Code of the District of Columbia

Subchapter XVII. Qualified High Technology Companies.


§ 47–1817.01. Definitions.

For the purposes of this chapter, the term:

(1)(A) “Qualified asset” means a:

(i) Qualified stock;

(ii) Qualified partnership interest; or

(iii) Qualified business property.

(B) A qualified asset shall include property which was a qualified asset in the hands of a prior holder.

(2)(A) “Qualified business property” means tangible property if:

(i) The property was acquired by the taxpayer by purchase, as defined in section 179(d)(2) of the Internal Revenue Code of 1986, after December 31, 2000;

(ii) The original use of the property commences with the taxpayer; and

(iii) Substantially all of the use of the property was in a Qualified High Technology Company.

(B) This paragraph shall apply to real property which is substantially improved by the taxpayer before January 1, 2003, and any land on which the property is located.

(C) For the purposes of subparagraph (B) of this paragraph, real property shall be substantially improved by the taxpayer if, during any 24-month period beginning after December 31, 2000:

(i) Additions to basis with respect to the property in the hands of the taxpayer exceed the greater of:

(I) An amount equal to the adjusted basis of the property at the beginning of the 24-month period in the hands of the taxpayer; or

(II) $5,000; and

(ii) At least 51% of the additions to basis represent improvements which facilitate the conduct of a Qualified High Technology Company on the premises, including improvements to electrical wiring or telecommunications facilities serving the building.

(3) “Qualified capital gain” means gain recognized on the sale or exchange of a capital asset or property used in a trade or business, as defined in § 47-1801.04. The term “qualified capital gain” shall not include gain which is:

(A) Treated as ordinary income under sections 1245 or 1250 of the Internal Revenue Code of 1986 if section 1250 applied to all depreciation rather than additional depreciation;

(B) Attributable to real property or an intangible asset which is not an integral part of a Qualified High Technology Company’s business operations in the District; or

(C) Attributable, directly or indirectly, in whole or in part, to a transaction with a related person.

(4) “Qualified employee” means a person who is employed in the District by a Qualified High Technology Company.

(5)(A) “Qualified High Technology Company” means:

(i) An individual or entity organized for profit and leasing or owning an office in the District of Columbia;

(ii) Having 10 or more qualified employees in the District; and

(iii) Deriving at least 51% of its gross revenues earned in the District from:

(I) Internet-related services and sales, including website design, maintenance, hosting, or operation; Internet-related training, consulting, advertising, or promotion services; the development, rental, lease, or sale of Internet-related applications, connectivity, or digital content; or products and services that may be considered e-commerce;

(II) Information and communication technologies, equipment and systems that involve advanced computer software and hardware, data processing, visualization technologies, or human interface technologies, whether deployed on the Internet or other electronic or digital media, including operating and applications software; Internet-related services, including design, strategic planning, deployment, and management services and artificial intelligence; computer modeling and simulation; high-level software languages; neural networks; processor architecture; animation and full-motion video; graphics hardware and software; speech and optical character recognition; high-volume information storage and retrieval; data compression; and multiplexing, digital signal processing, and spectrum technologies;

(III) Advanced materials and processing technologies that involve the development, modification, or improvement of one or more materials or methods to produce devices and structures with improved performance characteristics or special functional attributes, or to activate, speed up, or otherwise alter chemical, biochemical, or medical processes, including metal alloys; metal matrix and ceramic composites; advanced polymers; thin films; membranes; superconductors; electronic and photonic materials; bioactive materials; bioprocessing; genetic engineering; catalysts; waste emissions reduction; pharmaceuticals; and waste processing technologies;

(IV) Engineering, production, biotechnology, and defense technologies that involve knowledge-based control systems and architectures; advanced fabrication and design processes, equipment, and tools; propulsion, navigation, guidance, nautical, aeronautical and astronautical ground and airborne systems, instruments, and equipment, including computer-aided design and engineering; computer-integrated manufacturing; robotics and automated equipment; integrated circuit fabrication and test equipment; sensors; biosensors; signal and image processing; medical and scientific instruments; precision machining and forming; biological and genetic research equipment; environmental analysis, remediation, control, and prevention equipment; defense command and control equipment; avionics and controls; guided missile and space vehicle propulsion units; military aircraft; space vehicles; and surveillance, tracking, and defense warning systems; or

(V) Electronic and photonic devices and components for use in producing electronic, optoelectronic, mechanical equipment and products of electronic distribution with interactive media content, including microprocessors; logic chips; memory chips; lasers; printed circuit board technology; electroluminescent, liquid crystal, plasma, and vacuum fluorescent displays; optical fibers; magnetic and optical information storage; optical instruments, lenses, and filters; simplex and duplex data bases; and solar cells.

