§ 9-230

Maryland § 9-230

• Jurisdiction: Maryland
• Article gtp: Tax - Property
• Title: 9

Text

(a) (1) In this section the following words have the meanings indicated.

(2) “Affiliate” means a person:

(i) that directly or indirectly owns at least 80% of a business entity; or

(ii) 80% of which is owned, directly or indirectly, by a business entity.

(3) “Business entity” means a person conducting a trade or business in the State, that is subject to the State individual or corporate income tax, insurance premiums tax, financial institution franchise tax, or public service company franchise tax.

(4) “Full–time position” means a position requiring at least 840 hours of an individual’s time during at least 24 weeks in a 6–month period.

(5) “New or expanded premises” means real property, including a building or part of a building that has not been previously occupied, where a business entity or its affiliates locate to conduct business.

(6) (i) “New permanent full–time position” means a position that is:

1. A. a full–time position of indefinite duration; or

B. in Montgomery County and Washington County, a full–time position of indefinite duration or a contract position of definite duration lasting at least 12 months with an unlimited renewal option;

2. located in Maryland;

3. newly created, as a result of the establishment or expansion of a business facility in the State; and

4. filled.

(ii) “New permanent full–time position” does not include a position that is:

1. created when an employment function is shifted from an existing business facility of the business entity or its affiliates located in Maryland to another business facility of the same business entity or its affiliates, if the position does not represent a net new job in the State;

2. created through a change in ownership of a trade or business;

3. created through a consolidation, merger, or restructuring of a business entity or its affiliates, if the position does not represent a net new job in the State;

4. created when an employment function is contractually shifted from an existing business entity or its affiliates, located in the State to another business entity or its affiliates, if the position does not represent a net new job in the State; or

5. filled for a period of less than 12 months.

(7) “Notification date” means the date on which the business entity provides written notice to the county or municipal corporation as required under subsection (b)(6) of this section.

(b) (1) The Mayor and City Council of Baltimore City or the governing body of a county or of a municipal corporation may enact legislation necessary to grant either property tax credits, enhanced property tax credits, or both types of property tax credits against the county or municipal corporation property tax imposed on real property owned or leased by business entities that meet the requirements specified for the applicable tax credit under this section and on personal property owned by business entities that meet the requirements specified under this section.

(2) (i) If a property tax credit is granted under paragraph (1) of this subsection, a business entity that meets the requirements for the property tax credit under this section and obtains certification from the county or municipal corporation may claim a State tax credit against the individual or corporate income tax, insurance premiums tax, or financial institution franchise tax as provided under subsection (c)(3) of this section.

(ii) If an enhanced property tax credit is granted under this section and a business entity and its affiliates meet the requirements for the enhanced property tax credit and obtain certification from the county or municipal corporation, the business entity or any of its affiliates may claim a State tax credit against the individual or corporate income tax, insurance premiums tax, or financial institution franchise tax as provided under subsection (d)(5) of this section.

(3) A tax credit may not be granted under this section if:

(i) the business entity or any of its affiliates have moved their operations from one county in the State to the new or expanded premises in another; or

(ii) the new or expanded premises has otherwise been granted a tax credit or exemption under this article for the taxable year.

(4) To qualify for a tax credit under this section, the new or expanded premises must be located in:

(i) a priority funding area as designated in Title 5, Subtitle 7B of the State Finance and Procurement Article; or

(ii) a qualified opportunity zone designated under § 1400Z–1 of the Internal Revenue Code in Allegany County, Garrett County, Somerset County, or Wicomico County.

(5) To qualify for a property tax credit under this section against property tax imposed on personal property a business entity shall certify that the personal property is located on the premises that qualify for a property tax credit or enhanced property tax credit under this section.

(6) To qualify for a tax credit under this section, before it obtains the new or expanded premises or hires employees to fill the new permanent full–time positions at the new or expanded premises, a business entity shall provide written notification to the county or municipal corporation in which the new or expanded premises are located:

(i) that it intends to claim the property tax credit or enhanced property tax credit;

(ii) if it intends to claim the enhanced property tax credit, how it expects to meet the requirements to qualify for the enhanced property tax credit; and

(iii) when it expects to obtain the new or expanded premises and hire the required number of employees in the new permanent full–time positions.

(7) If a business entity meets the requirements for a tax credit under this section, the county or municipal corporation shall certify to the Department and the Department of Commerce that the business entity has met the requirements for the tax credit for the taxable year that follows the date on which it met the requirements.

