EXPLANATION: CAPITALS INDICATE MAT TER ADDED TO EXISTIN G LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*hb0478*
HOUSE BILL 478
C8 2lr1470
HB 805/21 – W&M
By: Delegate Palakovich Carr
Introduced and read first time: January 21, 2022
Assigned to: Ways and Means
Committee Report: Favorable with amendments
House action: Adopted
Read second time: March 13, 2022
CHAPTER ______
AN ACT concerning 1
Economic Development – Enterprise Zone Program – Alterations 2
FOR the purpose of establishing the purpose of the Enterprise Zone Program; altering the 3
circumstances under which the Secretary of Commerce may designate an area as an 4
enterprise zone or a focus area; prohibiting the Secretary from designating a new 5
enterprise zone or granting an expansion of an existing enterprise zone under certain 6
circumstances; altering a certain limitation on the expansion of an existing 7
enterprise zone during a single calendar year; altering the circumstances under 8
which the Secretary may grant an extraordinary expansion of an enterprise zone; 9
altering the State agencies responsible for assessing the effectiveness of certain tax 10
credits provided to certain business entities in enterprise zones; requiring the State 11
Department of Assessments and Taxation and the Comptroller to submit to the 12
Department of Commerce a certain report; requiring each county within which an 13
enterprise zone is located to submit to the Department of Commerce a certain report; 14
requiring the Department of Commerce to provide certain notification to a county 15
under certain circumstances; requiring the Department of Commerce to develop 16
certain metrics and a framework for analyzing certain matters; altering the 17
definitions of certain employees for purposes of determining eligibility for a certain 18
credit against the State income tax; limiting the amount of a certain credit against 19
the State income tax that may be claimed by a business entity each taxable year; 20
limiting the total amount of credits against the State income tax that certain 21
business entities may claim each taxable year; providing that, for any taxable year, 22
the amount of a certain credit against the property tax imposed on certain qualified 23
property may not exceed a certain amount; providing for the termination of the 24
Enterprise Zone Program and, except under certain circumstances, eligibility for 25 2 HOUSE BILL 478
certain tax credits provided under the Program; and generally relating to the 1
Enterprise Zone Program. 2
BY repealing and reenacting, with amendments, 3
Article – Economic Development 4
Section 5–702, 5–704(a)(2) and (4) and (b) 5–704(a)(4), 5–705, 5–706, 5–707(d), and 5
5–709 6
Annotated Code of Maryland 7
(2018 Replacement Volume and 2021 Supplement) 8
BY repealing and reenacting, without amendments, 9
Article – Economic Development 10
Section 5–704(a)(1) and 5–707(a) and (d) 11
Annotated Code of Maryland 12
(2018 Replacement Volume and 2021 Supplement) 13
BY adding to 14
Article – Economic Development 15
Section 5–710 16
Annotated Code of Maryland 17
(2018 Replacement Volume and 2021 Supplement) 18
BY repealing and reenacting, with amendments, 19
Article – Tax – General 20
Section 10–702 21
Annotated Code of Maryland 22
(2016 Replacement Volume and 2021 Supplement) 23
BY repealing and reenacting, without amendments, 24
Article – Tax – Property 25
Section 9–103(b)(1) 26
Annotated Code of Maryland 27
(2019 Replacement Volume and 2021 Supplement) 28
BY repealing and reenacting, with amendments, 29
Article – Tax – Property 30
Section 9–103(d) 31
Annotated Code of Maryland 32
(2019 Replacement Volume and 2021 Supplement) 33
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 34
That the Laws of Maryland read as follows: 35
Article – Economic Development 36
5–702. 37
HOUSE BILL 478 3
(A) THE PURPOSE OF THE EN TERPRISE ZONES AUTHO RIZED UNDER THIS 1
SUBTITLE IS TO ATTRA CT, RETAIN, AND ENCOURAGE COMMERCIAL DEVELOPME NT 2