(B) “Qualified High Technology Company” shall not include:

(i) An individual or entity that derives 51% or more of its gross revenues from the operation in the District of:

(I) An on-line or brick and mortar retail store;

(II) An electronic equipment facility that is primarily occupied, or intended to be occupied, by electronic and computer equipment that provides electronic data switching, transmission, or telecommunication functions between computers, both inside and outside the facility; or

(III) A building or construction company.

(ii) A professional athletic team, as defined in § 47-2002.05(a)(3)

(iii) A business entity located in the DC Ballpark TIF Area, as defined in [§ 2-1217.12a(a)]; or

(iv) A holder of a sports wagering license listed in [§ 36-621.05(b)(1)].

(6) “Qualified partnership interest” means a capital or profits interest in a partnership, formed under the laws of the District of Columbia or any state of the United States of America, which is originally issued after December 31, 2000, if:

(A) The interest is acquired by the taxpayer from the partnership solely in exchange for cash;

(B) On the date of acquisition, the partnership was a Qualified High Technology Company (or, in the case of a new partnership, the partnership was organized for purposes which would qualify it as a Qualified High Technology Company); and

(C) During substantially all of the taxpayer’s holding period for the interest, the partnership qualified as a Qualified High Technology Company.

(7) “Qualified stock” means stock in a corporation, formed under the laws of the District of Columbia or any state of the United States of America, which is originally issued after December 31, 2000, if:

(A) The stock is originally issued to the taxpayer, directly or through an underwriter, solely in exchange for cash;

(B) On the date of issuance, the corporation was a Qualified High Technology Company (or, in the case of a new corporation, the corporation was being organized for purposes which would qualify it as a Qualified High Technology Company); and

(C) During substantially all of the taxpayer’s holding period for the stock, the corporation qualified as a Qualified High Technology Company.


(Apr. 3, 2001, D.C. Law 13-256, § 101(a)(2), 48 DCR 730; Apr. 8, 2005, D.C. Law 15-320, § 110(c), 52 DCR 1757; Mar. 5, 2013, D.C. Law 19-211, § 2(c), 59 DCR 13281; Feb. 26, 2015, D.C. Law 20-155, § 7172, 61 DCR 9990; May 3, 2019, D.C. Law 22-312, § 3(a), 66 DCR 1402; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(2), 67 DCR 10493.)

Section References

This section is referenced in § 2-1221.01, § 10-803.01, § 47-462, § 47-1801.04, and § 47-1818.01.

Effect of Amendments

D.C. Law 15-320 rewrote par. (5)(B) which had read:

“(B) ‘Qualified High Technology Company’ shall not include an individual or entity that derives 51% or more of its gross revenues from the operation in the District of:

“(i) A retail store; or

“(ii) An electronic equipment facility that is primarily occupied, or intended to be occupied, by electronic and computer equipment that provides electronic data switching, transmission, or telecommunication functions between computers, both inside and outside the facility.”

The 2013 amendment by D.C. Law 19-211 substituted “employees in the District” for “employees” in (5)(A)(ii); and substituted “gross revenues earned in the District” for “gross revenues” in (5)(A)(iii).

The 2015 amendment by D.C. Law 20-155 rewrote (5)(A) and (5)(B)(i).

Cross References

Assistance for qualified high technology companies, see § 2-1221.01 et seq.

Applicability

Applicability of D.C. Law 22-312: § 7177 of D.C. Law 23-16 amended § 5(a) of D.C. Law 22-312 to repeal the delayed applicability affecting this section. Therefore the amendment of this section by D.C. Law 22-312 has been implemented.

