Renewal community

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Renewal Communities (RCs) and Empowerment Zones (EZs) are distressed urban and rural communities in the United States where qualifying businesses are eligible for billions of dollars in tax incentives. They were created in the Community Renewal Tax Relief Act of 2000, which was eventually passed as part of the Consolidated Appropriations Act, 2001. [1]

United States Federal republic in North America

The United States of America (USA), commonly known as the United States or America, is a country comprising 50 states, a federal district, five major self-governing territories, and various possessions. At 3.8 million square miles, the United States is the world's third or fourth largest country by total area and is slightly smaller than the entire continent of Europe's 3.9 million square miles. With a population of over 327 million people, the U.S. is the third most populous country. The capital is Washington, D.C., and the largest city by population is New York City. Forty-eight states and the capital's federal district are contiguous in North America between Canada and Mexico. The State of Alaska is in the northwest corner of North America, bordered by Canada to the east and across the Bering Strait from Russia to the west. The State of Hawaii is an archipelago in the mid-Pacific Ocean. The U.S. territories are scattered about the Pacific Ocean and the Caribbean Sea, stretching across nine official time zones. The extremely diverse geography, climate, and wildlife of the United States make it one of the world's 17 megadiverse countries.

Community Renewal Tax Relief Act of 2000

The Community Renewal Tax Relief Act of 2000 is a bill that was introduced into the United States House of Representatives during the 106th United States Congress. The Act was eventually passed as part of the Consolidated Appropriations Act, 2001.

Contents

The Community Renewal Tax Relief Act of 2000 is intended to improve development in economically distressed areas of the United States. The law offers "tax incentives for businesses to locate and hire residents in urban and rural areas that have not experienced recent economic expansion." [2] Both rural and urban areas are eligible. Three primary means were used: renewal communities, empowerment zones, and community development entities. [2] The bill also created the New Markets Tax Credit Program, which has been renewed several times and is still in effect. [3]

An empowerment zone is an economically distressed community eligible to receive tax incentives and grants from the United States federal government under the Empowerment Zones and Enterprise Communities Act of 1993.

The New Markets Tax Credit (NMTC) Program incentivizes business and real estate investment in low-income communities of the United States via a federal tax credit. The program is administered by the US Treasury Department's Community Development Financial Institutions (CDFI) Fund and allocated by local Community Development Entities (CDEs) across the United States.

One provision of the Community Renewal Tax Relief Act of 2000 was the creation of 40 "renewal communities". [2] Renewal communities would receive special tax breaks designed to encourage economic growth by generating business investment and job opportunities. Requirements to being designated a renewal community included having a high rate of poverty and high unemployment rate (compared to rates nationwide). [2] The communities must have under 200,000 people in them, but can be any physical size. [2] Local and state governments must be involved with a community gaining this designation. They are required to participate by making their own commitments to taking action to reduce economic burdens on employers and businesses in the area, as well as taking steps to encourage economic growth. [2] If a community is successful in becoming a designated renewal community, local business "may be entitled to employer wage credits for full-time employees and summer workers, an expanded expense deduction for tangible assets, an accelerated commercial revitalization deduction and a 100% exclusion for capital gains on the sale of certain renewal community business interests or tangible assets." [2]

Communities

The Departments of Housing and Urban Development (HUD) and Agriculture (USDA) have designated RCs and EZs in three competitions since 1994. 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 in rural communities only. A couple of RCs have as few as approximately 100 businesses, while several RCs and EZs have more than 5,000 businesses. No RC or EZ has a population greater than 200,000.

United States Department of Housing and Urban Development Cabinet department in the Executive branch of the United States federal government

The United States Department of Housing and Urban Development (HUD) is a Cabinet department in the Executive branch of the United States federal government. Although its beginnings were in the House and Home Financing Agency, it was founded as a Cabinet department in 1965, as part of the "Great Society" program of President Lyndon Johnson, to develop and execute policies on housing and metropolises.

United States Department of Agriculture department of United States government responsible policy on farming, agriculture, forestry, and food

The United States Department of Agriculture (USDA), also known as the Agriculture Department, is the U.S. federal executive department responsible for developing and executing federal laws related to farming, forestry, and food. It aims to meet the needs of farmers and ranchers, promote agricultural trade and production, work to assure food safety, protect natural resources, foster rural communities and end hunger in the United States and internationally.

Qualifying businesses in RCs are 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 renewal community employment credit provides businesses with an incentive to hire individuals who both live and work in a renewal community. Employers can claim the credit if they pay or incur “qualified zone wages” to a “qualified zone employee”. The credit is for wages paid or incurred after 2001. The credit is 15% of the qualified wages paid or incurred during a calendar year. The amount of qualified wages you can use to figure the credit cannot be more than $10,000 for each employee for each calendar year. As a result, the credit can be as much as $1,500 (15% of $10,000) per qualified employee each year.

These areas have been designated renewal communities:

Greene-Sumter County, Alabama Mobile County, Alabama Southern Alabama Los Angeles, California Orange Grove, California Parlier, California San Diego, California San Francisco, California Atlanta, Georgia
Chicago, Illinois Eastern Kentucky Central Louisiana New Orleans, Louisiana Northern Louisiana Ouachita Parish, Louisiana Lawrence, Massachusetts Lowell, Massachusetts Detroit, Michigan
Flint, Michigan West Central Mississippi Turtle Mountain Band of Chippewa, North Dakota Camden, New Jersey Newark, New Jersey Buffalo-Lackawanna, New York Jamestown, New York Niagara Falls, New York Rochester, New York
Schenectady, New York Hamilton, Ohio Youngstown, Ohio Philadelphia, Pennsylvania Charleston, South Carolina Chattanooga, Tennessee Memphis, Tennessee Corpus Christi, Texas El Paso County, Texas
Burlington, Vermont Tacoma, Washington Yakima, Washington Milwaukee, Wisconsin

See also

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References

  1. ↑ "106th - H.R. 5662 - Summary". United States Congress. Retrieved 18 September 2013.
  2. 1 2 3 4 5 6 7 Fiore, Nicholas (August 2001). "The Community Renewal Tax Relief Act of 2000: New incentives for taxpayers investing in distressed communities". Journal of Accountancy. Retrieved 19 September 2013.
  3. ↑ Ebeling, Ashlea (18 September 2013). "Banks Press Congress To Renew Neighborhood Revitalization Tax Break". Forbes Magazine. Retrieved 19 September 2013.

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