IN ECONOMICALLY DIST RESSED AREAS OF THE STATE, IN PARTNERSHIP WITH 3
POLITICAL SUBDIVISIO NS, BY INCENTIVIZING CAP ITAL INVESTMENT AND JOB 4
CREATION THROUGH REA L PROPERTY AND INCOM E TAX CREDITS. 5
(B) Subject to § 9–103 of the Tax – Property Article, a business entity that owns, 6
operates, develops, constructs, or rehabilitates property intended for use primarily as single 7
or multifamily residential property located in an enterprise zone may not benefit from an 8
incentive or initiative under this subtitle. 9
5–704. 10
(a) (1) The Secretary may only designate an area as an enterprise zone if the 11
area: 12
(i) in a priority funding area or in a qualified opportunity zone 13
under § 1400Z–1 of the Internal Revenue Code in Allegany County, Garrett County, 14
Somerset County, or Wicomico County or meets an exception under Title 5, Subtitle 7B of 15
the State Finance and Procurement Article; and 16
(ii) satisfies at least one of the requirements specified in paragraph 17
(2) of this subsection. 18
(2) An area may be designated as an enterprise zone if: 19
(i) the average rate of unemployment in EACH CENSUS TRACT 20
WITHIN the area, or within a reasonable proximity to the area but in the same county IF 21
FEWER THAN 1,500 INDIVIDUALS RESIDE I N THE CENSUS TRACT , for the most recent 22
18–month period for which data are available is at least 150% of the greater of the average 23
rate of unemployment in either the State or the United States during that period; 24
(ii) the population in EACH CENSUS TRACT WI THIN the area, or 25
within a reasonable proximity to the area but in the same county IF FEWER THAN 1,500 26
INDIVIDUALS RESIDE I N THE CENSUS TRACT , qualifies the area as a low–income poverty 27
area; 28
(iii) at least 70% of the families in EACH CENSUS TRACT WI THIN 29
the area, or within a reasonable proximity to the area but in the same county IF FEWER 30
THAN 1,500 INDIVIDUALS RESIDE I N THE CENSUS TRACT , have incomes that are less 31
than 80% of the median family income in the political subdivision that contains the area; 32
or 33
(iv) the population in EACH CENSUS TRACT WI THIN the area, or 34
within a reasonable proximity to the area but in the same county IF FEWER THAN 1,500 35 4 HOUSE BILL 478
INDIVIDUALS RESIDE I N THE CENSUS TRACT , decreased by 10% between the most recent 1
two censuses, and the political subdivision can demonstrate to the Secretary’s satisfaction 2
that: 3
1. chronic abandonment or demolition of property is 4
occurring in the area; or 5
2. substantial property tax arrearages exist in the area. 6
(4) The Secretary: 7
(I) SHALL ADOPT REGULATIONS GOVERNING THE EVALUA TION 8
AND PRIORITIZATION O F APPLICATIONS FOR T HE DESIGNATION OF NE W 9
ENTERPRISE ZONES UND ER THIS SECTION AND THE EXPANSION OF EXI STING 10
ENTERPRISE ZONES UND ER § 5–705 OF THIS SUBTITLE; AND 11
(II) may [establish by regulation any other requirements] ADOPT 12
REGULATIONS necessary and appropriate to carry out this subtitle. 13
(b) (1) Within 60 days after a submission date, the Secretary may designate 14
one or more enterprise zones from among the areas described in the applications timely 15
submitted. 16
(2) The designation of an area as an enterprise zone is effective for 10 17
years. 18
(3) The Secretary may not designate more than six enterprise zones in a 19
calendar year. 20
(4) IF THE SECRETARY REASONABLY ANTICIPATES THAT THE 21
AGGREGATE AMOUNT OF PROPERTY TAX CREDITS CLAIMED UNDER § 9–103 OF THE 22
TAX – PROPERTY ARTICLE FOR THE IMMED IATELY PRECEDING FIS CAL YEAR MAY 23
EXCEED $60,000,000, THE SECRETARY MAY NOT DES IGNATE A NEW ENTERPR ISE 24
ZONE DURING THE CURR ENT FISCAL YEAR . 25
[(4)] (5) A county may not receive more than two enterprise zones in a 26
calendar year. 27
5–705. 28
(a) (1) A political subdivision may apply to the Secretary to expand an existing 29
enterprise zone in the same manner as the political subdivision would apply to designate a 30
new enterprise zone. 31
HOUSE BILL 478 5
(2) [The] EXCEPT AS PROVIDED IN SUBSECTION (C) OF THIS SECTION, 1
