For purposes of section
38, the amount of the empowerment zone employment credit determined under this section with respect to any employer for any taxable year is the applicable percentage of the qualified zone wages paid or incurred during the calendar year which ends with or within such taxable year.
(b) Applicable percentage
For purposes of this section, the applicable percentage is 20 percent.
(c) Qualified zone wages
(1) In general
For purposes of this section, the term “qualified zone wages” means any wages paid or incurred by an employer for services performed by an employee while such employee is a qualified zone employee.
(2) Only first $15,000 of wages per year taken into account
With respect to each qualified zone employee, the amount of qualified zone wages which may be taken into account for a calendar year shall not exceed $15,000.
(3) Coordination with work opportunity credit
(A) In general
The term “qualified zone wages” shall not include wages taken into account in determining the credit under section
(B) Coordination with paragraph (2)
The $15,000 amount in paragraph (2) shall be reduced for any calendar year by the amount of wages paid or incurred during such year which are taken into account in determining the credit under section
(d) Qualified zone employee
For purposes of this section—
(1) In general
Except as otherwise provided in this subsection, the term “qualified zone employee” means, with respect to any period, any employee of an employer if—
(A)substantially all of the services performed during such period by such employee for such employer are performed within an empowerment zone in a trade or business of the employer, and
(B)the principal place of abode of such employee while performing such services is within such empowerment zone.
(2) Certain individuals not eligible
The term “qualified zone employee” shall not include—
(A)any individual described in subparagraph (A), (B), or (C) of section
(B)any 5-percent owner (as defined in section
(C)any individual employed by the employer for less than 90 days,
(D)any individual employed by the employer at any facility described in section
(E)any individual employed by the employer in a trade or business the principal activity of which is farming (within the meaning of subparagraph (A) or (B) of section
2032A(e)(5)), but only if, as of the close of the taxable year, the sum of—
(i)the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the employer which are used in such a trade or business, and
(ii)the aggregate value of assets leased by the employer which are used in such a trade or business (as determined under regulations prescribed by the Secretary),
(3) Special rules related to termination of employment
(A) In general
Paragraph (2)(C) shall not apply to—
(i)a termination of employment of an individual who before the close of the period referred to in paragraph (2)(C) becomes disabled to perform the services of such employment unless such disability is removed before the close of such period and the taxpayer fails to offer reemployment to such individual, or
(ii)a termination of employment of an individual if it is determined under the applicable State unemployment compensation law that the termination was due to the misconduct of such individual.
(B) Changes in form of business
For purposes of paragraph (2)(C), the employment relationship between the taxpayer and an employee shall not be treated as terminated—
(i)by a transaction to which section
381(a) applies if the employee continues to be employed by the acquiring corporation, or
(ii)by reason of a mere change in the form of conducting the trade or business of the taxpayer if the employee continues to be employed in such trade or business and the taxpayer retains a substantial interest in such trade or business.
2000—Subsec. (b). Pub. L. 106–554, § 1(a)(7) [title I, § 113(a)], amended subsec. (b) generally, substituting provisions establishing an applicable percentage of 20 percent for provisions setting out tables for determining the applicable percentage.
Subsec. (e). Pub. L. 106–554, § 1(a)(7) [title I, § 113(b)], struck out heading and text of subsec. (e). Text read as follows: “This section shall be applied without regard to any empowerment zone designated under section
1997—Subsec. (b). Pub. L. 105–34substituted “For purposes of this section—
“(1) In general.—Except as provided in paragraph (2), the term ‘applicable percentage’ means the percentage determined in accordance with the following table:”
for “For purposes of this section, the term ‘applicable percentage’ means the percentage determined in accordance with the following table:” and added par. (2).
1996—Subsec. (c)(3). Pub. L. 104–188substituted “work opportunity credit” for “targeted jobs credit” in heading.
Effective Date of 2000 Amendment
Pub. L. 106–554, § 1(a)(7) [title I, § 113(d)], Dec. 21, 2000, 114 Stat. 2763, 2763A–601, provided that: “The amendments made by this section [amending this section and section
1400 of this title] shall apply to wages paid or incurred after December 31, 2001.”
Effective Date of 1997 Amendment
Amendment by section 951(b) ofPub. L. 105–34effective Aug. 5, 1997, except that designations of new empowerment zones made pursuant to amendments by section 951 ofPub. L. 105–34to be made during 180-day period beginning Aug. 5, 1997, and no designation pursuant to such amendments to take effect before Jan. 1, 2000, see section 951(c) ofPub. L. 105–34, set out as a note under section
1391 of this title.
Effective Date of 1996 Amendment
Amendment by Pub. L. 104–188applicable to individuals who begin work for the employer after Sept. 30, 1996, see section 1201(g) ofPub. L. 104–188, set out as a note under section
38 of this title.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
An empty table indicates that we see no relevant changes listed in the classification tables. If you suspect that our system may be missing something, please double-check with the Office of the Law Revision Counsel.
Description of Change
Statutes at Large
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