Applicability of D.C. Law 22-312: § 5 of D.C. Law 22-312 provided that the change made to this section by § 3(a) of D.C. Law 22-312 is subject to the inclusion of the law’s fiscal effect in an approved budget and financial plan. Therefore that amendment has not been implemented.

Emergency Legislation

For temporary (90 days) amendment of applicability provision of D.C. Law 22-312, see § 7177 of Fiscal Year 2020 Budget Support Congressional Review Emergency Act of 2019 (D.C. Act 23-112, Sept. 4, 2019, 66 DCR 11964).

For temporary (90 days) amendment of applicability provision of D.C. Law 22-312, see § 7177 of Fiscal Year 2020 Budget Support Emergency Act of 2019 (D.C. Act 23-91, July 22, 2019, 66 DCR 8497).

For temporary (90 days) amendment of this section, see § 3 of Sports Wagering Lottery Emergency Amendment Act of 2018 (D.C. Act 22-630, Jan. 30, 2019, 66 DCR 1745).

For temporary (90 day) amendment of section, see § 201(a) of Ballpark Omnibus Financing and Revenue Tax Provisions Emergency Amendment Act of 2004 (D.C. Act 15-719, January 4, 2005, 52 DCR 1790).

For temporary (90 day) amendment of section, see § 201(a) of Ballpark Omnibus Financing and Revenue Tax Provisions Congressional Review Emergency Act of 2005 (D.C. Act 16-25, February 17, 2005, 52 DCR 2981).

For temporary (90 days) amendment of this section, see § 7182 of the Fiscal Year 2015 Budget Support Emergency Act of 2014 (D.C. Act 20-377, July 14, 2014, 61 DCR 7598, 20 STAT 3696).

For temporary (90 days) amendment of this section, see §§ 7172 and 7173 of the Fiscal Year 2015 Budget Support Congressional Review Emergency Act of 2014 (D.C. Act 20-449, October 10, 2014, 61 DCR 10915, 20 STAT 4188).

For temporary (90 days) addition of D.C. Law 20-155, § 7173, concerning applicability of D.C. Law 20-155, § 7172, see § 2(o) of the Fiscal Year 2015 Budget Support Clarification Emergency Act of 2014 (D.C. Act 20-461, November 6, 2014, 61 DCR 11784, 20 STAT 4368).

For temporary (90 days) amendment of this section, see §§ 7172 and 7173 of the Fiscal Year 2015 Budget Support Second Congressional Review Emergency Act of 2014 (D.C. Act 20-566, January 9, 2015, 62 DCR 884, 21 STAT 541).

For temporary (90 days) addition of D.C. Law 20-155, § 7173, concerning applicability of D.C. Law 20-155, § 7172, see § 2(o) of the Fiscal Year 2015 Budget Support Clarification Emergency Act of 2014 (D.C. Act 20-587, January 13, 2015, 62 DCR 1294, 21 STAT 758).

For temporary (90 days) addition of D.C. Law 20-155, § 7173, an applicability clause, see § 7016(z)(1) of the Fiscal Year 2016 Budget Support Emergency Act of 2015 (D.C. Act 21-127, July 27, 2015, 62 DCR 10201).

Temporary Legislation

For temporary (225 days) addition of D.C. Law 20-155, § 7173, see § 2(u)(1) of the Fiscal Year 2015 Budget Support Clarification Temporary Amendment Act of 2014 (D.C. Law 20-179, March 7, 2015, 62 DCR 424).

Editor's Notes

Applicability of D.C. Law 20-155: Section 7173 of D.C. Law 20-155, as amended by D.C. Law 21-36, § 7024(e), provided that § 7173 of the act shall be applicable for tax years beginning after December 31, 2014.


§ 47–1817.01a. Alternative method to determine a Qualified High Technology Company status.

(a) If the accounting method used by the taxpayer for income tax purposes does not readily permit the verification of revenue for the purposes of determining the status of a corporation as a Qualified High Technology Company, the taxpayer may petition for, or the Chief Financial Officer may employ, a cost of performance method as described in subsection (b) of this section, which method is intended to function in the same manner as § 47-441.

