Are You Up to Speed on Maryland’s Cybersecurity Investment Incentive Tax Credit?
May 31, 2017
The state of Maryland has made several efforts to incentivize and promote cybersecurity firms to startup and reside within Maryland. One particular incentive to help grow cybersecurity companies in Maryland is the Cybersecurity Investment Incentive Tax Credit (CIITC) for Qualified Maryland Cybersecurity Companies.
A Qualified Maryland Cybersecurity Company (QMCC) is a firm that meets the following requirements:
- Headquartered and has operations based in Maryland
- Engaged in the development of innovative and proprietary cybersecurity technology
- Has no more than 50 employees
- Not active business longer than 5 years
- Does not have publicly traded securities
- Is certified by the Maryland Department of Commerce
A company that fulfills all of the above requirements would be considered a QMCC and potentially eligible for the CIITC. The CIITC is equal to 33% of an eligible investment to the company. There is a limit of $250,000 for each investor, for each fiscal year and each QMCC may not receive total credits exceeding 15% of the total program appropriations for each fiscal year. Additionally, this is a refundable credit and can still be received even when no Maryland income tax liability exists for a certain fiscal year. QMCC are limited to participating in the program for two years.
As an additional benefit, please note that many counties in Maryland such as Montgomery, Allegany, Dorchester, Garrett, and Somerset have additional provisions to this credit which may allow for a tax credit up to 50% of the investment made and up to $500,000 in tax credit.
To apply for this credit an application must be submitted to the Maryland Department of Commerce.
Finally, application submission is quite inflexible with this credit and deadlines must be met to receive any benefit from this credit opportunity. The QMCC needs to have the certification application to Maryland Department of Commerce no later than June 1 for certification and July 3 for submission for the credit. Investors need to submit applications within at least 30 days, but no more than 60 days before making a qualifying investment.
To learn more about Maryland’s Cybersecurity Investment Inventive Tax Credit, contact SC&H Group’s Tax Services practice here.