(c) (1) To qualify for a property tax credit under this subsection, a business entity shall:

(i) obtain at least 5,000 square feet of new or expanded premises by purchasing newly constructed premises, constructing new premises, causing new premises to be constructed, or leasing newly constructed premises; and

(ii) 1. except as provided in item 2 of this subparagraph, employ at least 25 individuals in new permanent full–time positions during a 24–month period, during which period the business entity must also obtain and occupy the new or expanded premises; or

2. in a county with a population under 30,000, employ at least 10 individuals in new permanent full–time positions during a 24–month period, during which period the business entity must also obtain and occupy the new or expanded premises.

(2) If a business entity meets the requirements of paragraph (1) of this subsection and subsection (b) of this section and of applicable local law adopted under subsection (b)(1) of this section, the county or municipal corporation shall compute the amount of the property tax credit granted under this subsection for new or expanded premises and the personal property located on those premises that may be claimed against the county or municipal corporation property taxes that would otherwise be due to equal a percentage of the amount of property tax imposed on the assessment of the new or expanded premises, as follows:

(i) 52% for the 1st and 2nd taxable years;

(ii) 39% in the 3rd and 4th taxable years;

(iii) 26% in the 5th and 6th taxable years; and

(iv) 0% for each taxable year thereafter.

(3) On receipt of notification under subsection (b)(7) of this section that a business entity has been certified for a property tax credit under this subsection, the Department shall compute and certify to the Comptroller or, in the case of the insurance premiums tax, the Maryland Insurance Commissioner the amount of the State tax credit authorized under this subsection that may be claimed against the individual or corporate income tax, insurance premiums tax, or financial institution franchise tax that would otherwise be due to equal a percentage of the amount of property tax imposed on the assessment of the new or expanded premises, as follows:

(i) 28% in the 1st and 2nd taxable years;

(ii) 21% in the 3rd and 4th taxable years;

(iii) 14% in the 5th and 6th taxable years; and

(iv) 0% for each taxable year thereafter.

(d) (1) For a business entity to qualify for an enhanced property tax credit under this subsection, the business entity, along with its affiliates, shall:

(i) 1. obtain at least 250,000 square feet of new or expanded premises by purchasing newly constructed premises, constructing new premises, causing new premises to be constructed, or leasing newly constructed premises;

2. continue to employ at least 2,500 individuals in existing permanent full–time positions paying at least 150% of the federal minimum wage and located at premises in the State where the business entity, along with its affiliates, is primarily engaged in one or more of the industries listed in paragraph (2) of this subsection; and

3. employ at least 500 individuals in new permanent full–time positions paying at least 150% of the federal minimum wage and located in the new or expanded premises, and, if applicable, in newly renovated premises adjoining or otherwise neighboring the new or expanded premises;

(ii) 1. obtain at least 250,000 square feet of new or expanded premises by purchasing newly constructed premises, constructing new premises, causing new premises to be constructed, or leasing newly constructed premises; and

2. employ at least 1,250 individuals in new permanent full–time positions paying at least 150% of the federal minimum wage and located in the new or expanded premises and, if applicable, in newly renovated premises adjoining or otherwise neighboring the new or expanded premises; or

(iii) in Montgomery County only:

1. expend at least $150 million to obtain at least 700,000 square feet of new or expanded premises by purchasing newly constructed premises, constructing new premises, causing new premises to be constructed, or leasing newly constructed premises; and

2. employ a total of at least 1,100 individuals in full–time positions consisting of both full–time positions of indefinite duration and contract positions of definite duration lasting at least 12 months with an unlimited renewal option, and including at least 500 individuals in new permanent full–time positions, with all positions:

A. receiving an employer provided subsidized health care benefits package;

B. paying at least 150% of the federal minimum wage; and

C. located in the new or expanded premises and, if applicable, in newly renovated premises adjoining or otherwise neighboring the new or expanded premises.

(2) For a business entity to qualify for an enhanced property tax credit under this subsection, the business entity, along with its affiliates, shall be primarily engaged in one or more of the following at the qualifying premises:

(i) manufacturing or mining;

(ii) transportation or communications;

(iii) agriculture, forestry, or fishing;

(iv) research, development, or testing;

(v) biotechnology;

(vi) computer programming, data processing, or other computer–related services;

(vii) central services as defined in § 6–101 of the Economic Development Article;

(viii) the operation of central administrative offices or a company headquarters as defined in § 6–101 of the Economic Development Article;

(ix) a public utility;

(x) warehousing; or

(xi) business services.

