2006 Delaware Code - Subchapter I — Neighborhood Assistance Tax Credit

§ 2001. Short title.

This subchapter shall be known and may be cited as the "Neighborhood Assistance Act." (30 Del. C. 1953, § 2001; 56 Del. Laws, c. 405, § 1; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2002. Definitions.

As used in this subchapter:

(1) "Community services" means any type of counseling and advice, emergency assistance or medical care furnished to individuals or groups in an impoverished area.

(2) "Impoverished area" means any clearly-defined, economically-distressed urban or rural area in this State that is certified as such by the Department of Health and Social Services and approved by the Tax Appeal Board. Such certification shall be made on the basis of federal census studies and current indices of social and economic conditions.

(3) "Neighborhood organization" means any organization performing community services and offering neighborhood assistance in an impoverished area and holding a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of the Internal Revenue Code.

(4) "Community development corporation" and "community-based development organization" means any locally-based, resident-controlled, nonprofit organization that plans and implements Community Economic Development projects in impoverished areas or for low income people and that holds a ruling from the Internal Revenue Service of the United States Department of the Treasury that the organization is exempt from income taxation under the provisions of the Internal Revenue Code.

(5) "Neighborhood assistance" means the furnishing of financial assistance, labor, material and technical advice to aid in the physical, economic and community improvement of any part or all of an impoverished area.

(6) "Business firm" means any business entity authorized to do business in this State and subject to the Delaware corporation income tax.

(7) "Job training" means any type of instruction to an individual who resides in an impoverished area that enables him or her to acquire vocational skills so that he or she can become employable or be able to seek a higher grade of employment.

(8) "Education" means any type of scholastic instruction to an individual who resides in an impoverished area that enables him/her to meet educational requirements for known job vacancies.

(9) "Crime prevention" means any activity that aids in the reduction of crime in an impoverished area.

(10) "Housing" means any activity that aids in substantial renovation or new construction of rental or owner-occupied residences for low and moderate income families in impoverished areas.

(11) "Economic development" means any activity that aids in business development and ownership in impoverished areas. (30 Del. C. 1953, § 2002; 56 Del. Laws, c. 405, § 1; 57 Del. Laws, c. 741, § 9A; 70 Del. Laws, c. 186, § 1; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2003. Declaration of policy.

It is declared to be public policy of this State to encourage the investment by business firms in offering neighborhood assistance and providing job training, education, crime prevention and community services, both directly and by contributing to neighborhood organizations, to benefit individuals living in impoverished areas. This public policy further encourages the creation of significant partnerships among community-based development organizations, the private sector and the government. (30 Del. C. 1953, § 2003; 56 Del. Laws, c. 405, § 1; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2004. Qualification for tax credit.

For each taxable period beginning on or after January 1, 2000, a business firm that contributes to a neighborhood organization, community development corporation, or community-based development organization, or that provides neighborhood assistance, job training or education for individuals not employed by the business firm, community services, crime prevention, housing or economic development in an impoverished area shall receive a tax credit as provided in § 2005 of this title if the Director of the Economic Development Office and the Tax Appeal Board annually approve the proposal of the business firm, setting forth the program to be conducted, the impoverished area selected, and the estimated amount to be invested in the program. The Director of the Economic Development Office and the Tax Appeal Board may promulgate rules and regulations for the approval or disapproval of such proposals by business firms.

A Neighborhood Assistance Act Advisory Council, comprising community development practitioners and representatives of the private and public sectors, shall be established to provide guidance and recommendations to the Director of the Economic Development Office and the Tax Appeal Board in establishing program priorities and mechanisms for the program to be conducted and determining the impoverished area(s) selected and the estimated amount to be invested in the program or community-based development organization. The Neighborhood Assistance Act Advisory Council shall assist the Department of Health and Social Services and the Tax Appeal Board in establishing and promulgating rules and regulations for the approval or disapproval of proposals by business firms and community-based development organizations. (30 Del. C. 1953, § 2004; 56 Del. Laws, c. 405, § 1; 57 Del. Laws, c. 741, § 9A; 58 Del. Laws, c. 492, § 2; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2005. Corporate income tax credit; amount.

(a) For purposes of computing taxable income under Chapter 19 of this title, relating to the corporation income tax, the Secretary of Finance shall allow a credit equal to 50% of the amount invested by a business firm in a program or in a community-based development organization the proposal for which was approved under § 2004 of this title. Such tax credit, however, shall not exceed $100,000 per business.

(b) Any investment made in a tax year for which the tax credit herein described is claimed by a taxpayer shall not also be eligible for treatment in the same tax year as a charitable contribution deduction for state income tax purposes in calculating Delaware income tax liability. (30 Del. C. 1953, § 2005; 56 Del. Laws, c. 405, § 1; 57 Del. Laws, c. 741, § 9B; 58 Del. Laws, c. 492, § 3; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2006. Limitations on credits.

(a) The aggregate amount of such tax credits approved for all firms shall not exceed $500,000 in any 1 fiscal year.

(b) If the total amount of neighborhood assistance tax credits approved by the Director of the Economic Development Office and the Tax Appeal Board for which taxpayers applied in any year exceeds the amount allocated for those credits, then the neighborhood assistance tax credits to be received by each application shall be the product of $500,000 multiplied by a fraction, the numerator of which is the eligible neighborhood assistance tax credits applied for by the applicant and the denominator is the total of all eligible neighborhood assistance tax credits applied for by the applicants. (72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)

§ 2007. Unused tax credit.

(a) Any business firm making contributions after January 1, 2000, in amounts in excess of the maximum allowable credit permitted under § 2005 of this title shall be permitted to carry forward the excess contribution as a credit in any of the next 5 years subsequent to the date of the initial grant, subject to the limitation imposed by subsection (b) of this section.

(b) Excess contributions are those contributions that are not available as a credit in the year of the grant because of the limitation imposed by § 2005 of this title. The excess contributions carried over from prior years shall be allowable only after contributions for the current year have been credited, and in no event shall the total credit under this subchapter for any 1 year exceed the limitation imposed by § 2005 of this title. (30 Del. C. 1953, § 2006; 56 Del. Laws, c. 405, § 1; 58 Del. Laws, c. 492, § 4; 72 Del. Laws, 1st Sp. Sess., c. 250, § 2.)