THE Secretary may grant an expansion of an enterprise zone into an area that meets the 2
requirements of § 5–704 of this subtitle. 3
(3) For purposes of § 5–704(b) of this subtitle, an expansion of an enterprise 4
zone that does not exceed [50%] 25% of the existing geographic area of the enterprise zone 5
does not count towards the limit on the number of enterprise zones that: 6
(i) the Secretary may designate in a calendar year; or 7
(ii) a county may receive in a calendar year. 8
(b) (1) The Secretary may grant one extraordinary expansion of an enterprise 9
zone in the State each calendar year for an area that: 10
(i) meets the requirements of § 5–704 of this subtitle; and 11
(ii) in the determination of the Secretary, has suffered a significant 12
loss of economic base OR MERITS INCLUSION IN AN ENTERPRISE ZON E FOR A 13
COMPELLING ECONOMIC REASON. 14
(2) For purposes of § 5–704(b) of this subtitle, an extraordinary expansion 15
of an enterprise zone IS NOT SUBJECT TO TH E LIMITATION UNDER S UBSECTION (C) OF 16
THIS SECTION AND does not count towards the limit on the number of enterprise zones 17
that: 18
(i) the Secretary may designate in a calendar year; or 19
(ii) a county may receive in a calendar year. 20
(C) IF THE SECRETARY REASONABLY ANTICIPATES THAT THE AGGREGATE 21
AMOUNT OF PROPERTY T AX CREDITS CLAIMED U NDER § 9–103 OF THE TAX – 22
PROPERTY ARTICLE FOR THE IMMED IATELY PRECEDING FIS CAL YEAR MAY EXCEED 23
$60,000,000, THE SECRETARY MAY NOT GRA NT AN EXPANSION OF A N EXISTING 24
ENTERPRISE ZONE DURI NG THE CURRENT FISCA L YEAR. 25
5–706. 26
(a) A political subdivision may request the Secretary to designate all or part of an 27
enterprise zone as a focus area for the lesser of: 28
(1) 5 years; or 29
(2) the remainder of the 10–year term of the applicable enterprise zone. 30
6 HOUSE BILL 478
(b) The request may be made on or before a submission date when the political 1
subdivision applies for the designation of a new enterprise zone or after the Secretary has 2
designated an enterprise zone. 3
(c) The Secretary may grant the request if the area is located in an enterprise 4
zone and meets at least three of the following criteria: 5
(1) the average unemployment rate in EACH CENSUS TRACT WI THIN the 6
area, or within a reasonable proximity to the area but in the same county IF FEWER THAN 7
1,500 INDIVIDUALS RESIDE I N THE CENSUS TRACT , for the most recent 18–month 8
period for which data are available is at least 150% of the greater of the average rate of 9
unemployment in either the State or the United States during that same period; 10
(2) the population in EACH CENSUS TRACT WI THIN the area, or within a 11
reasonable proximity to the area but in the same county IF FEWER THAN 1,500 12
INDIVIDUALS RESIDE I N THE CENSUS TRACT , has an incidence of poverty that is at least 13
150% of the national average; 14
(3) the crime rate in EACH CENSUS TRACT WI THIN the area, or within a 15
reasonable proximity to the area but in the same county IF FEWER THAN 1,500 16
INDIVIDUALS RESIDE IN THE CENSUS TRACT , is at least 150% of the crime rate in the 17
political subdivision where the area is located; 18
(4) the percentage of substandard housing in EACH CENSUS TRACT 19
WITHIN the area, or within a reasonable proximity to the area but in the same county IF 20
FEWER THAN 1,500 INDIVIDUALS RESIDE I N THE CENSUS TRACT , is at least 200% of 21
the percentage of housing units in the State that are substandard, according to data from 22
the United States Bureau of the Census or other State or federal government data the 23
Secretary considers appropriate; or 24
(5) at least 20% of the square footage of commercial property in EACH 25
CENSUS TRACT WITHIN the area, or within a reasonable proximity to the area but within 26
the same county IF FEWER THAN 1,500 INDIVIDUALS RESIDE IN THE CENSUS TRACT , 27
is vacant, according to data from the United States Bureau of the Census or other State or 28
federal government data the Secretary considers appropriate. 29