(3) To qualify for the enhanced property tax credit under this subsection, a business entity shall:

(i) within a 6–year period beginning on the notification date, employ individuals in the number of new permanent full–time positions required under paragraph (1) of this subsection;

(ii) during the 6–year hiring period, obtain and occupy the new or expanded premises and, if applicable, the newly renovated premises adjoining or otherwise neighboring the new or expanded premises; and

(iii) during the 6–year hiring period, comply with all other requirements for the credits described in this subsection and in any applicable local law.

(4) (i) If a business entity meets the requirements of this subsection and subsection (b) of this section and of applicable local law adopted under subsection (b)(1) of this section, for each of the first 24 taxable years after it qualifies for the credit, a property tax credit may be claimed against the county or municipal corporation property taxes that would otherwise be due.

(ii) The county or municipal corporation shall compute the amount of the property tax credit granted to equal 58.5% of the amount of property tax imposed on the increase in assessment of:

1. the new or expanded premises;

2. newly renovated real property improvements adjoining or otherwise neighboring the new or expanded premises, if the renovations are substantial, as defined in legislation enacted by the county or municipal corporation to grant the credits under this subsection; and

3. the personal property located on the premises described in items 1 and 2 of this subparagraph.

(iii) The increase in assessment shall be measured from the notification date to the applicable annual assessment date after the county or municipal corporation has certified that the business entity has qualified for the credit.

(5) On receipt of notification under subsection (b)(7) of this section that a business entity has been certified for an enhanced property tax credit under this subsection, the Department shall compute and certify to the Comptroller or, in the case of the insurance premiums tax, the Maryland Insurance Commissioner the amount of the State tax credit authorized under this subsection that may be claimed by the business entity or any of its affiliates against the individual or corporate income tax, insurance premiums tax, or financial institution franchise tax that would otherwise be due to equal 31.5% of the amount of property tax imposed on the increase in assessment of the real and personal property described in paragraph (4)(ii) of this subsection for each of the first 24 taxable years for which the credit is allowed.

(6) If a business entity or any of its affiliates claim the enhanced tax credits under this subsection for a certain premises, they may not claim the tax credits under subsection (c) of this section.

(e) The same State tax credit cannot be applied more than once against different taxes by the same taxpayer.

(f) If the State tax credit allowed under this section in any taxable year exceeds the total tax otherwise payable by the business entity for that taxable year, a business entity or its affiliates may apply the excess as a credit for succeeding taxable years until the earlier of:

(1) the full amount of the excess is used; or

(2) the expiration of the 5th taxable year after the taxable year in which the State tax credit is claimed.

(g) The Maryland Insurance Commissioner shall adopt regulations to provide for the computation, carryover, and recapture of the State tax credit under § 6–116 of the Insurance Article.

(h) The Department shall adopt regulations to provide for the computation, carryover, and recapture of the State tax credit under § 8–217 of the Tax – General Article.

(i) The Comptroller shall adopt regulations to provide for the computation, carryover, and recapture of the State tax credit under § 10–704.8 of the Tax – General Article.

(j) The lessor of real property eligible for property tax credits under this section shall reduce by the amount of the property tax credits computed under this section the amount of taxes for which the eligible business entity is contractually liable under the lease agreement.

(k) The governing body of the county or municipal corporation shall provide, by law, for:

(1) the specific requirements for eligibility for a tax credit authorized under this section;

(2) any additional limitations on eligibility for the credit;

(3) the information to be supplied by the business entity to a county or municipal corporation and the Comptroller to verify that the business entity is not subject to subsection (l) of this section; and

(4) any other provision appropriate to implement the credit.

(l) All credits claimed under this section for a taxable year shall be recaptured if, during the 3 taxable years succeeding the taxable year in which a credit was claimed:

(1) the employment level or square footage of a business entity at the premises falls below the applicable thresholds required to qualify for the property tax credit under subsection (c) of this section; or

(2) for the enhanced property tax credit, the employment level or square footage of a business entity, together with its affiliates, at the premises falls below the applicable thresholds required to qualify for the enhanced property tax credit under subsection (d) of this section.

(m) On October 1 of each year, each county and municipal corporation that has granted tax credits under this section shall report to the Department, the Department of Commerce, and the Comptroller:

(1) the amount of each credit granted for that year; and

(2) whether the business entity is in compliance with the requirements for the tax credit.

(n) (1) After a business entity has complied with all the requirements provided in this section and in any applicable local law for a particular tax credit, the business entity shall be entitled to claim the credits for the term provided in this section.

(2) No abrogation of this law or law hereinafter enacted that eliminates or reduces the tax credits available under this section shall apply to any business entity or affiliate of a business entity that qualified for the tax credits before the effective date of such law or abrogation.