(b) To be certified as a Qualified High Technology Company, a corporation may provide:

(1) An analysis of the operations of the business that identifies the functions of the business in broad categories and specifically identifies those activities within each category that meet the definition of a Qualified High Technology Company;

(2) Evidence of the costs associated with each activity identified as a Qualified High Technology Company activity, consistent with industry standards; and

(3) An income calculation determined by multiplying the total gross revenue reported on its District franchise tax return as total gross income by a fraction, the numerator of which is the total expenses of all Qualified High Technology Company activities and the denominator of which is the total expenses claimed on the current District franchise tax return as total deduction.

(c) If the amount determined in subsection (b) of this section is 51% or more of total gross revenue, the taxpayer shall be certified as a Qualified High Technology Company.

(d) The final approval to grant an alternative method for determining a Qualified High Technology Company shall rest with the Chief Financial Officer and the approval shall not be unreasonably withheld.


(Dec. 7, 2004, D.C. Law 15-205, § 1082(b), 51 DCR 8441.)

Emergency Legislation

For temporary (90 day) addition, see § 1082(b) of Fiscal Year 2005 Budget Support Emergency Act of 2004 (D.C. Act 15-486, August 2, 2004, 51 DCR 8236).

For temporary (90 day) addition, see § 1082(b) of Fiscal Year 2005 Budget Support Congressional Review Emergency Act of 2004 (D.C. Act 15-594, October 26, 2004, 51 DCR 11725).

Short Title

Short title of subtitle H of title I of Law 15-205: Section 1081 of D.C. Law 15-205 provided that subtitle H of title I of the act may be cited as the New E-Conomy Refinement Act of 2004.

Editor's Notes

Applicability of subtitle H of title I of Law 15-205: Section 1083 of D.C. Law 15-205 provided: “This subtitle shall apply as of January 1, 2004.”


§ 47–1817.02. Tax credit for Qualified High Technology Company employment relocation costs; exceptions. [Repealed]

[Repealed].


(Apr. 3, 2001, D.C. Law 13-256, § 201(b), 48 DCR 730; Sept. 12, 2008, D.C. Law 17-231, § 41(n), 55 DCR 6758; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(3), 67 DCR 10493.)

Effect of Amendments

D.C. Law 17-231, in subsec. (c)(2)(D), substituted “spouse, domestic partner,” for “spouse”.


§ 47–1817.03. Tax credit to Qualified High Technology Companies for wages to qualified employees; exceptions.

(a) Except as provided in subsection (b) of this section, for taxable years beginning after December 31, 2000, and ending on December 31, 2019, a Qualified High Technology Company shall be allowed a credit against the tax imposed by § 47-1807.02 equal to 10% of the wages paid during the first 24 calendar months of employment to a qualified employee hired after December 31, 2000.

(a-1) Except as provided in subsection (b) of this section, for taxable years beginning after December 31, 2019, a Qualified High Technology Company shall be allowed a credit against the tax imposed by § 47-1807.02 equal to 5% of the wages paid during the first 24 calendar months of employment to a qualified employee hired after December 31, 2017.

(b) The credit under subsections (a) and (a-1) of this section shall not be allowed:

(1) To exceed, for each qualified employee:

(A) $5,000 in a taxable year for the credit under subsection (a) of this section.

(B) $3,000 in a taxable year for the credit under subsection (a-1) of this section.

(2) If the Qualified High Technology Company accords the qualified employee lesser benefits or rights than it accords other employees in similar jobs;

(3) If the qualified employee was employed as the result of:

(A) The displacement, other than for cause, of another employee;

(B) A strike or lockout;

(C) A layoff in which other employees are awaiting recall; or

(D) A reduction of the regular wages, benefits, or rights of other employees in similar jobs; or

(4) If the qualified employee is a member of the board of directors of the Qualified High Technology Company or, directly or indirectly, owns a majority of its stock.

(c) A credit allowable under this section may be carried forward for 10 years if:

(1) The amount of the credit allowable under this section exceeds the tax otherwise due from a Qualified High Technology Company; and

(2) The amount of the credit allowable under this section was obtained for wages of a qualified employee hired before October 1, 2019.


