Business Tax Credits

Qualified investors must contribute at least $25,000 in cash or cash-equivalent to a QMBC that is certified by the Maryland Department of Commerce (DOC).

A QMBC must:

• Have its headquarters and base of operations in Maryland;
• Have fewer than 50 full-time employees;
• Have been in active business for no longer than 12 years from the date it received its first qualified investment;
• Not have any securities publicly traded companion any exchange;
• Has been certified as a biotechnology company by the Department; and
• The qualified investors in the company have not received more than $7,000,000 in tax credits in the aggregate under this section.

A QMBC may include a company that has been an active business for up to 12 years, with DOC approval.

Qualified investors are also required to file an income tax return. Credits may be claimed for no more than $250,000 per investment in a qualified biotechnology company, or $500,000 if the company is located in Allegany, Dorchester, Garrett, or Somerset Counties. DOC may not certify tax credits for investments in a single qualified biotechnology company that are in the aggregate more than 10% of the total amount appropriated to the Maryland Biotechnology Investment Tax Credit Reserve Fund for that fiscal year. DOC may not issue initial credit certificates in excess of the amount appropriated to the Reserve Fund for that fiscal year in the state budget as approved by the General Assembly.

At least 30 days before making an investment, the business must submit an initial credit certificate application to DOC. Upon approval (within 30 days of DOC's receipt of the application), the applicant will receive an initial credit certificate stating the amount of the tax credit and will have 30 days to make the investment. Within the following 10 days, the investor must notify DOC that the investment has been made. A final credit certificate will be issued to the applicant stating the amount of the tax credit to which the applicant is entitled. A copy of the final credit certificate must be filed with the taxpayer's income tax return.

The credit allowed is 50% of the investment in the QMBC for certificates issued before July 1, 2021 or 33% of the investment for certificates issued after June 30, 2021. If the QMBC is (1) located in Allegany, Dorchester, Garrett, or Somerset Counties, or (2) located in a Regional Institution Strategic Enterprise zone, is based on technology that was developed at a qualified institution within that zone, and has been in active business not longer than 7 years, the amount of the credit is 75% of the investment in the QMBC for certificates issued before July 1, 2021 or 50% of the investment for certificates issued after June 30, 2021, not to exceed $500,000. The amount in excess of the state tax liability may be refunded. The total amount of final tax credit certificates issued by DOC each year is limited to the amount appropriated to the Reserve Fund in the State budget. Applications are reviewed and approved on a first come, first served basis.

For taxable years beginning after December 31, 2012, this credit is available only with an electronically filed return. A copy of the certification issued by DOC must be included with the electronic return, and the Form 500CR section of the return must be completed.

Exception: Should a fiduciary become eligible to claim this credit (the fiduciary may be a member of a pass-through entity eligible to pass on the Biotechnology Investment Incentive Tax Credit to its members), the fiduciary will use Business Tax Credit Form for a Fiduciary, Form 504CR, as an electronic version of Fiduciary Income Tax Form 504 does not currently exist. A fiduciary may distribute the tax credit to its beneficiaries using Maryland Schedule K-1(504). A copy of the certification issued by DOC must be included with any Form 504CR filed.

However, beneficiaries receiving this tax credit from a fiduciary, must file electronically to claim a business tax credit unless the beneficiary happens to be a fiduciary taxpayer.

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-7234 or 1-877-821-0099

The business must create at least 25 new positions as part of the new or expanded business facility in Maryland (5,000 square feet or more). Businesses located in smaller counties (population of 30,000 or less) must create at least 10 new positions.

An enhanced credit is instead available for businesses that create or expand a new business facility in Maryland of 250,000 square feet or more and:

1. Continue to employ 2,500 employees and create 500 new positions that pay at least 150% of the minimum wage; or
2. Create 1,250 new positions that are paid at least 150% of the minimum wage.

In Montgomery County only, a business can:

1. Spend at least $150 million to obtain at least 700,000 square feet of new or expanded business premises through the purchase, construction, or lease of a new premises; and
2. Employ at least 1,100 individuals including at least 500 new, permanent full-time positions. All of the positions must receive employer-provided subsidized health care benefits, be paid at least 150% of the minimum wage, and be located in or neighboring the new, expanded or renovated premises.

The new positions must be:

1. Located in Maryland
2. Part of the new or expanded business facility in Maryland
3. Permanent
4. Full time of indefinite duration. In Montgomery County and Washington County for tax years 2007 and later, the position can be a contract position of definite duration lasting at least 12 months with an unlimited renewal option; and
5. Filled for at least one year

The business must then apply for and receive certification for a property tax credit from the local government in which the facility is located.
The county or city government will notify the State Department of Assessments and Taxation (SDAT) that the property tax credit has been approved. SDAT will calculate and certify the amount of the allowable tax credit to the Comptroller.

The credits are calculated as a percentage of the local property tax liability on the new or expanded portion of the facility. Those percentages are as follows:

Property Tax Credit:

• 1st and 2nd taxable years: 52%
• 3rd and 4th taxable years: 39%
• 5th and 6th taxable years: 26%
• Remaining taxable years: 0%

Credit against the personal or corporate income tax, or the insurance premiums tax:

• 1st and 2nd taxable years: 28%
• 3rd and 4th taxable years: 21%
• 5th and 6th taxable years: 14%
• Remaining taxable years: 0%

The enhanced property tax credit is a flat percentage of 58.5% for the local property tax credit and 31.5% for the state tax credit in each of the first 24 tax years.

If the credit is more than the state tax liability, the unused credit may be carried forward for the next five (5) taxable years.

If, at any time during the three tax years after the year the credit was earned, the business fails to satisfy the thresholds to qualify for the credit, the credit must be recaptured. The income tax credit to be recaptured is reported on line 26, Part W in the Form 500CR section of the return and filed with the tax return for the tax year in which the business failed to satisfy the applicable thresholds.

For taxable years beginning after December 31, 2012, this credit is available only with an electronically filed return. A copy of the certification issued by the local government must be included with the electronic return and the Form 500CR section of the return must be completed.

Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit, and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

State Department of Assessments and Taxation
7 St. Paul Street
Baltimore, MD 21202
Phone: 410-767-1191
E-mail: taxcredits@dat.state.md.us

The business must invest in research and development activities in Maryland related to cellulosic ethanol technology, which is technology that is used to develop cellulosic biomass for conversion to ethanol fuel. The business must also submit an application for the credit to the Maryland Department of Commerce (DOC) by September 15 of the calendar year following the end of the tax year in which the qualified research and development expenses were paid or incurred. DOC will certify the amount of the allowable credit to the business by December 15.

The amount of the tax credit is equal to 10% of the qualified research and development expenses paid or incurred during the tax year.

DOC may not approve more than $250,000 in credits for any calendar year. If the aggregate amount of credits applied for exceeds $250,000, each applicant will receive a prorated share of the total credit amount.

If the credit is more than the state tax liability, the unused credit may be carried forward for the next 15 years.

For taxable years beginning after December 31, 2012, this credit is available only with an electronically-filed amended income tax return for the tax year in which the qualified R&D expenses were paid or incurred. A copy of the certification issued by DOC must be included with the electronic return, and the Form 500CR section of the return must be completed.