5–707. 30
(a) To the extent provided for in this section, a business entity is entitled to: 31
(1) the special property tax credit in § 9–103 of the Tax – Property Article; 32
(2) the income tax credits in § 10–702 of the Tax – General Article; and 33
(3) consideration for financial assistance from programs in Subtitle 1 of 34
this title. 35 HOUSE BILL 478 7
(d) (1) Except as provided in § 10–702 of the Tax – General Article and § 1
9–103 of the Tax – Property Article, the incentives and initiatives set forth in this section 2
are available for 10 years after the date that an area is designated an enterprise zone. 3
(2) (I) A law enacted after the enactment of this section that eliminates 4
or reduces the benefits available to a business entity under this section does not apply to a 5
business entity that was in an enterprise zone before the effective date of the law. 6
(II) A BUSINESS ENTITY THAT LOCATES IN AN ENTERP RISE 7
ZONE BEFORE THE TERM INATION DATE OF THIS SUBTITLE PROVIDED UN DER § 8
5–710 OF THIS SUBTITLE REM AINS ELIGIBLE FOR TH E BENEFITS AVAILABLE TO A 9
BUSINESS ENTITY UNDE R THIS SECTION , PROVIDED THAT THE BUSINESS ENTITY 10
MEETS THE REQUIREMEN TS AND CONDITIONS OF THE CODE SECTION APPLICAB LE 11
TO THE BENEFIT . 12
5–709. 13
(a) The Department [and the Comptroller jointly] shall assess each year the 14
effectiveness of the tax credits provided to business entities in enterprise zones and focus 15
areas in enterprise zones, including: 16
(1) the number and amounts of credits granted each year; and 17
(2) the success of the tax credits in attracting and retaining business 18
entities in enterprise zones and focus areas. 19
(B) (1) ON OR BEFORE SEPTEMBER 15 EACH YEAR , THE STATE 20
DEPARTMENT OF ASSESSMENTS AND TAXATION SHALL SUBMIT TO THE 21
DEPARTMENT A REPORT T HAT INCLUDES THE FOL LOWING INFORMATION F OR THE 22
IMMEDIATELY PRECEDIN G TAXABLE YEAR : 23
(I) THE NUMBER OF PROPER TIES CLAIMING A PROPERTY TAX 24
CREDIT UNDER § 9–103 OF THE TAX – PROPERTY ARTICLE CALCULATED IN 25
ACCORDANCE WITH § 9–103(D)(1) OF THE TAX – PROPERTY ARTICLE; 26
(II) THE NUMBER OF PROPER TIES CLAIMING A PROP ERTY TAX 27
CREDIT UNDER § 9–103 OF THE TAX – PROPERTY ARTICLE CALCULAT ED IN 28
ACCORDANCE WITH § 9–103(D)(4) OF THE TAX – PROPERTY ARTICLE; 29
(III) THE NUMBER OF PROPER TIES NEWLY CERTIFIED AS 30
QUALIFIED PROPERTIES BY THE STATE DEPARTMENT OF ASSESSMENTS AND 31
TAXATION AS ELIGIBLE FOR THE PROPERTY TAX CREDIT UNDER § 9–103 OF THE TAX 32
– PROPERTY ARTICLE; AND 33
8 HOUSE BILL 478
(IV) FOR EACH TAXPAYER CL AIMING OR RECEIVING A PROPERTY 1
TAX CREDIT UNDER § 9–103 OF THE TAX – PROPERTY ARTICLE : 2
1. THE NAME OF THE TAXP AYER; 3
2. THE LOCATION OF THE QUALIFIED PROPERTY F OR 4
WHICH THE CREDIT WAS CLAIMED; AND 5
3. THE AMOUNT OF TAX SA VINGS RECEIVED BY EA CH 6
QUALIFIED PROPERTY . 7
(2) ON OR BEFORE SEPTEMBER 15 EACH YEAR, THE COMPTROLLER 8
SHALL SUBMIT TO THE DEPARTMENT A REPORT T HAT INCLUDES THE FOL LOWING 9
INFORMATION FOR THE IMMEDIATELY PRECEDIN G TAXABLE YEAR : 10
(I) THE NAME AND ADDRESS OF EACH BUSINESS ENT ITY THAT 11
CLAIMED AN INCOME TA X CREDIT UNDER § 10–702 OF THE TAX – GENERAL 12
ARTICLE; 13
(II) THE BUSINESS ACTIVIT Y CODE OR NORTH AMERICAN 14
INDUSTRY CLASSIFICATION SYSTEM (NAICS) CODE OF THE BUSIN ESS ENTITY; 15
(III) THE NUMBER OF QUALIF IED EMPLOYEES AND FO CUS AREA 16
EMPLOYEES EMPLOYED B Y THE BUSINESS ENTIT Y; 17
(IV) THE NUMBER OF ECONOM ICALLY DISADVANTAGED 18
INDIVIDUALS EMPLOYED BY THE BUSINESS ENTI TY AND THE NUMBER OF YEARS FOR 19
WHICH THOSE ECONOMIC ALLY DISADVANTAGED I NDIVIDUALS HAVE BEEN 20
EMPLOYED BY THE BUSI NESS ENTITY; AND 21
(V) THE TOTAL AMOUNT OF THE INCOME TAX CREDI T CLAIMED 22
BY THE BUSINESS ENTI TY. 23
(C) (1) (I) ON OR BEFORE SEPTEMBER 15 EACH YEAR, EACH COUNTY 24
WITHIN WHICH AN ENTE RPRISE ZONE I S LOCATED SHALL SUBM IT TO THE 25
DEPARTMENT A DETAILED REPORT ON EACH ENTER PRISE ZONE IN THE CO UNTY TO 26
ASSIST THE DEPARTMENT IN THE ASS ESSMENT REQUIRED UND ER SUBSECTION (A) 27
