Cybersecurity Investment Incentive Tax Credit
Maryland provides a refundable tax credit to Qualified Maryland Cybersecurity Companies (QMCCs) that seek and secure investment from an in-state or out-of-state investor. The purpose of this new program is to incentivize and attract cybersecurity companies to start-up 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.
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 or Bernadette Goovaerts at (240) 777-2045.
- Begins January 1, 2014.
- Provides a refundable tax credit equal to 33% of an eligible investment to QMCCs up to $250,000 per QMCC in a single fiscal year (FY).
- Each QMCC is limited to the benefit of 15% of the total Program appropriation for each FY.
- Requires QMCCs and investors to retain the investment for a minimum of 3 years.
- Limits participation by a QMCC in the program to 2 years.
- Requires the Governor to appropriate at least $2 million to the program each FY; Governor O’Malley has appropriated $3 million for FY 2014.
- Sunsets July 1, 2019.
- Administered by the Maryland Department of Business and Economic Development.
- Individual or any entity who invests at least $25,000, and
- A QMCC with (1) headquarters and base of operations in Maryland; (2) organized for profit and engaged primarily in the development of innovative and proprietary cybersecurity technology; (3) fewer than 50 employees; (4) 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; (5) no publicly traded securities on any exchange; and (6) certified as a cybersecurity company by DBED.
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.
Qualifying for the Credit
Complete and submit the Maryland Cybersecurity Investment Incentive Tax Credit Application Forms to DBED.
Include investor form (Form A1, A2 or A3) and the Maryland Cybersecurity Company Form (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 for FY2014:
- Form B - Qualified Maryland Cybersecurity Company
Note: Multiple attachments 11 – Form B does not have to be completed for investors in a prospective QMCC if a current Form B is on file with DBED and is 30 days old or less.
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.
Electronic filing process will take place on January 13, 2014.
Applications are reviewed and approved on a first come basis. Total credit certificates issued in a fiscal year cannot exceed budget amount.
Beginning on December 9, 2013, the Maryland Department of Business and Economic Development (DBED) will be accepting completed hard copy applications to enable participation in the electronic filing process that will take place on January 13, 2014. Please submit your application plus attachments via courier or by mail to the Department of Business and Economic Development (ATTN: Tax Incentives) World Trade Center, 401 E. Pratt Street, 17th Floor, Baltimore, Maryland 21202.
The second step of the application process will require that the User Name and Reference Number be used to electronically complete the submission beginning at 9:00 am EST on January 13, 2014 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.
- December 9, 2013: Completed applications with all attachments will be accepted at the DBED (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 January 7, 2014 will have a User Name and Reference Number issued after January 13, 2014.
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 DBED 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 DBED. Within 30 calendar days of receiving the application, DBED 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 DBED issues the tax credit to make an investment in QMCC. Within 10 days of making the investment, the QMCC shall provide written notice with supporting documentation to DBED. If the QMCC fails to provide notice of investment to DBED within 40 days after the issuance of the initial tax credit certificate DBED shall rescind the certificate. Based on the actual investment DBED shall issue a final tax credit certificate.
Contact Mark Vulcan, DBED Program Manager, Tax Incentives at 410-767-6438 for more information.
Frequently Asked Questions
Statute - Tax General Sec. §10.733