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 East Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-7234 or 1-877-821-0099

This credit is allowed if a Maryland facility is originally placed in service or initially began co-firing, during the period of January 1, 2006 through December 31, 2018 and produces electricity during the tax year primarily using qualified energy resources derived from:

• Wind
• Open-Loop and Closed-Loop Biomass, including:
  • Any non-hazardous waste material that is segregated from other waste materials and is derived from any of the following forest-related resources: Mill residues, forest thinnings, slash, brush, waste pallets, crates, and dunnage and landscape or right-of-way trimmings
  • Agricultural sources, including but not limited to, orchard tree crops, vineyard grain, sugar, and other crop by-products and residues.
  • Methane gas or other combustible gases resulting from the decomposition of organic materials from an agricultural operation or from a landfill or a wastewater treatment plant using one, or a combination, of anaerobic decomposition or thermal decomposition.
  • Biomass facilities may NOT use old growth timber, or mill residues consisting of sawdust or wood shavings.
• Geothermal Energy
• Solar Energy
• Small Irrigation Power
• Municipal Solid Waste
• Qualified Hydropower

The business must apply for and receive an initial credit certificate from the Maryland Energy Administration (MEA) before claiming this credit. The initial credit certificate must state the amount of electricity the taxpayer expects to produce in a qualified Maryland facility over a five-year period. The total amount of the credit specified in the initial credit certificate cannot exceed $2.5 million and must be a minimum of $1,000.

Note: MEA is prohibited from issuing initial credit certificates after December 31, 2018.

The credit is $0.0085 (85/100 of one cent) for each kilowatt hour (or 85 cents for every 100 kilowatt hours) of electricity produced at a Maryland facility using qualified energy resources during the five-year period specified in the initial credit certification.

The annual tax credit may not exceed one-fifth (1/5) of the maximum amount of credit stated in the initial credit certificate.If the credit is more than the state tax liability, the excess credit may be refunded.

The MEA cannot issue an initial credit certificates after December 31, 2015, and may not issue an initial credit certificate for a credit amount less than $1,000.

For taxable years beginning after December 31, 2012, this credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. A copy of the initial credit certificate issued by the MEA must be included with the electronic return, and the Form 500CR section of the return must be completed.

Maryland Energy Administration
1800 Washington Blvd, Suite 755
Baltimore, MD 21230
Phone: 410-260-7207
E-mail: meainfo@energy.state.md.us

Contributions of money, goods or real property worth $500 or more are eligible for tax credits. Contributions of services or labor are not eligible. Individuals and businesses may claim a maximum of $250,000 in credits per year, representing a contribution of no more than $500,000.

Contributions must be made to a nonprofit organization approved by the Department of Housing and Community Development (DHCD). The taxpayer must apply to and receive approval by the DHCD for each contribution for which a credit is claimed.

For any tax year, the sum of all CITCs, including any carryover credits, may not exceed the lesser of $250,000 or the total amount of tax otherwise payable by the individual and/or business for the tax year. Excess credits may be carried over for five (5) years.

The credit is 50% of the value of the approved donation. Each business or individual may claim a credit of up to $250,000. Businesses and individuals claim the CITC by filing an electronic tax return supporting Business Income Tax Credit Form 500CR. An electronic return must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012. See exception below.

Important Note: While many individuals claim this credit on Form 502, this is still a business tax credit. Taxpayers must file electronically to use Form 500CR. Prior to Tax Year 2015, this credit did not appear on Form 502CR.

Exception: Beginning 2015, individuals who are eligible to claim the Community Investment Tax Credit (CITC), and who are not PTE members may elect to claim this credit on Part H of Form 502CR, instead of claiming the credit on Form 500CR. Taxpayers electing to use Form 502CR to claim the CITC are not required to file their return electronically. However, an individual may not claim this credit on both Form 500CR and Form 502CR. PTE members who are eligible for this credit must claim the credit on Business Income Tax Credit Form 500CR.

Individuals who anticipate having a carryover of the CITC are advised to use Form 500CR instead of Form 502CR. Individuals who have an existing carryover on Part X of their 2014 Form 500CR may elect to use Form 502CR if their Excess Carryover Credit is attributable only to the CITC.

See Form 500CR Instructions for specific line-by-line instructions. Form 500CR must still be filed electronically.

A copy of the required approval from the DHCD must be attached to the appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 for individuals, electing to use Form 500CR. The Form 500CR section of the electronic return must also be completed.

A copy of the required approval from the DHCD must be attached to Form 502 for those individuals, electing to use Form 502CR. Insurance premiums tax

The contributor and the non-profit partner must complete the Certification of Contribution for Tax Credit and submit it to the Maryland Department of Housing and Community Development along with a copy of the check or documentation of the value of donated goods. Businesses claiming the credit against this tax must include their North American Industry Classification System (NAICS) number in the space provided on that form.

Public service company franchise tax

Form AT3-74 must be submitted with the franchise tax return (SDAT Forms 11 or 11T).

Department of Housing and Community Development
Division of Neighborhood Revitalization
2 N. Charles St., Suite 450
Baltimore, MD 21202
Phone: 410-209-5800
E-mail:citc@mdhousing.org

The credit is applicable to the following transit instruments: MTA passes, fare cards, smart cards or vouchers used by employees to ride publicly or privately owned transit systems except taxi services, company Vanpool programs, company guaranteed Ride Home programs, and company Cash in Lieu of Parking programs.

The employer must pay a portion of the cost of an employee's travel between the employee's home and workplace, including the purchase of transit instruments (tickets, passes, vouchers, fare cards, smart cards and tokens). In addition, the workplace must be located in Maryland and travel must take place in either:

• A mass transit vehicle such as an MTA Bus, MTA Commuter Bus, MTA Light Rail, MARC Train, WMATA Metrobus, WMATA Metrorail, or other qualified mass transit system; or
• A vanpool which can seat at least eight adults, is used primarily to transport individuals between home and the workplace.

In addition, a business may also qualify for a credit for a portion of the amount paid to provide their employees a Guaranteed Ride Home and/or a parking "Cash-Out" program.

The business entity may claim a tax credit in an amount equal to 50% of the cost of providing commuter benefits to the business entity's employees and may not exceed $100 per individual employee per month.

If the credit is more than the state tax liability, the unused credit may not be carried forward to any other tax year.

A tax-exempt organization may estimate the amount of the tax credit for qualifying employees for the tax year. The total amount of the estimated credit should be divided evenly over the number of periods for filing withholding returns (Form MW506). For example, if quarterly returns are required, then the total estimated credit should be divided by four. Each payment to the Comptroller would be reduced by the pro rata amount of the credit.

Alternatively, the tax-exempt organization could apply the credit against the tax on unrelated business taxable income.

For taxable years beginning after December 31, 2012, the income tax credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. The Form 500CR section of the return must be completed.

Insurance premiums tax: Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

State and local income taxes withheld: Form MW508CR must be submitted with Form MW508, the Maryland Annual Employer Withholding Reconciliation Report to claim this credit against Maryland income tax withheld. If the tax-exempt entity is required to file the MW508 electronically, then MW508CR must be filed with an amended MW508A as the MW508CR is not available electronically at this time.