OF THIS SECTION. 28
(II) THE COUNTY SHALL INCL UDE IN THE REPORT RE QUIRED 29
UNDER SUBPAR AGRAPH (I) OF THIS PARAGRAPH TH E FOLLOWING INFORMAT ION 30
FOR THE IMMEDIATELY PRECEDING FISCAL YEA R: 31
HOUSE BILL 478 9
1. NOTABLE EXAMPLES OF REDEVELOPMENT OR NEW 1
BUSINESSES RELOCATIN G OR EXPANDING IN TH E ENTERPRISE ZONE DU E TO THE 2
TAX CREDITS PROVIDED UNDER THIS SUBTITLE ; AND 3
2. A DESCRIPTION OF FUT URE ECONOMIC 4
DEVELOPMENT PROJECTS THAT MIGHT CLAIM A T AX CREDIT PROVIDED U NDER THIS 5
SUBTITLE, INCLUDING WITH RESPE CT TO EACH PROJECT : 6
A. WHETHER THE PROJECT IS LOCATED WITHIN A FOCUS 7
AREA; 8
B. WHETHER THE PROJECT MAY QUALIFY FOR A CR EDIT 9
UNDER THIS SUBTITLE AGAINST THE TAX IMPO SED ON REAL PROPERTY , PERSONAL 10
PROPERTY, OR INCOME; AND 11
C. ANTICIPATED CAPITAL OR PERSONAL PROPERTY 12
EXPENDITURES FOR THE PROJECT. 13
(2) (I) IF A COUNTY FAILS TO PROVIDE THE REPORT REQUIRED 14
UNDER PARAGRAPH (1) OF THIS SUBSECTION , THE DEPARTMENT SHALL NOTI FY 15
THE COUNTY THAT THE REPORT IS DUE. 16
(II) IF, AFTER THE DEPARTMENT HAS PROVID ED A COUNTY THE 17
NOTICE DESCRIBED UND ER SUBPARAGRAPH (I) OF THIS PARAGRAPH , THE COUNTY 18
FAILS TO PROMPTLY PROVIDE THE OVERDUE REPORT , THE SECRETARY MAY NOT 19
DESIGNATE A NEW ENTE RPRISE ZONE IN THE C OUNTY OR GRANT THE E XPANSION OF 20
AN EXISTING ENTERPRI SE ZONE IN THE COUNT Y UNTIL THE REPORT I S RECEIVED 21
BY THE DEPARTMENT . 22
(D) THE DEPARTMENT SHALL DEVE LOP FORMAL METRICS AND A 23
FRAMEWORK FOR ANALYZ ING: 24
(1) THE COST–EFFECTIVENESS OF EAC H ENTERPRISE ZONE ; AND 25
(2) THE EFFECTIVENESS OF EACH ENTERPRISE ZONE IN ATTRACTING 26
BUSINESSES AND INCRE ASING EMPLOYMENT . 27
[(b)] (E) On or before December 15 [of] each year, the Department [and the 28
Comptroller] shall submit to the Governor and, in accordance with § 2–1257 of the State 29
Government Article, the General Assembly a report outlining the findings of the 30
Department [and the Comptroller] and any other information of value in determining the 31
effectiveness of the tax credits provided under § 5–707(b) of this subtitle. 32
5–710. 33 10 HOUSE BILL 478
THIS SUBTITLE AND , EXCEPT AS PROVIDED I N § 5–707(D)(2) OF THIS 1
SUBTITLE, ELIGIBILITY FOR THE TAX CREDITS PROVIDED UNDER § 5–707(A) OF THIS 2
SUBTITLE SHALL TERMINATE ON JANUARY 1, 2030. 3
SECTION 2. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 4
as follows: 5
Article – Tax – General 6
10–702. 7
(a) (1) In this section the following words have the meanings indicated. 8
(2) (i) “Business entity” means: 9
1. a person conducting or operating a trade or business; or 10
2. an organization that is exempt from taxation under § 11
501(c)(3) or (4) of the Internal Revenue Code. 12
(ii) “Business entity” does not include a person owning, operating, 13
developing, constructing, or rehabilitating property intended for use primarily as single or 14
multifamily residential property located within the enterprise zone. 15
(3) “Economically disadvantaged individual” means an individual who is 16
certified by provisions that the Maryland Department of Labor adopts as an individual who, 17
before becoming employed by a business entity in an enterprise zone: 18
(i) was both unemployed for at least 30 consecutive days and 19
qualified to participate in training activities for the economically disadvantaged under the 20
federal Workforce Innovation and Opportunity Act or its successor; or 21
(ii) in the absence of an applicable federal act, met the criteria for an 22
economically disadvantaged individual that the Secretary of Labor sets. 23
(4) (i) “Enterprise zone” has the meaning stated in § 5–701 of the 24
Economic Development Article. 25
(ii) “Enterprise zone” includes a Regional Institution Strategic 26
Enterprise zone established under Title 5, Subtitle 14 of the Economic Development Article. 27
(5) “Focus area” has the meaning stated in § 5–701 of the Economic 28
Development Article. 29
(6) “Focus area employee” means an individual who: 30
HOUSE BILL 478 11
