1. EMPOWERMENT ZONE EMPLOYMENT CREDIT

The credit provides businesses with an incentive to hire individuals who both live and work in an empowerment zone.

Qualified zone employee must perform substantially all of his/her services for you within an empowerment zone in your trade or business and the employee must live in an empowerment zone while performing the services.

Nonqualified Employees:

1. An individual employed for less than 90 days.
2. Certain related taxpayers
3. Certain dependents
4. Any 5% owner

The total amount of qualified zone wages you can use to figure the credit cannot be more than $15,000, per employee, per calendar year.

For 2002 the maximum credit per employee is $2,250, ($15,000 x 15%).

You must reduce the deduction on your income tax return for salaries and wages for the amount of your empowerment zone employment credit.

For certain qualified zone property placed in service by an enterprise zone business, Section 179 deduction limits can be increased by as much as $20,000.

2. WORK OPPORTUNITY CREDIT

The work opportunity credit provides businesses with an incentive to hire individuals from groups that have a particularly high         unemployment rate or other special employment needs.  The business does not have to be in an empowerment zone or enterprise community to qualify for this credit.

Targeted groups include:

·        Recipients of AFDC or its successor program TANF

·        Veteran

·        Ex-felon

·        High-risk youth

·        Vocational rehabilitation referral

·        Summer youth employee

·        Food stamp recipient or

·        Supplemental security income (SSI) recipient.

 State certification required.  An employee is not considered a targeted group employee without SESA CERTIFICATION.  To receive certification, submit Form 8850, Pre-Screening Notice and Certification to your state employment security agency.

You must either receive the certification by the day the individual begins work or both of the following:

·        Complete Form 8850 by the day you offer the individual a job.

·        Submit the form to your SESA by the 21^st day after the individual begins work.

Nonqualified wages:

·        Wages paid to an employee who has worked for you for more than 1 year.

·        The employee is your relative or dependent.

·        You rehired, if he or she was not a targeted group employee when employed earlier

·        The employee does not work for you at least 120 hours.

 Amount of Credit:

·        Worked at least 400 hours – Maximum credit $2,400

·        Worked at least 120 but less than 400 hours - $1,500

 You must reduce the deduction on your income tax return for salaries and wages for the amount of your work opportunity credit.  Wages used to claim the work opportunity credit cannot be used to figure the empowerment zone employment credit.  You cannot claim both the work opportunity credit and the welfare-to-work credit for the same employee during the same tax year.

3. Welfare-to-Work Credit

 The credit provides businesses with an incentive to hire long-term family assistance recipients.  You can claim the credit if you pay or incur “qualified wages” during the first 2 years of employment to a “long-term family assistance recipient” who begins work for you after December 1997.

4. HUBZone Empowerment Contracting Program

 Requirements:

·        A business must be a small business by SBA standards.

·        Its principal office must be located within a “Historically Underutilized Business Zone”

·        It must be owned and controlled by one or more U.S. citizen

·        At least 35% of its employees must reside in a HUBZone.  (The employees must live in a primary residence within that area for at least 180 days or be a currently registered voter in that area.

 Use the link http://www.sba.gov/hubzone, to find out if your business or employee’s are located in a HUBZone.

Contract Benefits:

·        Competitive HUBZone contracts can be awarded if the contracting officer has a reasonable expectation that at least two qualified HUBZone small business concerns will submit offers.

·        Sole-source HUBZone contracts can be awarded if the contracting officer determines only one HUBZone SBC is likely to bid and is qualified, and the award price will not exceed $5,000,000 for manufacturing, $3,000,000 for others.

·        Full and open competitive contracts can be awarded with a price evaluation preference.  The HUBZone SB must not be 10% higher than the offer of a non-small business.

·        Firms in Empowerment Zones and Enterprise Communities can also benefit from employer tax credits, tax-free facility bonds, and investment tax deductions.

·        Eligible HUBZone firms can qualify for higher SBA-guaranteed surety bonds on construction and service contract bids.