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What is a Renewal Community (RC)?
Renewal Communities are federally designated geographic areas that have been identified as particularly distressed zones. Because these areas
have a hard time attracting the businesses and residents needed for economic revival, the federal government offers monetary incentives to
businesses that are located in these areas and hire employees within these communities. Memphis has 48 census tracts that fall within the Renewal
Community Zone. To determine whether an address falls within an eligible census tract go to:
http://egis.hud.gov/egis/cpd/rcezec/ezec_open.htm
and enter your address and zip code information.
What Benefits are Available to Businesses?
Businesses working within a RC or employing residents that reside in a RC are eligible for several specialized tax incentive programs as well
as more traditional programs open to all businesses. Additionally, businesses may also be eligible for assistance with tax preparations, legal
and accounting referrals, and links to local employment agencies and job banks. Examples of specific benefits include:
- The Renewal Community & Empowerment Zone Employment Tax Credit
The Renewal Community Employment Credit is an incentive to businesses that locate and hire employees within a Renewal Community.
In return for working in these areas, businesses receive a dollar amount (based on the number of employees hired) that can be deducted from their
federal taxes. A business is eligible to apply for the credit every year, if they have employed an RC worker for 90 calendar days or more. The
amount of tax credits received varies according to the wages paid to each employee, with a maximum allocation of $3,000 per employee.
- The Commercial Revitalization Deduction
The Commercial Revitalization Deduction is an incentive for businesses that either build new or revitalize existing commercial buildings located
within a Renewal Community. In return, businesses can deduct the cost associated with this development from their federal taxes, with $10 million
is the maximum deduction for a single project. (You can only apply for the deduction the year before your project is placed into service).
- Welfare to Work Tax Credit (WtW)
The Welfare to Work Tax Credit is a two-year credit that can be deducted from federal taxes for businesses that hire individuals who have
been on public assistance, (Families First). Eligible businesses do not have to be located in a Renewal Community to qualify.
Businesses receive credits from up to $3,500 for the first year and $5,000 for the second year for each new hired employee that has worked
at least 400 hours or 180 days. This incentive applies only to new hires and cannot be combined with Work Opportunity Tax Credit.
- Work Opportunity Credit (WOTC)
The Work Opportunity Tax Credit provides businesses with an incentive to hire individuals from groups that have particularly high unemployment
rates or other special employment needs such as veterans, ex-felons, high risk youth, public assistance recipients, etc. Eligible
businesses do not have to be located in an RC to qualify. The amount of tax credits depends on the number of employees
and the wages paid. For example, businesses with employees who work at least 120 hours can receive a credit worth 25 percent of wages paid
to that individual. Businesses with employees that work at least 400 hours, can receive a credit worth 40 percent of first-year wages up
to the maximum of $2,400 per employee.
How Can I Find Out More?
There are several other benefits that your business may be eligible for. It is important to note that understanding all the eligibility
requirements and applying for these benefits can be a complicated process. For more detailed information on the business incentives available in
Memphis go to http://www.cityofmemphis.org/framework.aspx?page=519 and click on the
'Business' icon listed on the page or email:
virginia.wilson@memphistn.gov
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