Click Here to be taken to ONLINE REGISTRATION FORM

The online registration form must be completed each time a business applies for the Commuter Tax Credit. Businesses must re-register for this tax credit annually.

For more information call 410-865-1100 or email CommuterChoice@mdot.maryland.gov

Visit: CommuterChoiceMaryland.com for more information

A credit is available for an investment in a qualified Maryland cybersecurity company (QMCC). The credit is claimed by a qualified investor. A qualified investor is an individual or entity that invests at least $25,000 in a QMCC that is required to file an income tax return in any jurisdiction. To qualify, a QMCC can be an entity of any form (except a sole proprietorship) that is duly organized and existing under the laws of any jurisdiction (or formed within 4 months of receiving the investment) for the purpose of conducting business for profit, and must be engaged primarily in the development of innovative and proprietary cybersecurity technology.

The QMCC must:

• Have its headquarters and base of operations in Maryland;
• Have not participated in the tax credit program for more than 1 prior fiscal year;
• Have an aggregate capitalization of at least $100,000;
• Own or have properly licensed any proprietary technology;
• Have fewer than 50 full-time employees
• Not have any securities publicly traded on any exchange
• Be in good standing;
• Be current in the payment of all tax obligations to Maryland or any unit or subdivision of Maryland;
• Not be in default under the terms of any contract with, indebtedness to, or grant from Maryland or any unit or subdivision of Maryland;
• Meet any other requirements of the Maryland Department of Commerce evidencing that the QMCC is a going concern primarily engaged in the development of innovative and proprietary cybersecurity technology; and
• Provide any other information the Maryland Department of Commerce may require.

The amount of the credit is 33% of the investment in the QMCC, not to exceed $250,000. For a QMCC located in Allegany County, Dorchester County, Garrett County, or Somerset County, the amount of the credit is 50% of the investment in the QMCC, not to exceed $500,000. The investment cannot include debt unless it is convertible debt. The investment must be the contribution of money in cash or cash equivalents expressed in United States dollars, at risk of loss, to a QMCC in exchange for stock, a partnership or membership interest, or any other ownership interest in the equity of the QMCC, title to which the ownership interest shall vest in the qualified investor. "Qualified investor" means an individual or entity that is required to file an income tax return in any jurisdiction and invests at least $25,000 in a QMCC. However, the qualified investor may not, after making the investment, own or control more than 25% of the equity interest in the QMCC. See § 10-733 of the Tax-General Article.

At least 30 days prior to making an investment in a QMCC, a qualified investor must submit an application to the Maryland Department of Commerce for an initial tax credit certificate.

At least 30 days prior to receiving an investment the QMCC must submit an application to the Maryland Department of Commerce to evidence that the QMCC has satisfied the minimum requirements for consideration as a QMCC.

For questions on application and certification processes or for additional information on this credit program, contact:

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438

Based on the actual amount of the investment made by a qualified investor, the Maryland Department of Commerce will issue a final tax credit certificate to the qualified investor. The qualified investor may claim the tax credit for the amount provided in the final certificate. If the credit exceeds the tax due, then a refund for the excess amount may be claimed. The credit cannot be claimed until the date of issuance of the final certificate. It must be claimed on the Maryland income tax return for the tax year in which the investment is made in the QMCC.

A copy of the final certificate received from the Maryland Department of Commerce is required to be included with your return for the tax credit to be allowed. Complete Part H-I using the information provided in the final certificate and enter the amount of the approved investment on line 1.

On line 2, Part H-I, enter 33% of the approved investment. For a QMCC located in Allegany County, Dorchester County, Garrett County or Somerset County, enter 50% of the approved investment.

Line 3, Part H-I, reflects the maximum dollar amount of credit per investment. Enter $250,000. For a QMCC located in Allegany County, Dorchester County, Garrett County or Somerset County, enter $500,000.

On line 4, Part H-I, enter the lesser of line 2 or line 3.

On line 5, Part H-I, enter any applicable recapture amount. See more information below about recapture amounts.

On line 6, Part H-I, subtract line 5 from line 4. If the amount is less than zero, enter a negative amount.

Enter the amount from line 6, Part H-I, on line 7, Part CCC.

Note: If you are claiming a credit for more than one investment, another separate Part H-I must be completed for each investment.

Total the amounts from line 6 from each separate Part H-I. Using only one summary section, combine the total on line 7, Part CCC. To claim the total credit, you must complete a second Part H-I at the time you electronically file your income tax return.

The credit is subject to recapture if within 2 years of the close of the taxable year in which the credit is claimed; 1) the qualified investor sells, transfers or otherwise disposes of the ownership interest in the QMCC that gave rise to the credit; 2) the QMCC ceases operating as an active business or distributes the equity investment; 3) the QMCC is not duly organized and existing within 4 months of receiving the qualified investment. The applicable recapture amount is calculated by multiplying the total amount of the credit claimed (or in the case of a sale, transfer, or other disposition of the ownership interest, the portion of the credit attributable to the ownership interest disposed of), by one of the following percentages:

100%, if the event requiring recapture of the credit occurs during the tax year for which the tax credit is claimed;

67%, if the event requiring recapture of the credit occurs during the first year after the close of the tax year for which the tax credit is claimed; or

33%, if the event requiring recapture of the credit occurs more than 1 year but not more than 2 years after the close of the tax year for which the tax credit is claimed. The amount of recapture is entered onto line 5, Part H-I.

The credit may also be subject to a recapture if the certificate is rescinded by the Maryland Department of Commerce due to the qualified investor failing to provide the required notice to the Maryland Department of Commerce of having made the investment, or if the Maryland Department of Commerce revokes the final certification due to false representations made in connection with the application for the certification.

If the credit is claimed by a qualified investor that is a PTE, the members of the PTE may claim the distributive or pro rata shares of the credit amount subject to the $250,000 limitation (or $500,000 for a QMCC located in Allegany County, Dorchester County, Garrett County or Somerset County). A PTE that earned the Cybersecurity Incentive Tax Credit must electronically file the Maryland Form 510, Form 500CR and all other required attachments for members to be permitted to claim the credit. See Form 510 instructions.

For a member of the PTE to be allowed the credit, the member must complete the Form 500CR section of their electronically-filed Maryland return and include a copy of the final certification from the Maryland Department of Commerce and Maryland Schedule K-1 (510) showing the allocated share of the credit amount.

Nonrefundable Credit for Buyers of Cybersecurity Technology and/or Cybersecurity Services (Part H-II of Form 500CR)

A qualified buyer may claim a credit in an amount equal to 50% of the cost incurred during the taxable year to purchase cybersecurity technology and/or cybersecurity services from one or more qualified sellers. For any taxable year, the credit allowed may not exceed $50,000 for each qualified buyer, and the aggregate credits claimed for cybersecurity technology and/or cybersecurity services purchased from a single qualified seller may not exceed $200,000.

A "Qualified Buyer" means any entity that has fewer than 50 employees in the State and that is required to file an income tax return in the State.

A qualified buyer eligible for the credit may apply to the Maryland Department of Commerce for a credit certificate that states the amount of the credit the qualified buyer may claim. A qualified buyer must attach a copy of the credit certificate to the income tax return on which the qualified buyer claims the credit. The Maryland Department of Commerce approves each application that qualifies for a credit certificate.

