Section 9-1103. TAX CREDITS TO QHTCS: WAGES PAID TO QUALIFIED EMPLOYEES

 

1103.1A QHTC shall be allowed a credit against the tax imposed by D.C. Official Code § 47-1817.6 equal to ten percent (10%) of the wages paid during the first 24 calendar months to a qualified employee who is employed in the District by the QHTC in any of the activities defined in D.C. Official Code § 47-1817.1(5)(A)(iii) and hired after December 31, 2000.

 

1103.2The credit shall not exceed, for each qualified employee, five thousand dollars ($5,000) in a taxable year.

 

1103.3The credit shall not be allowed if:

 

(a) The employee is a key employee;

 

(b) The QHTC accords the qualified employee lesser benefits or rights than it accords other employees in similar jobs; or

 

(c) The qualified employee is employed as the result of:

 

(1) The displacement of another employee;

 

(2) A strike or lockout;

 

(3) A layoff in which other employees are awaiting recall; or

 

(4) A reduction of the regular wages, benefits, or rights of others in similar jobs.

 

1103.4If the amount of the credit allowable under this section exceeds the tax otherwise due from a QHTC, the unused amount of the credit shall not be carried forward after the tenth year following the first year the taxpayer files a return claiming QHTC status.

 

1103.5The following are examples of the application of §§ 1103.1 to 1103.4:

 

(a) On January 1, 2001, Company D, a QHTC, hires 10 employees at an annual salary of $40,000 each. Since the workers perform the activities described in D.C. Official Code § 47 -1817.1(5)(A)(iii); they are classified as qualified employees. None of the qualified employees are affected by the restrictions of § 1103.3. The annual payroll each year for the 10 qualified employees is $400,000. For tax years 2001 and 2002, Company D is entitled to a tax credit equal to 10% of the annual salaries of $400,000 received by the 10 qualified employees, or $40,000.

 

(b) Assume the same facts as in example 1, except the annual payroll for each year is $600,000. For tax years 2001 and 2002, Company D is entitled to a tax credit of only $5,000.00 for each qualified worker, or $50,000, since the limitation of § 1103.2 would apply.

 

(c) Assume the same facts as in example 1, except 5 of the qualified employees are entry level and are paid $30,000 each and 5 of the qualified employees are highly skilled and are paid $70,000 each. For tax years 2001 and 2002, the limitation of § 1103.1 applies to the 5-entry level qualified employees and the limitation of § 1103.2 applies to the highly skilled qualified employees. Therefore, Company D is entitled to a tax credit of $40,000, calculated as follows: (1) the total annual wages paid to the entry level qualified employees is $150,000 of which 10%, or $15,000, is available for the credit, (2) the total annual wages paid to the highly skilled qualified employees is $350,000 and since the credit for each of the five highly skilled qualified employee exceeds $5,000, only $25,000 is available for the credit, (3) $15,000 plus $25,000 totals $40,000.

 

source

Final Rulemaking published at 49 DCR 2142 (March 8, 2002).