CIITC provides a refundable income tax credit to Qualified Maryland Cybersecurity Companies (QMCCs) that secure investment from investors. The purpose of this new program is to incentivize and attract cybersecurity companies to startup in or move to Maryland; and to attract investment to cybersecurity companies in order to help them grow, create jobs and retain intellectual property in Maryland.
QMCCs receive a credit equal to 33%* of an eligible investment in the QMCC. A QMCC is limited to $250,000* for each investor, each fiscal year. A single QMCC may not receive total credits exceeding 15% of the total program appropriation for each fiscal year. QMCCs are limited to participating in the program for two years. Total credits issued during the fiscal year cannot exceed the budget amount and are, therefore, issued on a first come basis. The credit is refundable if the QMCC has no Maryland income tax liability.
Montgomery County passed legislation to offer a local supplement to the Maryland Cybersecurity Investment Incentive Tax Credit to QMCCs that receive a final Maryland tax credit certificate and have their headquarters and base of operations in Montgomery County. The program is subject to appropriation of funds. For more details, please contact the Montgomery County Department of Economic Development's Gene Smith at 240-777-2011.
Beginning with the fiscal year starting July 1, 2016, HB 1168 provides that if a QMCC is located in Allegany, Dorchester, Garrett or Somerset Counties, 50% of the investment in the QMCC, is eligible for the tax credit up to $500,000.
A qualified investor is an individual or any entity that invests at least $25,000 in a QMCC and is required to file an income tax return in any jurisdiction.
QMCC is a company that meets following requirements:
- Has its headquarters and base of operations in Maryland;
- Is organized for profit and engaged primarily in the development of innovative and proprietary cybersecurity technology;
- Has fewer than 50 employees;
- Is in active business no longer than 5 years and once certified as a QMCC a QMCC may remain eligible for a qualified investment for up to 2 years;
- Has no publicly traded securities on any exchange; and
- Is certified as a QMCC by the Maryland Department of Commerce (Commerce)
Note: Cybersecurity technology means products or goods intended to detect or prevent activity intended to result in unauthorized access to, exfiltration of, manipulation of, or impairment to the integrity, confidentiality, or availability of an information system or information stored on or transiting an information system.
Beginning on May 18, 2016, the Maryland Department of Commerce will accept Form B applications for companies to be pre-qualified as a QMCC. Early applications will be accepted through May 25, 2016. Notifications will be sent no later than June 6, 2016.
Convertible debt will qualify for the Cybersecurity Investment Incentive Tax Credit provided that the conversion to equity ownership (common or preferred stock) occurs within 30 days after the issuance of an Initial Tax Credit Certificate by Commerce and prior to the request for a Final Tax Credit Certificate. Convertible debt must have been created within one year prior to the date of an investor’s application for a tax credit.
APPLYThe Maryland Department of Commerce accepts applications to enable participation in the electronic filing process. Please submit your application plus attachments via courier or by mail to the Department of Commerce, ATTN: Tax Incentives, World Trade Center, 401 E. Pratt Street, 17th Floor, Baltimore, Maryland 21202.
QMCCs must submit a Form B application starting June 1, 2016 for the fiscal year beginning July 1, 2016.
NOTE: QMCCs must re-apply each fiscal year for eligibility in that fiscal year’s tax credit.
To qualify for the credit: complete and submit the CIITC application forms to Commerce (including Investor Form: Form A1, A2 or A3 and the QMCC Form B).
Qualified Investor Forms:
- Form A1 – Qualified Investor, Individual
- Form A2 – Qualified Investor, Corporation (all kinds including Sub-Chapter S)
- Form A3 – Non Sub-Chapter S Corporation Pass-Through Entities
Qualified Maryland Cybersecurity Company Form B:
- Form B – Print out and submit via hard copy.
Note: Multiple Attachment 11 (Form B) – not required for investor applications if prospective QMCC has a current Form B on file with Commerce.
- Completed applications with all attachments will be accepted at the Commerce (ATTN: Tax Incentives) offices located at World Trade Center, 401 East Pratt Street, 17th Floor, Baltimore, MD 21202.
A User Name and Reference Number will be issued within 48 hours, except applications received after June 24, 2016 will have a User Name and Reference Number issued after July 1, 2016.
- The second step of the application process will require that the User Name and Reference Number be used to complete the submission electronically beginning at
9:00 am EDT on July 1, 2016 through the cybertaxcredit.choosemaryland.org website.
- Submission order of the applications will be determined by "first come, first served" based ONLY on the electronic submission of the User Name and Reference Number. No physical application can be filed for purposes of the ordering of first come first served.
- Multiple submissions by an applicant using the same user name and reference number will be considered filed at the date and time of the LAST submission.
This rule is to maintain that the application procedure is as fair and equitable as possible.
- Any decision made by Commerce during the application process is considered final.
Applications are reviewed and approved based on the order received. At least 30 calendar days but no more than 60 calendar days prior to making a qualifying investment, the qualified investor submits a completed application to Commerce. Within 30 calendar days of receiving the application, Commerce will issue an initial tax credit certificate certifying the amount of any approved tax credits to a QMCC or offer rejection. A qualified investor has 30 days after the date Commerce issues the initial tax credit to make an investment in the QMCC. Within 10 days of making the investment, the QMCC shall provide written notice with supporting documentation to Commerce. If the QMCC fails to provide notice of investment to Commerce within 40 days after the issuance of the initial tax credit certificate Commerce shall rescind the certificate. Based on the actual investment, Commerce shall issue a final tax credit certificate.
Note: If a login window opens prompting you to input a user name/password, close the login window to continue opening the form. Once the form is open, please remember to save it to your computer before changing or completing the form.
For more information about CIITC contact:
Mark A. Vulcan,
Director, Tax Incentives
Maryland Department of Commerce, Office of Finance Programs
Elaine McCubbin, Tax Specialist
Maryland Department of Commerce, Office of Finance Programs
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