A "Qualified Seller" means a cybersecurity business that:

• Has its headquarters and base of operations in the State;
• (i) Has less than $5,000,000 in annual revenue; (ii) Is a minority-owned, woman-owned, veteran-owned, or service-disabled-veteran-owned business; or (iii) Is located in a historically underutilized business zone designated by the United States Small Business Administration;
• Owns or has properly licensed any proprietary cybersecurity technology; or provides cybersecurity service;
• Is in good standing;
• Is current in the payment of all tax obligations to the State or any unit or subdivision of the State; and
• Is not in default under the terms of any contract with, indebtedness to, or grant from the State or any unit or subdivision of the State.

A "Cybersecurity Business" means an entity organized for profit that is engaged primarily in the development of innovative and proprietary cybersecurity technology or the provision of cybersecurity service.

A "cybersecurity service" is an activity that is associated with a category or subcategory identified under the framework core established by the National Institute of Standards and Technology's Cybersecurity Framework.

"Cybersecurity technology" means products or goods intended to detect or prevent activity intended to result in unauthorized access to, exfiltration of, manipulation of, or impairment to the integrity, confidentiality, or availability of an information system or information stored on or transiting an information system.

The Maryland Department of Commerce may revoke its certification of a credit if any representation made in connection with the application for the certification is determined by the Maryland Department of Commerce to have been false. The revocation may be in full or in part as the Maryland Department of Commerce may determine.

Maryland Department of Commerce
Abigail McKnight
Tax Specialist
Office of Finance Programs
401 E. Pratt Street, 17th Floor
Baltimore, MD 21202
410-767-7234
Abigail.mcknight@maryland.gov

The company must provide long-term care insurance benefits to one or more employees during the taxable year as part of an employee benefits package.

The credit allowed is 5% of employer's cost which may not exceed the lesser of $5,000, or $100 for each employee in the State covered by long-term care insurance provided under the employee benefits package.

If the credit is more than the tax liability, the unused credit may be carried forward for the next five (5) tax years.

For taxable year beginning after December 31, 2012, taxpayers must file their income tax return electronically (Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 or 505 for Individuals). They must complete the Business Tax Credit Form 500CR section of the electronic return to claim this tax credit.

Insurance premium tax

:

Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

Public service company franchise tax

:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).

Comptroller of Maryland
Revenue Administration Division
110 Carroll Street
Annapolis, MD 2141
Phone: 410-260-7980 from Central Maryland,
1-800-MD TAXES from elsewhere
E-mail: taxhelp@marylandtaxes.gov

or

State Department of Assessments and Taxation
7 St. Paul Street
Baltimore, MD 21202
Phone: 410-767-1191
E-mail: taxcredits@dat.state.md.us

Donations of $500 or more of cash or publicly traded securities made by the taxpayer to a "qualified permanent endowment fund" at an "eligible community foundation" that meets certain requirements are eligible for tax credits. Individuals and businesses may claim a maximum of $50,000 in credits per year, representing a donation of no more than $200,000.

The taxpayer must apply to the Maryland Department of Housing and Community Development (DHCD) for a certification for the donation.

For any tax year, the sum of all Endow Maryland tax credits, including any carryover credits, may not exceed the lesser of $50,000 or the total amount of tax otherwise payable by the individual and/or business for the tax year. Excess credits may be carried over for five (5) years.

The credit is 25% of the value of the approved donation. Each business or individual may claim a credit of up to $50,000. Businesses and individuals claim the Endow Maryland Tax Credit by filing an electronic tax return supporting Business Income Tax Credit Form 500CR. An electronic return must be filed to claim this credit against the Maryland income tax. See exception below.

Exception: Individuals who are eligible to claim the Endow Maryland Tax Credit, and who are not PTE members may elect to claim this credit on Part I of Form 502CR, instead of claiming the credit on Part V of Form 500CR. Taxpayers electing to use Form 502CR to claim the Endow Maryland Tax Credit are not required to file their return electronically. However, an individual may not claim this credit on both Form 500CR and Form 502CR. PTE members who are eligible for this credit must claim the credit on Business Income Tax Credit Form 500CR.

Individuals who anticipate having a carryover of the Endow Maryland Tax Credit are advised to use Form 500CR instead of Form 502CR.

See Form 500CR Instructions for specific line-by-line instructions. Form 500CR must still be filed electronically.

Whenever the Endow Maryland Tax Credits are claimed against the income tax, an addition modification must be included for the amount deducted as a donation to the extent that the amount of donation is included in an application for the Endow Maryland Tax Credit.

A copy of the required approval from the Department of Housing and Community Development DHCD must be attached to the appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 for individuals, electing to use Form 500CR. The Form 500CR section of the electronic return must also be completed.

A copy of the required approval from the DHCD must be attached to Form 502 for those individuals, electing to use Form 502CR.

Department of Housing and Community Development
Division of Neighborhood Revitalization
2 N. Charles St., Suite 450
Baltimore, MD 21202
Phone: 410-209-5800
E-mail: endowmaryland.nr@maryland.gov

The business must hire at least one employee who:

• Is a new employee or an employee rehired after being laid off for more than one year;
• Worked for the business for at least 35 hours per week for six months or more;
• Earns at least 150% of the federal minimum wage;
• Spends at least 50% of the workday either in the enterprise zone or on activities of the business resulting from its location in the enterprise zone or focus area;
• Is hired after the date the enterprise zone was created or the date the business located in the enterprise zone or focus area, whichever is later; and
• Is not hired to replace an individual employed by the business within the last four years.

If the individual is economically disadvantaged, the business must obtain certification from the Maryland Department of Labor, Licensing and Regulation.

The income tax credit is $1,000 for each qualified new employee filling a newly created position in an enterprise zone, or $1,500 for each qualified new employee in a focus area.

The tax credit for economically disadvantaged employees is for a three-year period for each qualified employee, earned at the following amounts:

	Enterprise Zone	Focus Area
First Year	$3,000	$4,500
Second Year	$2,000	$3,000
Third Year	$1,000	$1,500

In order to receive the tax credit, an economically disadvantaged employee must remain in the position for three years. However, if the disadvantaged employee leaves the firm and is replaced by another employee who is also certified as disadvantaged, the firm may take the remainder of the credit as if the original employee had remained.

If the credit allowed in any tax year exceeds the State income tax for that tax year, a business entity may apply the excess as a credit against the State income tax for succeeding tax years until the earlier of the full amount of the excess is used or the expiration of the 5th tax year from the date on which the business entity hired the qualified employee to whom the credit first applies.

The business must include certification with the electronic return which shows the business is located in a Maryland enterprise zone. For Tax Years after December 31, 2012, this credit must be claimed in the Form 500CR section of an electronically filed Maryland return.

Maryland has more than 30 enterprise zones. Counties and municipalities are responsible for certifying a business as eligible for the tax credits. Contac the county or municipal enterprise zone administrator for more information. DOC has a list of jurisdictions with enterprise zones on its website.

