MARYLAND CREDITS BECAME EFFECTIVE JULY 1, 2013: CYBERSECURITY AND SECURITY CLEARANCE COSTS

INVESTMENT IN CYBER SECURITY COMPANIES

Legislation was enacted that provides a refundable credit for qualified investments in Maryland cyber security companies for purposes of corporate and personal income tax computation. A qualified Maryland cyber security company (QMCC) may claim a credit equal to 33% of the investment, not to exceed $250,000. The Department of Business and Economic Development may not certify investments in a single cyber security company that total more than 15% of the total appropriations to the reserve fund for that fiscal year. An investor may not acquire an ownership interest in a company that exceeds 25% and must submit an application to the department for approval of the credit.

A "qualifying company" is defined as a for-profit entity that is primarily engaged in the development of innovative and proprietary cyber security technology. It must meet specified criteria, including requirements that the company (1) have been in business for no more than five years; (2) have fewer than 50 full-time employees; (3) have its headquarters and base of operations in Maryland; (4) not be publicly traded on any exchange; (5) have not participated in the tax credit program for more than one prior fiscal year; (6) own or have properly licensed any proprietary technology; and (7) have an aggregate capitalization of at least $100,000.

The credit is applicable to all taxable years beginning after December 31, 2013, but before January 1, 2019, and it will terminate at the end of June 30, 2019.

H.B. 803, Laws 2013, effective July 1, 2013.

SECURITY CLEARANCE COSTS

Legislation has also been enacted that amends the employer security clearance cost tax credit available against Maryland corporate and personal income tax liabilities. The maximum amount of credit is increased from $100,000 to $200,000 and from $250,000 to $500,000 for multiple sensitive compartmented information facilities (SCIFs). Certain rental payments incurred by a small business that performs security-based contracting qualify for the credit.

S.B. 482, Laws 2013, effective July 1, 2013.

This blog

Brian Strahle is the owner of LEVERAGE SALT, LLC where he provides state and local tax technical services to accounting firms, law firms and tax research organizations across the United States.  He also writes a weekly column in Tax Analysts State Tax Notes entitled, "The SALT Effect."  For more info, visit his website: www.leveragestateandlocaltax.com

You can reach Brian at strahle@leveragesalt.com.

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Because state and local taxes are deceptively simple and endlessly complicated.

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