Renewal community

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Renewal Communities (RCs) and Empowerment Zones (EZs) are distressed urban and rural communities where qualifying businesses are eligible for billions of dollars in tax incentives. 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 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.

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. You can claim the credit if you 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, AL	Mobile County, AL	Southern Alabama	Los Angeles, CA	Orange Grove, CA	Parlier, CA	San Diego, CA	San Francisco, CA	Atlanta, GA
Chicago, IL	Eastern KY	Central Louisiana	New Orleans, LA	Northern Louisiana	Ouachita Parish, LA	Lawrence, MA	Lowell, MA	Detroit, MI
Flint, MI	West Central Mississippi	Turtle Mountain Band of Chippewa, ND	Camden, NJ	Newark, NJ	Buffalo-Lackawanna, NY	Jamestown, NY	Niagara Falls, NY	Rochester, NY
Schenectady, NY	Hamilton, OH	Youngstown, OH	Philadelphia, PA	Charleston, SC	Chattanooga, TN	Memphis, TN	Corpus Christi, TX	El Paso County, TX
Burlington, VT	Tacoma, WA	Yakima, WA	Milwaukee, WI