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041

Economically disadvantaged employees are those who are certified as such by:

Maryland Department of Labor, Licensing and Regulation
Division of Workforce Development and Adult Learning
1100 N. Eutaw St.
Baltimore, MD 21201
Phone: 410-767-2047

To claim the credit, before beginning a film production activity, a qualified film production entity shall apply with the Maryland Department of Commerce for an initial credit certificate for the estimated production costs. Generally to qualify as a film production entity, the estimated total direct costs incurred in Maryland must exceed $250,000. However, for a Maryland small or independent film entity to qualify as a film production entity, the estimated total direct costs incurred in Maryland must exceed $25,000 and at least 50% of the filming of the film production activity must occur within Maryland. The credit claimed cannot exceed the amount stated in the final certificate.

An initial application describing the anticipated film production activity must be submitted to the Maryland Film Office of the Department of Commerce (DOC) by the film production entity before beginning a film production activity. A Preliminary Tax Credit Certificate(s) for these credits cannot be issued until July 1st of the fiscal year from which the credits will be drawn. The Final Tax Credit Certificate(s) will be issued after DOC has reviewed all required closing documentation, including completion of the Agreed Upon Procedures process.

After the production activity is completed, the film production entity must apply to the DOC for a tax credit certificate, providing proof of the total direct costs that qualify for the credit and the number of employees hired and qualifying wages paid. DOC will determine the total direct costs that qualify for a refundable Maryland income tax credit and issue a tax credit certificate for 25% of the total direct costs that qualify for the refundable income tax credit (27% of the total qualified direct costs for a television series).

A film production entity will not receive more credit than the amount certified by DOC.

This tax credit is a refundable tax credit, i.e. if the tax credit allowed in any taxable year exceeds the total tax otherwise payable by the qualified film production entity for that taxable year, the qualified film production entity may claim a refund in the amount of the excess.

For taxable years beginning after December 31, 2012, this credit is available only with an electronically-filed return. A copy of the final certificate issued by DOC must be included with the electronic return, and the Form 500CR section of the return must be completed.

Catherine Batavick, Deputy Director
Maryland Film Office
Maryland Department of Commerce
World Trade Center
401 E. Pratt Street, 14th Floor
Baltimore, MD 21202
Phone: 410-767-6342 or 1-800-333-6632

Website: www.marylandfilm.org
E-mail: catherine.batavick@maryland.gov

For Tax Years beginning after December 31, 2012, the carryover of the excess Green Building income tax credit must be requested on an electronic return completing the Form 500CR section of the electronic return.

Comptroller of Maryland
Revenue Administration Division
110 Carroll Street
Annapolis, MD 21411-0001
Phone: 410-260-7980 from Central Maryland,
1-800-MD TAXES from elsewhere
E-mail: taxhelp@marylandtaxes.gov

A homeowner must undertake the rehabilitation of a single-family, owner-occupied residential structure; and the rehabilitation expenses must exceed $5,000. The buildings that are being rehabilitated must be certified as historic, defined as having at least one of the following designations:

• Individually listed in the National Register of Historic Places; or
• A contributing resource within a National Register Historic District; or
• A locally designated structure or contributing resource to a local historic district that the Maryland Historical Trust (MHT) determines to be eligible for the National Register

The credit for homeowners is capped at $50,000 in a 24-month period.

Businesses must undertake substantial rehabilitation of income-producing buildings. "Substantial rehabilitation" means the greater of the adjusted basis of the structure or $25,000. The same expenditures may not be used to qualify for a credit in any other tax year. In addition, these buildings must be certified as historic, defined as having at least one of the following designations:

• Individually listed in the National Register of Historic Places; or
• A contributing resource within a National Register Historic District; or
• A locally designated structure or contributing resource to a local historic district that MHT determines to be eligible for the National Register; or
• Located within and certified as contributing to the significance of a Certified Heritage Area.

Some businesses may qualify as a "small commercial project." Businesses must undertake the rehabilitation of income-producing buildings and contain no more than 75 percent residential rental use. A main street business with a top floor apartment is an example of a small commercial property. In addition these buildings must be certified as historic, defined as having at least one of the designations above for business taxpayers.

Small commercial rehabilitations cannot exceed $500,000 in expenses, and the credit is capped at $50,000 in a 24-month period.

The business must receive certification from the Maryland Historical Trust (MHT). A credit will not be approved if work has already begun on a project prior to submission of the application, or if the applicant for a commercial rehabilitation has previously submitted three or more applications for commercial rehabilitations exceeding a total of $500,000 in the same year.

An individual or business may claim a tax credit for:

• 20% of the qualified rehabilitation expenditures; plus
• 5% of the qualified rehabilitation expenditures if the certified rehabilitation is a certified historic structure and a high performance building

Small Commercial Projects do not qualify for the additional 5% credit for being a high performance building.

For certified commercial rehabilitation projects, the credit is limited to $3 million. For all other certified rehabilitation projects, the credit is limited to $50,000. The amount of the credit that exceeds tax liability in the year the credit is claimed may be refunded.

A pro-rated percentage of the credit is subject to recapture if disqualifying work is performed, or the certified rehabilitation is disposed of, during a five-year period that begins with the year in which the certified rehabilitation was completed.

Within 18 months of a credit certificate being issued, the business or individual undertaking the rehabilitation must notify the Maryland Historical Trust that work on the project has begun. In general, without additional approval by the MHT, commercial rehabilitations must be completed within 30 months of the issuance of the initial credit certificate.

Corporations: For Tax Years beginning after December 31, 2012 Maryland Corporations must file their Maryland corporation return electronically and complete the Heritage Structure Rehabilitation Credit Form 502S and Form 500CR sections of the electronic corporation return and submit a pdf of the Maryland Historical Trust certification to claim this refundable credit.

Pass-Through Entities: For Tax Years beginning after December 31, 2012 Maryland Pass-Through Entities(PTEs) must file their Maryland Form 510 electronically and complete the Heritage Structure Rehabilitation Credit Form 502S and Form 500CR sections. PTEs must submit a pdf of the Maryland Historical Trust certification to pass this credit on to its members. In addition the PTE must provide Form 510 Schedule K-1 which separately states each member's distributive or pro rata share of the credit, and the MHT certification to each member.

Individuals (including fiduciaries): Form 502S must be completed and submitted with the income tax return (Form 502, Form 505 or Form 504) along with the MHT certification. For Tax Year 2013 and 2014, individuals are not required to file electronically to claim the Heritage Structure Rehabilitation Credit if they have no other business tax credit. Individuals will also complete and attach Form 502CR when filing Form 502S.

Insurance premium tax: Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, upon request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit, and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

Maryland Historical Trust
100 Community Place
Crownsville, MD 21032-2023

For information about the Homeowner and Small Commercial Project Tax Credit:
Contact: Megan Klem, megan.klem@maryland.gov, 410-514-7688
mht.maryland.gov/Pages/funding/tax-credits-homeowner.aspx
mht.maryland.gov/Pages/funding/tax-credits-small-commercial.aspx

For Commercial Rehabilitations:
Contact: Collin Ingraham, collin.ingraham@maryland.gov, 410-514-7671
mht.maryland.gov/Pages/funding/tax-credits.aspx

The business facility must be certified as having created at least 60 qualified positions, 25 qualified positions if the business facility established or expanded is in a Maryland Priority Funding Area or 10 qualified positions in a county with an annual average employment that is less than 75,000 or a median household income that is less than two-thirds of the statewide median household income.