(Apr. 3, 2001, D.C. Law 13-256, § 202(b), 48 DCR 730; Sept. 11, 2019, D.C. Law 23-16, § 7212(a)(1), 66 DCR 8621; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(4), 67 DCR 10493.)

Section References

This section is referenced in § 47-1818.01 and § 47-1818.06.

Emergency Legislation

For temporary (90 days) amendment of this section, see § 7212(a)(1) of Fiscal Year 2020 Budget Support Congressional Review Emergency Act of 2019 (D.C. Act 23-112, Sept. 4, 2019, 66 DCR 11964).

For temporary (90 days) amendment of this section, see § 7212(a)(1) of Fiscal Year 2020 Budget Support Emergency Act of 2019 (D.C. Act 23-91, July 22, 2019, 66 DCR 8497).


§ 47–1817.04. Tax credit to Qualified High Technology Companies for retraining costs for qualified disadvantaged employees.

(a)(1) For purposes of this section, the term “qualified disadvantaged employee” means a District resident who:

(A) Is a recipient of Temporary Assistance for Needy Families (“TANF”);

(B) Was a recipient of TANF in the period immediately proceeding employment;

(C) Was released from incarceration within 24 months before the date of employment by a Qualified High Technology Company; or

(D) Is an employee hired, or relocated to the District, after December 31, 2000 and for which a Qualified High Technology company also is eligible to claim the Welfare to Work Tax Credit or the Work Opportunity Tax Credit under the Internal Revenue Code of 1986.

(2) The term “qualified disadvantaged employee” shall not mean or include:

(A) A temporary or seasonal employee; or

(B) An employee who was employed as the result of:

(i) The displacement, other than for cause of another employee;

(ii) A strike or lockout;

(iii) A layoff in which other employees are awaiting recall; or

(iv) A reduction of the regular wages, benefits, or rights of other employees in similar jobs.

(b) For taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit against taxes imposed by § 47-1817.06 for expenditures paid or incurred during the taxable year for retraining of a qualified disadvantaged employee.

(c) Qualified disadvantaged employee retraining expenditures which are eligible for the tax credit are:

(1) 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 or 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), in demand among technology companies in general, and information and telecommunications companies in particular. Eligible training programs, other than those at District-based accredited colleges or universities, shall be pre-qualified for participation under this section by the Department of Employment Services; and

(2) Worker retraining programs undertaken through an apprenticeship agreement approved by the District of Columbia Apprenticeship Council.

(d) The credit claimed under this section shall be limited to $10,000 for each qualified disadvantaged employee during the first 18 months of employment.

(e) [Repealed].


(Apr. 3, 2001, D.C. Law 13-256, § 203(b), 48 DCR 730; Oct. 26, 2001, D.C. Law 14-42, § 10(i), 48 DCR 7612; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(5), 67 DCR 10493.)

Section References

This section is referenced in § 47-1817.05.

Effect of Amendments

D.C. Law 14-42, in subsec. (a)(1), deleted the second subparagraph (B) which had read as follows:

“(B) An employee who was employed as the result of:

“(i) The displacement, other than for cause, of another employee;

“(ii) A strike or lockout;

“(iii) A layoff in which other employees are awaiting recall; or

“(iv) A reduction of the regular wages, benefits, or rights of other employees in similar jobs.”

Emergency Legislation

For temporary (90 day) amendment of section, see § 10(i) of Technical Amendments Emergency Act of 2001 (D.C. Act 14-108, August 3, 2001, 48 DCR 7622).


§ 47–1817.05. Tax credit to Qualified High Technology Companies for wages to qualified disadvantaged employees.

(a) Except as provided in subsection (b) of this section, for taxable years beginning after December 31, 2000, a Qualified High Technology Company shall be allowed a credit against the tax imposed by § 47-1817.06 equal to 50% of the wages paid to a qualified disadvantaged employee, as defined in § 47-1817.04, during the first 24 calendar months of employment.

