1104.1 For taxable years beginning after December 31, 2000, a QHTC shall be allowed a credit against taxes imposed by D.C. Official Code § 47-1817.6 for expenditures paid or incurred by a QHTC during the taxable year for retraining of a qualified disadvantaged employee.

1104.2 The following expenditures for retraining qualified disadvantaged employees paid by a QHTC are eligible for the tax credit:

1. (a) Tuition, costs, or fees for credit or noncredit courses leading to academic degrees or certification of professional, technical, or administrative skills taken at District-based accredited colleges or universities;
2. (b) The cost for formal enrollment in training programs offered by nonprofit training providers (including community or faith-based organizations certified for the provision of training, or job-readiness preparation at skill levels suitable for immediate performance of entry-level jobs) that are pre-qualified for participation under this section by the Department of Employment Services and are in demand among technology companies in general, and among information and telecommunications companies in particular;
3. (c) Eligible training programs, other than those at District-based accredited colleges or universities, that are pre-qualified for participation under this section by the Department of Employment Services; and
4. (d) Worker retraining programs undertaken through an apprenticeship agreement approved by the District of Columbia Apprenticeship Council.

1104.3 The credit claimed under this section shall be limited to twenty thousand dollars ($20,000) for each qualified disadvantaged employee during the first 18 months of employment.

1104.4 If the amount of the credit allowable under this section exceeds the tax otherwise due from a QHTC, the unused amount of the credit shall not be carried forward after the tenth year following the first year the taxpayer files a return claiming QHTC status. In the alternative, the QHTC can elect to take a refundable credit in an amount up to fifty percent (50%) of the unused credit with no carryover of the unused credit to subsequent years. A QHTC, that is not a corporation, may file a claim for refund.

1104.5 The retraining costs shall be prorated for the number of months of the training program.

1104.6 The following are examples of the application of §§ 1104.1 through 1104.5:

1. (a) Company E, a QHTC, hires 10 qualified employees to work in activities described in D.C. Official Code § 47-1817.1(5)(A)(iii). Five of Company E's employees are qualified disadvantaged employees within the meaning of § 1199. None of the qualified disadvantaged employees are affected by the restrictions of § 1199. On January 1, 2001, Company E enters into a 24-month program that was pre-qualified by the Department of Employment Services to retrain five qualified disadvantaged employees. The cost for the 24-month program is $20,000 for each qualified disadvantaged employee.

In tax year 2001, Company E is entitled to a tax credit of $50,000 and a tax credit of $25,000 in tax year 2002, computed as follows: Company E's retraining costs were $833 per employee per month ($833 per month x 5 employees x 12 months = $50,000 and $833 per month x 5 employees x 6 months = $25,000).

The credit limitation of § 1104.3 is $1,111 per employee per month in retraining costs, for a period not to exceed eighteen months, paid by a QHTC to retrain each qualified disadvantaged employee.

(b) Assume the same facts as in example 1, except the retraining cost for the 24-month program is $60,000 per qualified disadvantage employee. Company E is entitled to a tax credit in tax year 2001 of $66,667 and a tax credit of $33,333 in tax year 2002, even though Company E's retraining costs are $2,500 per employee per month. § 1104.3 limits the credit to $1,111 per employee per month in retraining costs, for a period not to exceed eighteen months ($1,111 x 5 x 12 = $66,667 and $1,111 x 5 x 6m = $33,333).

SOURCE: Final Rulemaking published at 49 DCR 2142 (March 8, 2002).