A qualified position is a full-time position which pays at least 120% of the State minimum wage, is located in Maryland, is newly created as a result of the establishment or expansion of a business facility in a single location in the state and is filled.

Qualified business entities are those that are certified as such by the Maryland Department of Commerce. A qualified employee is an employee filling a qualified position.

Before filling these new positions, the company must notify the Maryland Department of Commerce to seek certification.

The credit allowed depends on where in Maryland the facility is located:

• If the facility is located in a revitalization area, as defined in the statute, the credit is $5,000 multiplied by the number of employees hired to fill the new positions.
• If the facility is not located in a revitalization area, the credit is $3,000 multiplied by the number of employees hired to fill the new positions.

The total credit earned by any one company may not exceed $1 million for any credit year. If the credit is more than the State portion of the income tax liability, the unused credit may be carried forward for the next five (5) tax years, or until it is fully used, whichever comes first.

If, at any time during the three tax years after the year the credit was earned, the average number of qualified positions falls more than 5% below the average number of qualified positions during the year in which the credit was earned, a portion of the credit will be recaptured for the tax year in which this occurs.

The amount to be recaptured is the amount originally claimed as a tax credit multiplied by the percentage reduction in the number of qualified employees. The income tax credit to be recaptured is reported on the line specified for recaptures in the Business Tax Credit Summary of Form 500CR.

For taxable years beginning after December 31, 2012, the income tax credit is available only with an electronically-filed return. A copy of the certification issued by the Maryland Department of Commerce must be included with the electronic return, and the Form 500CR section of the return must be completed.

Insurance premium tax:
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4980
E-mail: taxincentives@choosemaryland.org

To qualify for the credit, the company must hire an individual with a disability and obtain a determination from the Division of Rehabilitation Services (DORS) in the Maryland State Department of Education, or the Maryland Department of Labor for a disabled veteran, that the individual is a qualified employee with a disability.

A "Qualified Employee" with a disability means:

1. An individual who
   • Meets the definition of an individual with a disability as defined by the Americans with Disabilities Act;
     Has a disability that presently constitutes an impediment to obtaining or maintaining employment or to transitioning from school to work; and,
   • Is ready for employment; or,
2. Is a veteran who has been discharged or released from active duty in the U.S. armed forces for a service-connected disability.

A business may not claim the credit for an employee: (1) who is hired to replace a laid-off employee or to replace an employee who is on strike, or (2) for whom the business simultaneously receives federal or state employment training benefits.

The credit is allowed for the first 2 years of employment of the disabled individual for both the wages paid and the child care or transportation expenses paid on behalf of the employee as follows:

First Year	Wages - 30% of the first $15,000 paid in the first year for a maximum allowable credit of $4,500 Child care or transportation expenses - up to $1,500 of expenses paid in the first year
Second Year	Wages - 30% of the first $15,000 of wages paid in the second year for a maximum allowable credit of $4,500 Child care or transportation expenses - up to $1,500 of expenses paid in the second year

If the credit is more than the tax liability, the unused credit may be carried forward for up to 5 tax years.

A 501( c)(3) tax-exempt organization may estimate the amount of the tax credit for qualifying employees for the tax year. The total amount of the estimated credit should be divided evenly over the number of periods for filing withholding returns (Form MW506). For example, if quarterly returns are required, then the total estimated credit should be divided by four. Each payment to the Comptroller would be reduced by the pro rata amount of the credit.

Alternatively, the tax-exempt organization could apply the credit against the tax on unrelated business taxable income.

Whenever this credit is claimed against the income tax, an addition modification must be made in the amount of the credit claimed.

This credit is available only with an electronically-filed return. A copy of the determination from DORS or the Maryland Department of Labor must be included with the electronic return, and the Form 500CR section of the return must be completed.

State and local income taxes withheld:

Form MW508CR must be submitted with Form MW508, the Maryland Annual Employer Withholding Reconciliation Report. A copy of the determination from DORS or the Maryland Department of Labor must be included with the MW508CR. If the tax-exempt employer is required to file its MW508 electronically, then the employer should submit Form MW508CR and documentation with a paper Form MW508A after the electronic Form MW508 is transmitted.

Insurance premiums tax:
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.

Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).

Maryland State Department of Education
Division of Rehabilitation Services
2301 Argonne Drive
Baltimore, MD 21218
Phone: 1-888-554-0334 or 410-554-9442 or
Maryland Department of Labor
Division of Employment and Training
1100 N. Eutaw Street, Room 201
Baltimore, MD 21201
Phone: 410-767-2047

Businesses must submit an application to the Maryland Department of Commerce (DOC) by September 15 of the calendar year following the end of the tax year for which the costs were incurred. DOC shall certify the amount of the approved credit by December 15 of the calendar year following the end of the tax year in which the costs were incurred.

The credit can be taken for tax years beginning after December 31, 2012, but before January 1, 2022.

The Department of Commerce may not exceed $2 million in credits for any calendar year. If the total amount of credits applied for by all businesses exceeds $2 million, the credits will be approved on a pro-rata basis.

The credit is the sum of:

• Security clearance administrative expenses, not to exceed $200,000;
• 50% of the construction and equipment costs to construct or renovate a single Sensitive Compartmented Information Facility (SCIF) not exceed $200,000 the total amount of construction and equipment costs incurred to construct or renovate multiple SCIFs for which a credit can be claimed may not exceed $500,000; and
• Expenses incurred for rental payments owed during the first year of a rental agreement for spaces leased in the State if the individual or corporation is a Qualified Small Business that performs security-based contracting, not to exceed $200,000.

If the credit is more than the State tax liability, the unused credit may be carried forward for succeeding tax years until fully used.

Whenever a credit is claimed against the income tax for Security Administrative Expenses or the costs associated with a SCIF, an addition modification must be made in the amount of the credit claimed in Part J-I, line 3 of the Form 500CR. The add back requirement does not apply to a Qualified Small Business claiming the credit for First-Year Leasing Costs.

During the 2103 Legislative Session, the Maryland General Assembly amended certain provisions of the bill which authorized this tax credit that were effective for Tax Years beginning in 2013. As a result, there are some special provisions that apply when claiming the 2013 tax credit. Contact DOC, or go to their website, if you are claiming the 2013 credit and need more information.

To claim the ESCC tax credit, a business must submit an application to the Maryland Department of Commerce by September 15th following the tax year in which the related expenses and costs were incurred. By December 15th of that year, the Maryland Department of Commerce will certify the approved amount. To claim the credit, the applicant must: 1) file an electronic Maryland income tax return with the Comptroller of Maryland for any taxable year after the taxable year in which the costs were incurred; or 2) file an electronic amended Maryland income tax return with the Comptroller of Maryland. A copy of the Maryland Department of Commerce certification must be included with the return.

Maryland Department of Commerce (DOC)
Division of Business Development, Tax Incentives Group
World Trade Center
401 East Pratt Street, 17th Floor
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041

The business must purchase Maryland-mined coal during the tax year. To take the credit against the income tax, an application must be submitted to the State Department of Assessments and Taxation (SDAT).