(b) The credit under subsection (a) of this section shall not be allowed:

(1) To exceed $15,000 in a taxable year for a qualified disadvantaged employee; or

(2) If the Qualified High Technology Company accords the qualified disadvantaged employee lesser benefits or rights than it accords other employees in similar jobs.

(c) [Repealed].


(Apr. 3, 2001, D.C. Law 13-256, § 203(b), 48 DCR 730; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(6), 67 DCR 10493.)


§ 47–1817.06. Tax on Qualified High Technology Companies. [Repealed]

[Repealed].


(Apr. 3, 2001, D.C. Law 13-256, § 403(b), 48 DCR 730; Mar. 5, 2013, D.C. Law 19-211, § 2(d), 59 DCR 13281; Sept. 11, 2019, D.C. Law 23-16, § 7212(a)(2), 66 DCR 8621; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(7), 67 DCR 10493.)

Section References

This section is referenced in § 47-340.26, § 47-1817.02, § 47-1817.03, § 47-1817.04, § 47-1817.05, § 47-1818.02, § 47-1818.06, and § 47-4630.

Effect of Amendments

The 2013 amendment by D.C. Law 19-211 rewrote (a)(2).

Emergency Legislation

For temporary (90 days) amendment of this section, see § 7212(a)(2)(B) of Fiscal Year 2020 Budget Support Congressional Review Emergency Act of 2019 (D.C. Act 23-112, Sept. 4, 2019, 66 DCR 11964).

For temporary (90 days) amendment of this section, see § 7212(a)(2)(B) of Fiscal Year 2020 Budget Support Emergency Act of 2019 (D.C. Act 23-91, July 22, 2019, 66 DCR 8497).


§ 47–1817.07. Rollover of capital gain from qualified stock to other qualified stock. [Repealed]

[Repealed].


(Apr. 3, 2001, D.C. Law 13-256, § 407(b), 48 DCR 730; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(8), 67 DCR 10493.)


§ 47–1817.07a. Tax on capital gain from the sale or exchange of a Qualified High Technology Company investment.

For the tax year beginning after December 31, 2018 and ending before January 1, 2020, and for tax years beginning after December 31, 2024, notwithstanding any other provision of this chapter and in lieu of the tax imposed by §§ 47-1806.03(a)(7)(A), 47-1807.02(a)(4), and 47-1808.03(a)(4), the tax on a capital gain from the sale or exchange of an investment in a Qualified High Technology Company, as defined in § 47-1817.01(5)(A), shall be at the rate of 3% if:

(1) The investment was made after [March 11, 2015];

(2) The investment was held by the investor for at least 24 continuous months;

(3) At the time of the investment, the stock of the Qualified High Technology Company was not publicly traded; and

(4) The investment is in common or preferred stock of the Qualified High Technology Company.


(Mar. 11, 2015, D.C. Law 20-210, § 2(b), 61 DCR 13072; Dec. 3, 2020, D.C. Law 23-149, § 7152(b)(9), 67 DCR 10493.)


§ 47–1817.08. Severability.

If any provision of this title relating to a Qualified High Technology Company is held to be invalid:

(1) Any tax abatement, credit, or other benefit provided under this title shall not be increased, and the amount of tax imposed under this title shall not be decreased, as a result of such invalidity; and

(2) A Qualified High Technology Company shall not pay additional taxes under this title to the District of Columbia until any proceedings to contest such taxes become final.


(Apr. 3, 2001, D.C. Law 13-256, § 408, 48 DCR 730.)

Emergency Legislation

For temporary (90 day) addition of §§ 47-1850.01 to 47-1850.04, see § 2(e) of Homestead and Senior Citizen Real Property Tax Legislative Review Emergency Act of 2001 (D.C. Act 14-226, January 8, 2002, 49 DCR 668).

For temporary (90 day) addition of § 47-1818.01, see § 2(b) of CareFirst Economic Assistance Emergency Act of 2002 (D.C. Act 14-460, July 26, 2002, 49 DCR 8175).

Temporary Legislation

For temporary (225 day) addition of section, see 2(b) of CareFirst Economic Assistance Temporary Act of 2002 (D.C. Law 14-246, March 25, 2003, law notification 50 DCR 2759).