Empowerment zone

The Empowerment Zone Program consists of three congressional designations [Public Law 103-66; Regulation [http://www.rurdev.usda.gov/rbs/ezec/About/ruralregs.html 7 CFR 25] ] . The Renewal Communities (RCs), Empowerment Zones (EZs) and Enterprise Communities (ECs) are highly distressed urban and rural communities who maybe eligible for a combination of grants, tax credits for businesses, bonding authority and other benefits. Highly distressed refers to communities who have experienced poverty and/or high outmigration based upon definitions in the law. These designations, RCs, EZs and ECs were awarded in three competitions since 1994. The program ends on December 31, 2009.

This program is primarily managed through partnerships between the local entity and either the Department of Housing and Urban Development (HUD) for RCs and urban areas or US Department of Agriculture (USDA) for rural EZs and ECs.

Currently, there are 40 HUD RCs, 28 of which are in urban areas and 12 in rural communities. There are 30 HUD EZs, all of which are in urban areas. There are 10 USDA EZs and 20 USDA ECs in rural communities. A couple RCs have as few as approximately 100 businesses, while several RCs and EZs have more than 5,000 businesses. No RC, EZ or EC has a population greater than 200,000.

Tax Incentives and Bonds:

Qualifying businesses in EZs are eligible for employment credits (up to $3,000 yearly per EZ resident employed). Qualifying EZ businesses are also eligible for low-cost loans through EZ facility bonds, increased Section 179 tax deductions, partial-exclusion of tax on capital gains upon the sale of certain assets, and other incentives. Qualifying businesses in RCs are also eligible for employment credits (up to $1,500 yearly per RC resident employed). Qualifying RC businesses are also eligible for a 0% tax on the capital gains of assets sold, provided the business holds the asset at least five years. Businesses in RCs that build or substantially rehabilitate commercial property may also be eligible for up to $10 million in Commercial Revitalization Deductions to rapidly increase their depreciation schedules. For detailed information on all RC/EZ tax incentives, including which tax forms to file to claim the incentives, read IRS Publication 954, Tax Incentives for Distressed Communities, available on the IRS website at www.irs.gov.

The empowerment zone employment credit provides businesses with an incentive to hire individuals who both live and work in an empowerment zone. (An exception applies to the to the Washington, DC empowerment zone. Individuals who work in the Washington, DC empowerment zone may live anywhere in the District of Columbia.) You can claim the credit if you pay or incur “qualified zone wages” to a “qualified zone employee”.

The credit is 20% of the qualified zone wages paid or incurred during a calendar year. The amount of qualified zone wages you can use to figure the credit cannot be more than $15,000 for each employee for each calendar year. As a result, the credit can be as much as $3,000 (20% of $15,000) per qualified zone employee each year.

Parts of the following urban areas are empowerment zones:

Parts of the following rural areas are empowerment zones:

ources

IRS Publication 954. [http://www.irs.gov/publications/p954/index.html TAX INCENTIVES FOR DISTRESSED COMMUNITIES]

US Department of Housing and Urban Development [http://www.hud.gov/offices/cpd/economicdevelopment/library/taxincentivesqa.pdf Questions and Answers on Renewal Community (RC) and Empowerment Zone (EZ) tax incentives]

External links

* [http://www.irs.gov Internal Revenue Service]
* [http://www.hud.gov/ US Department of Housing and Urban Development]
* [http://www.rurdev.usda.gov/rbs/ezec/ US Dept of Agriculture, Rural Development]

ee also

* Renewal Community

References

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