An electricity supplier must not have been an electric company before July 1, 1999, and both co-generators and electricity suppliers must not be subject to the public service company franchise tax. The total amount of credits approved by SDAT for the tax years 2007 and later are limited. In addition, $2,250,000 of the credits must be reserved for Maryland-mined coal for use in a Maryland facility.

The credit is $3 per ton of Maryland-mined coal purchased during the tax year, but cannot exceed the credit amount approved by SDAT.

The co-generator or electricity supplier may only apply the credit against the State income tax for the tax year in which the credit was earned. The amount of the credit may not exceed the State income tax for that tax year.

An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012.

See Form 500CR Instructions for specific line-by-line instructions.

An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012. The appropriate electronic Maryland Income Tax Return - Form 500 for Corporations, Form 510 and 510 Schedule K-1 for Pass-Through Entities, and Form 502 or 505 for Individuals must be filed to claim this credit. A copy of the certification by the State Department of Assessments and Taxation (SDAT) must be included with the electronic return

Public service company franchise tax:

Computation and schedule must be submitted with the franchise tax return (SDAT Form 11 or 11T).

State Department of Assessments and Taxation
7 St. Paul Street
Baltimore, MD 21202
Phone: 410-767-1191
E-mail: taxcredits@dat.state.md.us

Credits may be claimed for eligible project costs incurred to establish, relocate or expand a business facility in a Tier I Maryland county. To qualify for the credit for project costs, a minimum of $500,000 must be spent on eligible project costs. At least 50 newly hired qualified employees must be employed for at least one year at the new or expanded facility for eligibility for the maximum credit of $5,000,000, or at least 25 but fewer than 50 for eligibility for a maximum credit of $2,500,000, or at least 10 but fewer than 25 for eligibility for a maximum credit of $1,000,000. This credit may also be claimed by tax-exempt nonprofit organizations that are qualified business entities against their unrelated business taxable income. If claiming a credit for multiple projects, complete a separate Part P of Form 500CR for each project.

For information on Tier I counties, qualified employees, eligible costs and other requirements businesses must satisfy to qualify for credit, contact:

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438 or 410-767-4980

A business cannot be certified as a qualified business entity by the Secretary of the Maryland Department of Commerce unless the business notifies the Maryland Department of Commerce of its intent to seek certification before hiring any qualified employees to fill the qualified positions.

The qualified business entity must report to the Maryland Department of Commerce the amount of the project tax credit that the entity claims on the entity's tax return for each taxable year that the entity claims any portion of the project tax credit. Failure of the qualified business entity to report the amount claimed disqualifies the entity from claiming any unclaimed amount of the project tax credit.

For any taxable year, if a qualified business entity claims the project tax credit, the qualified business entity cannot also claim a Job Creation Tax Credit authorized under Section 6-304 of the Maryland Economic Development Article.

Pass-through entities (PTEs), filing Maryland Form 510 with eligible project costs must follow the additional instructions following Part P-IV Summary of Form 500CR.

Note: A qualified business entity, which has been certified for the tax credit, may claim a prorated share of this credit, if: (1) the number of qualified positions falls below the minimum number of qualified positions required to qualify for the project tax credit, but does not fall below 10, and (2) the qualified business entity has maintained at least the minimum number of qualified positions required to qualify for the project tax credit for at least five years.

Generally, at any time after the 4th taxable year in which the qualified business entity claims the project tax credit, the business may request a refund of any excess credit. For any taxable year, the total amount claimed as a refund must not exceed the amount of tax that the qualified business entity is required to withhold for the taxable year from the wages of qualified employees under Section 10-908 of the Maryland Tax- General Article.

Credits may be claimed for eligible project costs and for eligible start-up costs incurred to establish, relocate or expand a business facility in a distressed Maryland county. To qualify for the credit for project costs, a minimum of $500,000 must be spent on eligible project costs. At least 25 newly hired qualified employees must be employed for at least one year at the new or expanded facility.

This credit may also be claimed by tax-exempt nonprofit organizations that are qualified business entities against their unrelated business taxable income.

If claiming a credit for multiple projects, complete a separate Part P of Form 500CR for each project.

For information on distressed counties, qualified employees, eligible costs and other requirements, businesses must satisfy to qualify for credit, contact:

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt St.
Baltimore, MD 21202
410-767-6438 or 410-767-4980

Pass-through entities (PTEs), filing Maryland Form 510 with eligible project costs and eligible start-up costs must follow the additional instructions following Part P-IV Summary of Form 500CR.

Note: For tax years beginning after December 31, 2010, a qualified business entity, which has been certified for the tax credit, may claim a prorated share of this credit, if: (1) the number of qualified positions falls below 25, but does not fall below 10, and (2) the qualified business entity has maintained at least 25 qualified positions for at least five years.

Generally, at any time after the 4th tax year but before the expiration of the 15th tax year after the project was placed in service or the business locates to a qualified distressed county, the business may apply the excess to the entity's total Maryland State income tax liability and may request a refund of any excess credit. If the majority of the qualified positions are paid at least 250% of the federal minimum wage, then the refundable years will begin after the 2nd tax year rather than the 4th tax year.

To claim the credit, an individual or corporation must submit certification from the Maryland Department of Natural Resources, which verifies the amount of oyster shells recycled during the year.

The Comptroller of Maryland will allow a Maryland income tax credit for the amount certified by the Department of Natural Resources, not to exceed the lesser of $1,500 per taxpayer or the amount of the State income tax liability. If the credit is more than the state tax liability, the unused credit may not be carried forward to any other tax year.

The Oyster Shell Recycling Tax Credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. The Form 500CR section of the electronic return must be completed and must include the certification from the Department of Natural Resources.

Maryland Department of Natural Resources
Tawes State Office Building
580 Taylor Avenue
Annapolis, MD 21401
410-260-8300

"Qualified vehicle" means a Class F (Tractor) vehicle described under § 13-923(a) of the Transportation Article that is titled and registered in Maryland. These "tractors" are the ones which pull trailers, as opposed to farm tractors.

For each qualified Class F tractor registered by the taxpayer in Maryland, the Comptroller will allow a Maryland income tax credit for the lesser of:

1. The expenses of registering a Class F tractor in Maryland during the tax year; or
2. $400 for each qualified Class F tractor in Maryland; or
3. The State portion of the Maryland income tax liability for the tax year.

If the credit is more than the state tax liability, the unused credit may not be carried forward to any other tax year.

A copy of the tax credit certificate from MVA must be included with your tax return when claiming this tax credit. However, the Qualified Vehicle Tax Credit is available only on an electronically-filed income tax return for the tax year in which the credit is being claimed. The Form 500CR section of the electronic return must be completed to claim the Maryland tax credit.

The business must invest in research and development activities in Maryland during the tax year. The business must also submit an application for the credit to the Maryland Department of Commerce (DOC) by September 15 of the year following the tax years in which the Maryland qualified expenses were incurred.

In addition to submitting the application to DOC, small businesses must submit documentation showing they had net book value assets, at the beginning or end of the tax year, as reported on the balance sheet, of less than $5 million.

If the total Basic tax credits applied for in a tax year exceed $4.5 million, the businesses' Basic tax credit will be prorated. If the total Growth tax credits applied for in a tax year exceed $4.5 million, the businesses' Growth tax credit will be prorated.

