will automatically see the Tax Credit reflected in your Property Taxes (either at the start of the next Fiscal Year or after the next Assessment Cycle). If you are applying for the State Income Tax Credits, you will have to claim them or have your accountant/bookkeeper claim them when you file your business entity tax returns.