(i) is a new employee or an employee rehired after being laid off for 1
more than 1 year by a business entity; 2
(ii) is employed by a business entity at least 35 hours each week for 3
at least 12 months before or during the taxable year for which the entity claims a credit; 4
(iii) spends at least [50 percent] 50% of the hours under item (ii) of 5
this paragraph either in the focus area or on activities of the business entity resulting 6
directly from its location in the focus area; 7
(iv) is hired by the business entity after the later of: 8
1. the date on which the focus area is designated; or 9
2. The date on which the business entity located in the focus 10
area; and 11
(v) earns at least [150 percent] 120% of the [federal] STATE 12
minimum wage. 13
(7) “Qualified employee” means an individual who: 14
(i) is [a new employee] HIRED TO FILL A NEWLY CREATED 15
POSITION or [an employee rehired after being laid off for more than 1 year by a business 16
entity], IF THE INDIVIDUAL IS AN ECONOMICALLY DISA DVANTAGED INDIVIDUAL , IS 17
HIRED TO FILL A POSI TION PREVIOUSLY HELD BY ANOTHER ECONOMICA LLY 18
DISADVANTAGE D INDIVIDUAL; 19
(ii) is employed by a business entity at least 35 hours each week for 20
at least 6 months before or during the taxable year for which the entity claims a credit; 21
(iii) spends at least 50% of the hours under item (ii) of this paragraph, 22
either in the enterprise zone or on activities of the business entity resulting directly from 23
its location in the enterprise zone; 24
(iv) earns at least [150%] 120% of the [federal] STATE minimum 25
wage; and 26
(v) is hired by the business entity after the later of: 27
1. the date on which the enterprise zone is designated; or 28
2. the date on which the business entity locates in the 29
enterprise zone. 30
12 HOUSE BILL 478
(b) (1) [Any] SUBJECT TO THE LIMITA TIONS OF THIS SECTIO N, ANY 1
business entity that is located in an enterprise zone and satisfies the requirements of § 2
5–707 of the Economic Development Article may claim a credit only against the State 3
income tax for the wages specified in subsections (c) and (d) of this section that are paid in 4
the taxable year for which the entity claims the credit. 5
(2) [A] SUBJECT TO THE LIMITA TIONS OF THIS SECTIO N, A business 6
entity that is located in a focus area and satisfies the requirements of § 5–707 of the 7
Economic Development Article may claim a credit only against the State income tax for the 8
wages specified in subsection (e) of this section that are paid to a focus area employee in 9
the taxable year for which the entity claims the credit. 10
(3) An organization that is exempt from taxation under § 501(c)(3) or (4) of 11
the Internal Revenue Code may apply the credit under this section as a credit against 12
income tax due on unrelated business taxable income as provided under §§ 10–304 and 13
10–812 of this title. 14
(c) If a business entity does not claim an enhanced tax credit under subsection (e) 15
of this section for a focus area employee, for the taxable year in which a business entity 16
satisfies the requirements of § 5–707 or § 5–1406 of the Economic Development Article, a 17
credit is allowed that equals: 18
(1) up to $3,000 of the wages paid to each qualified employee who: 19
(i) is an economically disadvantaged individual; and 20
(ii) is not hired to replace an individual whom the business entity 21
employed in that or any of the 3 preceding taxable years; and 22
(2) up to $1,000 of the wages paid to each qualified employee who: 23
(i) is not an economically disadvantaged individual; and 24
(ii) is not hired to replace an individual whom the business entity 25
employed in that or any of the 3 preceding taxable years. 26
(d) (1) If a business entity does not claim an enhanced tax credit under 27
subsection (e) of this section for a focus area employee, for each taxable year after the 28
taxable year described in subsection (c) of this section, while the area is designated an 29