DOC will certify the amount of credit available to the business by December 15.

There are two types of research and development tax credits available to businesses:

• Basic Research and Development Credit: 3% of the lesser of its Maryland qualified research and development expenses incurred during the tax year or the Maryland base amount, subject to statutory limits on the total amount of credits to all firms;
• Growth Research and Development Credit: 10% of the Maryland qualified research and development expenses incurred during the year that exceeds the Maryland base amount, subject to statutory limits on the total amount of credits to all firms.

The Maryland base amount is the average annual gross receipts of the business for the four preceding tax years multiplied by the Maryland base percentage. For most businesses, the Maryland base percentage is the percentage that Maryland research and development expenses for the preceding four tax years is of total gross receipts for those years.

If the credit allowed in any tax year exceeds the State income tax for that tax year, a taxpayer may apply the excess as a credit against the State income tax for succeeding tax year until the earlier of:

• The full amount of the excess is used;
• The expiration of the 7th tax year in which the Maryland qualified research and development expense was incurred; and
• The expiration of the 15th tax year in which the Maryland qualified research and development expense was incurred if the expense was incurred in a tax year prior to 2005.

An electronic tax return supporting Form 500CR must be filed to claim this credit against the Maryland income tax, for tax years beginning after December 31, 2012.

See Form 500CR Instructions for specific line-by-line instructions. For qualified small businesses, the amount in excess of the state tax liability may be refunded.

Whenever the Research & Development Tax Credits are claimed against the income tax, an addition modification must be made for the tax year in which the research and development expenses were paid.

A copy of the required certification from DOC must be included with the appropriate electronic return: Form 500X, the Maryland Amended Corporation Income Tax Return, or Form 502X, Maryland Amended Individual Income Tax Return or Pass-Through Entities Form 510. The Form 500CR section of the electronic amended return must also be completed.

Maryland Department of Commerce
Division of Business Development, Tax Incentives Group
World Trade Center
401 E. Pratt Street, 17th Floor
Phone: 410-767-6438 or 410-767-4980

To claim the credit, before beginning a theatrical production activity, a qualified theatrical production entity shall apply with the Maryland Department of Commerce (MDOC) for an initial credit certificate for the estimated production costs. To qualify as a theatrical production entity, the estimated total direct costs incurred in Maryland must exceed $100,000. The credit claimed cannot exceed the amount stated in the final certificate.

An initial application describing the anticipated theatrical production activity must be submitted to MDOC by the theatrical production entity before beginning a theatrical production activity. A Preliminary Tax Credit Certificate(s) for these credits cannot be issued until July 1st of the fiscal year from which the credits will be drawn. The Final Tax Credit Certificate(s) will be issued after DOC has reviewed all required closing documentation, including completion of the Agreed Upon Procedures process.

After the production activity is completed, the theatrical production entity must apply to MDOC for a tax credit certificate, providing proof of the total direct costs that qualify for the credit and the number of employees hired and qualifying wages paid. DOC will determine the total direct costs that qualify for a refundable Maryland income tax credit and issue a tax credit certificate for 25% of the total direct costs that qualify for the refundable income tax credit.

A theatrical production entity will not receive more credit than the amount certified by MDOC.

This tax credit is a refundable tax credit, i.e. if the tax credit allowed in any taxable year exceeds the total tax otherwise payable by the qualified theatrical production entity for that taxable year, the qualified theatrical production entity may claim a refund in the amount of the excess.

For taxable years beginning after December 31, 2021, this credit is available only with an electronically-filed return. A copy of the final certificate issued by MDOC must be included with the electronic return, and the Form 500CR section of the return must be completed.

Liz Fitzsimmons, Managing Director
Office of Tourism and Film
Maryland Department of Commerce
401 E. Pratt Street, 14th Floor
Baltimore, MD 21202
Phone: 410-767-6331
E-mail: liz.fitzsimmons@maryland.gov

The business must qualify for the federal Work Opportunity Tax Credit allowed under § 38 of the Internal Revenue Code. Additional information about the federal credit is here. The Maryland credit is available if the business employs Maryland workers whose wages the employer uses to calculate the federal credit.

The credit is calculated on Form 500CR. Line 2 through 5 of Part O calculate the portion of the federal credit that is attributable to the business's Maryland employees. The Maryland credit entered on line 6 is 50% of the federal credit attributable to Maryland.

The business must follow all IRS procedures for claiming the federal credit, including completing federal Form 8850 (Pre-Screening and Certification Request for the Work Opportunity Credit). The business must provide the Comptroller information about its eligibility for the federal credit and its Maryland employees upon request.

For a winery or a vineyard to claim a tax credit, an individual or corporation on behalf of the winery or vineyard must apply to and be certified by the Maryland Department of Commerce (DOC). The winery or vineyard must submit an application to DOC by September 15th following the tax year in which the qualified capital expenses were incurred.

A qualified winery is defined as an establishment licensed by the Comptroller of Maryland as either a Class 3 or Class 4 winery.

A qualified vineyard is defined as agricultural lands located in Maryland consisting of at least one contiguous acre used solely to grow grapes and other plants that will be used in the production of wine by a winery licensed by the Comptroller of Maryland.

Qualified capital expenses must be made in connection with the establishment of new wineries or vineyards, or capital improvements made to existing wineries or vineyards in Maryland.

"Qualified capital expenses" include expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or in a winery. Qualified capital expenses do NOT include the cost of construction or installation of buildings or structures, utilities, labor costs, service costs, repair costs, maintenance costs, and general supplies. "Qualified capital expenses" include expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products at a vineyard or in a winery. Qualified capital expenses do NOT include the cost of construction or installation of buildings or structures, utilities, labor costs, service costs, repair costs, maintenance costs, and general supplies.

A list of expenses that are "qualified capital expenses" is posted on the Department of Commerce's Website
By December 15th of the year in which the application has been filed, DOC will certify the approved amount of credit. The total Maryland Wineries and Vineyards Tax Credit approved by DOC may not exceed $500,000 for any calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.

To claim the credit, the business must: 1) File an electronic Maryland income tax return with the Comptroller of Maryland for any taxable year after the taxable year in which the qualified capital expenses were incurred; or 2) File an electronic amended tax return with the Comptroller of Maryland for the year in which the expenses were incurred. A copy of the certification from the Maryland Department of Commerce must be included with the return.

DOC will certify up to 25% of the qualified capital expenses; however they may not approve more than $500,000 of tax credits in more than one calendar year. If the total amount of credits applied for by all businesses exceeds $500,000, the credits will be approved on a pro-rata basis.

If the approved credit is more than the state tax liability, the unused credit may be carried forward for up to fifteen tax years, or until used, whichever comes first.

A copy of the required certification from DOC must be included with the appropriate electronic amended return: Form 500X, the Maryland Amended Corporation Income Tax Return, or Form 502X(or Form 505X), Maryland Amended Individual Income Tax Return or Pass-Through Entities Form 510. The Form 500CR section of the electronic amended return must also be completed.

Maryland Department of Commerce
Office of Finance Programs, Tax Incentives Group
401 E. Pratt Street
Baltimore, MD 21202
Phone: 410-767-6438 or 410-767-4041 or (877) 821-0099