An employer, including organizations exempt from taxation under §501(c)(3) or (4) of the Internal Revenue Code that provides long-term care insurance as part of an employee benefit package may claim a credit for costs incurred during the taxable year.
The credit may be taken against corporate income tax, personal income tax, insurance premiums tax or public service company franchise tax. The same credit may not, however, be applied to more than one tax type.
Sole proprietorships, corporations and pass-through entities, such as partnerships, subchapter S corporations, limited liability companies and business trusts may claim the tax credit.
To qualify for the credit:
The company must provide long-term care insurance benefits to one or more employees during the taxable year as part of an employee benefits package.
How the credit is calculated:
The credit allowed is 5% of employer's cost which may not exceed the lesser of $5,000; or $100 for each employee in the State covered by long-term care insurance provided under the employee benefits package.
If the credit is more than the tax liability, the unused credit may be carried forward for the next five (5) tax years.
For taxable year beginning after December 31, 2012, taxpayers must file their income tax return electronically (Form 500 for Corporations, Form 510 and Form 510 Schedule K-1 for Pass-Through Entities, and Form 502 or 505 for Individuals). They must complete the Business Tax Credit Form 500CR section of the electronic return to claim this tax credit.
Insurance premium tax:
Documentation of the credit shall be maintained by the taxpayer in their files and be made available to the Insurance Commissioner, on request, in accordance with COMAR 31.06.04.03. The documentation should include documents from the agency granting the credit and a list of the names and telephone numbers for the taxpayer's staff who are directly involved in granting the credits. All information shall be retained for a minimum of three years from the date of the filing of the final tax return on which the credit is taken.
Public service company franchise tax:
Form AT3-74 must be submitted with the franchise tax return (SDAT forms 11 or 11T).