enterprise zone, a credit is allowed that equals: 30
(i) up to $3,000 of the wages paid to each qualified employee who: 31
1. is an economically disadvantaged individual; 32
2. became a qualified employee during the taxable year to 33
which the credit applies; and 34 HOUSE BILL 478 13
3. is not hired to replace an individual whom the business 1
entity employed in that or any of the 3 preceding taxable years; 2
(ii) up to $2,000 of the wages paid to each qualified employee who is 3
an economically disadvantaged individual, if the business entity received a credit under 4
subsection (c)(1) of this section for the qualified employee in the immediately preceding 5
taxable year; and 6
(iii) up to $1,000 of the wages paid to each qualified employee who is 7
not hired to replace an individual whom the business entity employed in that or any of the 8
3 preceding taxable years if the qualified employee: 9
1. is an economically disadvantaged individual for whom the 10
business entity received a credit under subsection (c)(1) of this section or item (i) of this 11
paragraph and a credit under item (ii) of this paragraph in the 2 immediately preceding 12
taxable years; or 13
2. is not an economically disadvantaged individual but 14
became a qualified employee during the taxable year to which the credit applies. 15
(2) A business entity that hires a qualified employee to replace another 16
qualified employee for whom the business entity received a credit under subsection (c)(1) of 17
this section and paragraph (1)(ii) of this subsection in the immediately preceding taxable 18
year may treat the new qualified employee as the replacement for the other qualified 19
employee to determine any credit that may be available to the business entity under 20
paragraph (1)(ii) or (iii) of this subsection. 21
(e) (1) For the taxable year in which a business entity satisfies the 22
requirements of §§ 5–706 and 5–707 or § 5–1406 of the Economic Development Article, a 23
credit is allowed that equals: 24
(i) up to $4,500 of the wages paid to each focus area employee who: 25
1. is an economically disadvantaged individual; and 26
2. is not hired to replace an individual whom the business 27
entity employed in that year or any of the 3 preceding taxable years; and 28
(ii) up to $1,500 of the wages paid to each focus area employee who: 29
1. is not an economically disadvantaged individual; and 30
2. is not hired to replace an individual whom the business 31
entity employed in that year or any of the 3 preceding taxable years. 32
14 HOUSE BILL 478
(2) For each taxable year after the taxable year described in paragraph (1) 1
of this subsection, while the area is designated a focus area, a credit is allowed that equals: 2
(i) up to $4,500 of the wages paid to each focus area employee who: 3
1. is an economically disadvantaged individual; 4
2. became a focus area employee during the taxable year to 5
which the credit applies; and 6
3. is not hired to replace an individual whom the business 7
entity employed in that year or any of the 3 preceding taxable years; 8
(ii) up to $3,000 of the wages paid to each focus area employee who 9
is an economically disadvantaged individual, if the business entity received a credit under 10
paragraph (1)(i) of this subsection for the focus area employee in the immediately preceding 11
taxable year; and 12
(iii) up to $1,500 of the wages paid to each focus area employee who 13
is not hired to replace an individual whom the business entity employed in that year or any 14
of the 3 preceding taxable years if the focus area employee: 15
1. is an economically disadvantaged individual for whom the 16
business entity received a credit under item (ii) of this paragraph in the 2 immediately 17
preceding taxable years and under: 18
A. paragraph (1)(i) of this subsection; or 19
B. item (i) of this paragraph; or 20
2. is not an economically disadvantaged individual but 21
became a focus area employee during the taxable year to which the credit applies. 22
