Jimmy Rodefer: Tax incentives for downtown employers through empowerment-zone credits

An empowering opportunity for employers -- extended through 2016 -- is empowerment-zone employer tax credits.

There's money on the table, and employers within empowerment zones can realize financial benefits if they meet the requirements as established by the U.S. Dept. of Housing and Urban Development.

The PATH Act (Protecting Americans from Tax Hikes) of 2015 extended empowerment-zone tax credits through the end of 2016, and retroactive to 2015.

Knoxville is one of only 40 empowerment-zone communities. The empowerment zone geography is described on the city of Knoxville's website, cityofknoxville.org: "The 16-square-mile Empowerment Zone includes downtown Knoxville and radiates out of it to encompass the Mechanicsville, Lonsdale, Five Points, Morningside, Fourth & Gill, Fort Sanders, Old Sevier and Vestal neighborhoods, among others."

Empowerment zones were created in 1993 with the purpose of spurring activity in economically distressed areas. They have several times reached the end of their authorization, and have each time been extended (in 2009, 2011, and 2013) indicating that empowerment zones have both popularity and value.

Tax credits potentially available to employers meeting empowerment-zone qualifications are:

  • $3,000 per year, or 20 percent of wages, up to a maximum of $15,000, for each employee who lives and works within the empowerment zone
  • A one time $2,400 Work Opportunity Tax Credit, or 40 percent of wages up to $6,000, for 18-39 year-old empowerment-zone residents
  • Summer Youth employees age 16 or 17 who live in an empowerment zone are also eligible for the work tax credit on work performed in summer 2015 or 2016
  • A $35,000 deduction for eligible equipment purchases

Basic requirements are that employees must live inside the empowerment zone, perform substantially all their duties within the zone, and be employed at least 90 days. For the work taz credit, employees need only to live in the empowerment zone and work 125 hours.

The IRS announced this past week that the time to claim the retroactive component of the work tax credit has been extended to Sept. 28 instead of the end of this month. After Sept. 28, employees must be certified within 28 days of hire to qualify.

Employers have the ability to find out quickly if they and their employees are located within the empowerment zone. There's an online tool available through HUD, which enables a search by address, state, or multiple addresses.

A map of the Knoxville EZ is available here.

Redevelopment of downtown Knoxville and it surrounding neighborhoods has picked up in recent years, empowerment-zone incentives offer more opportunity to empower employers to continue this progress.

You may view the original article from the Knoxville News Sentinel here.


Tagged Empowerment Zones, Featured, #JimmyTalk, PATH Act, Tax