Businesses that qualify and operate in empowerment zones are eligible for the employer wage credit. The employer wage credit is available to any employer engaged in a trade or business in an empowerment zone, even if it is not an enterprise zone business (see below). Initially, an employer can claim a tax credit equal to 20% of the first $15,000 of qualified wages paid or incurred to each employee who are zone residents and perform substantially all of their services for the employer within the zone. The credit remains until it begins to phase down in 2002. The credit will not be available after December 31, 2004. The wage credit can be used to offset up to 25% of the employer's alternative minimum tax liability.
 

Certain taxpayers can elect to deduct up to $17,500 of the cost of qualifying Section 179 property in the year it is placed in service, instead of recovering that cost through depreciation. Section 179 property does not include buildings. The maximum deduction for Section 179 property that is "qualified zone property" is increased to $37,500 for "enterprise zone businesses." For complete details and qualifications, contact the Jackson County Empowerment Zone Community.

The Revenue Reconciliation Act created a new category of tax-exempt private activity bonds; qualified enterprise zone facility bonds. Tax-exempt bonds have lower interest rates than conventional financing. This tax incentive will be available to finance property in both enterprise communities and empowerment zones. To qualify, 95% or more of the new proceeds of the bond issue must be used to finance: (1) "Qualified zone property" whose principal user is a qualified "enterprise zone business," and (2) Certain land used for a related purpose. A bond issue will not qualify if the local amount of outstanding enterprise zone facility bonds allocatable to any person and any related person is more than $3 million per zone or community or $20 million for all zones and communities. Additionally, no deduction will be allowed for bond-financed interest accruing in any year in which: (1) Substantially all of the facility ceases to be used in an empowerment zone, or (2) the principal user of the facility ceases to be an enterprise zone business. This rule does not apply if the use of the facility ceases to qualify because of bankruptcy or the termination or revocation of the designation as an empowerment zone. In addition, interest will remain deductible if the issuer and principal users attempted in good faith to meet the requirements and any failure is corrected within a reasonable period after discovery.
 

A number of federal agencies have agreed to provide additional resources for businesses in empowerment zones. The Small Business Administration (SBA) is creating one-stop capital shops within empowerment zones to help package financial assistance and offer certain types of loans. You should contact your local SBA office for additional information. The Department of Labor is offering special targeted job training programs for zone residents through local Private Industry Councils. These customized programs are designed to ensure that you can find qualified workers among residents in the zone. Finally, the Department of Housing and Urban Development (HUD) is offering to help communities in targeting resources to provide housing for your employees who would like to live near their place of work.