(3) A business entity that hires a focus area employee to replace another 23
focus area employee for whom the business entity received a credit under paragraph (1)(i) 24
of this subsection and paragraph (2)(ii) of this subsection in the immediately preceding 25
taxable year may treat the focus area employee as the replacement for the other focus area 26
employee to determine any credit that may be available to the business entity under 27
paragraph (2)(ii) or (iii) of this subsection. 28
(F) (1) THE CREDIT ALLOWED UN DER THIS SECTION SHALL BE CLAIME D 29
ON A FIRST–COME, FIRST–SERVED BASIS. 30
(2) FOR ANY TAXABLE YEAR : 31
(I) THE CREDIT ALLOWED U NDER THIS SECTION MA Y NOT 32
EXCEED $250,000; AND 33 HOUSE BILL 478 15
(II) THE TOTAL AMOUNT OF CREDITS CLAIMED BY B USINESS 1
ENTITIES MAY NOT EXC EED $2,000,000. 2
[(f)] (G) If the credit allowed under this section in any taxable year exceeds the 3
State income tax for that taxable year, a business entity may apply the excess as a credit 4
against the State income tax for succeeding taxable years until the earlier of: 5
(1) the full amount of the excess is used; or 6
(2) the expiration of the 5th taxable year from the date on which the 7
business entity hired the qualified employee to whom the credit first applies. 8
[(g)] (H) If a credit is claimed under this section, the claimant must make the 9
addition required in § 10–205, § 10–206, or § 10–306 of this title. 10
SECTION 3. AND BE IT FURTHER ENACTED, That the Laws of Maryland read 11
as follows: 12
Article – Tax – Property 13
9–103. 14
(b) (1) The governing body of a county or of a municipal corporation shall grant 15
a tax credit under this section against the property tax imposed on the eligible assessment 16
of qualified property. 17
(d) (1) [The] SUBJECT TO THE LIMITA TION UNDER PARAGRAPH (5) OF 18
THIS SUBSECTION , THE appropriate governing body shall calculate the amount of the tax 19
credit under this section equal to a percentage of the amount of property tax imposed on 20
the eligible assessment of the qualified property, as follows: 21
(i) 80% in each of the 1st 5 taxable years following the calendar year 22
in which the property initially becomes a qualified property; 23
(ii) 70% in the 6th taxable year; 24
(iii) 60% in the 7th taxable year; 25
(iv) 50% in the 8th taxable year; 26
(v) 40% in the 9th taxable year; and 27
(vi) 30% in the 10th taxable year. 28
16 HOUSE BILL 478
(2) The Department shall allocate the eligible assessment to the 1
nonresidential part of the qualified property at the same percentage as the square footage 2
of the nonresidential part is to the total square footage of the building. 3
(3) For purposes of calculating the amount of the credit allowed under this 4
section, the amount of property tax imposed on the eligible assessment shall be calculated 5
without reduction for any credits allowed under this title. 6
(4) For qualified property located in a focus area, the appropriate governing 7
body shall calculate the amount of the tax credit under this section equal to 80% of the 8
amount of property tax imposed on the eligible assessment of the qualified property for 9
each of the 10 taxable years following the calendar year in which the property initially 10
becomes a qualified property. 11
(5) FOR ANY TAXABLE YEAR , THE AMOUNT OF A PROP ERTY TAX 12
CREDIT GRANTED UNDER THIS SECTION TO A QU ALIFIED PROPERTY MAY NOT 13
EXCEED $500,000. 14
SECTION 4. 3. AND BE IT FURTHER ENACTED, That Section 2 of this Act shall 15
be applicable to all taxable years beginning after December 31, 2021. 16
SECTION 5. AND BE IT FURTHER ENACTED, That Section 3 of this Act shall be 17
applicable to all taxable years beginning after June 30, 2022. 18
SECTION 6. 4. AND BE IT FURTHER ENACTED, That this Act shall take effect 19
June 1, 2022. 20
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
Speaker of the House of Delegates.
________________________________________________________________________________
President of the Senate.