Empowerment zone
Encyclopedia
The Empowerment Zone Program consists of three US congressional designations. The Renewal Communities (RCs), Empowerment Zones (EZs) and Enterprise Communities (ECs) are highly distressed urban and rural communities who may be 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.
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 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:
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.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 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:
| Pulaski County, Arkansas | Tucson, Arizona | Fresno, California | Los Angeles, California | Santa Ana, California | New Haven, Connecticut | Jacksonville, Florida | Miami/Dade County, Florida | Chicago, Illinois |
| Gary/Hammond/East Chicago, Indiana | Boston, Massachusetts | Baltimore, Maryland | Detroit, Michigan | Minneapolis, Minnesota | St. Louis, Missouri/East St. Louis, Illinois | Cumberland County, New Jersey | New York, New York | Syracuse, New York |
| Yonkers, New York | Cincinnati, Ohio | Cleveland, Ohio | Columbus, Ohio | Oklahoma City, Oklahoma | Philadelphia, Pennsylvania/Camden, New Jersey | Columbia/Sumter, South Carolina | Knoxville, Tennessee | El Paso, Texas |
| San Antonio, Texas | Norfolk/Portsmouth, Virginia | Huntington, WV/Ironton, Ohio | ||||||
Parts of the following rural areas are empowerment zones:
| Desert Communities, California (part of Riverside County) | Southwest Georgia United, Georgia (part of Crisp County and all of Dooly County) |
| Southernmost Illinois Delta, Illinois (parts of Alexander and Johnson Counties and all of Pulaski County) | Kentucky Highlands, Kentucky (part of Wayne County and all of Clinton and Jackson Counties) |
| Aroostook County, ME (part of Aroostook County) | Mid-Delta, MS (parts of Bolivar, Holmes, Humphreys, Leflore, Sunflower, and Washington Counties) |
| Griggs-Steele, North Dakota part of Griggs County and all Steele County | Oglala Sioux Tribe, South Dakota (part of Jackson County and all of Bennett and Shannon Counties) |
| Middle Rio Grande FUTURO Communities, Texas (parts of Dimmit, Maverick, Uvalde, and Zavala Counties) | Rio Grande Valley, Texas (parts of Cameron, Hidalgo, Starr, and Willacy Counties) |
Sources
- US Department of Housing and Urban Development, Questions and Answers on Renewal Community (RC) and Empowerment Zone (EZ) tax incentives
- US Internal Revenue Service; TAX INCENTIVES FOR DISTRESSED COMMUNITIES, IRS Publication 954.
External links
- Internal Revenue Service
- US Department of Housing and Urban Development
- US Dept of Agriculture, Rural Development
See also
- Ke `Aupuni LokahiKe `Aupuni LokahiKe Aupuni Lokahi was a non-profit organization created to administer the United States Department of Agriculture's Enterprise Community Grant awarded to the Molokai, Hawaii community in 1998 for a span of 10 years...
- A former empowerment zone and enterprise community in Molokai, Hawaii. - Renewal communityRenewal communityRenewal Communities and Empowerment Zones are distressed urban and rural communities in the United States where qualifying businesses are eligible for billions of dollars in tax incentives....