Chapter 19. Wineries and Vineyards Capital Expenses Tax Credit

“Comptroller” means the Maryland Comptroller of the Treasury, or the Comptroller’s designee.

“Credit” means the qualified capital expenses tax credit described in Regulation .02 of this chapter.

“Credit year” means the year for which the credit is being claimed.

“Department” means the Department of Commerce.

“Qualified capital expenses” means all the expenditures made by the taxpayer for the purchase and installation of equipment or agricultural materials for use in the production of agricultural products for winemaking at a vineyard or in a winery, including but not limited to:

“Secretary” means the Secretary of Business Commerce, or the Secretary's designee.

“State” means the State of Maryland.

“Taxpayer” means an individual or corporation.

“Vineyard” means agricultural lands located in the State consisting of at least 1 contiguous acre dedicated to the growing of grapes that are used or are intended to be used in the production of wine by a winery and any plants or other improvements located thereon.

“Winery” means an establishment licensed by the Comptroller as either a Class 3 winery or a Class 4 winery pursuant to Article 2B, §§2–204 and 2–205, Annotated Code of Maryland.

The legal name of the taxpayer;

The street address of the principal place of business of the taxpayer, the taxpayer’s mailing address, the taxpayer’s email address, and the taxpayer’s telephone number;

The name, business mailing address, telephone number, and email address of an individual with authority to act on behalf of the taxpayer;

The federal employer identification number of the taxpayer or, if the taxpayer is an individual or sole proprietorship, the federal taxpayer identification number of the individual or sole proprietor;

An account, which may be in the form of a spreadsheet, showing in detail the eligible capital costs incurred by the taxpayer; and

Any other information requested by the Department.

The numerator of which is the maximum specified under §A of this regulation; and

The denominator of which is the total of all credits applied for by all business entities under Regulation .03C of this chapter in the calendar year.

In a transaction involving an asset purchase, unused credits:

Unused credits may not be sold or purchased.

The numerator of which is the allowed qualified capital costs incurred during the short taxable year; and

The denominator of which is the allowed qualified capital costs incurred during the entire calendar year.

Requirements. A partnership, S corporation, limited liability company, business trust, estate, or trust shall provide each of its partners, shareholders, members, or beneficiaries with a Maryland Form 510, Schedule K-1.

Statement Attached to Return. A partner, shareholder, member, or beneficiary shall attach a copy of the Maryland Form 510, Schedule K-1 to the income tax return on which the credit is claimed.

If the Department becomes aware of facts and circumstances that reasonably warrant an audit of the factual or accounting basis of a taxpayer’s claim of eligibility for a tax credit under this chapter or of a claim of tax credit under this chapter, the Department may require at any reasonable time before or after the issuance of a certificate of eligibility for tax credit that any information provided to the Department by a taxpayer be audited.

The Department may require at any reasonable time an audit of any information submitted to the Department:

An audit under §A(2) of this regulation shall be directed to the taxpayer’s basis for its claim of eligibility for the tax credit under this chapter.

An audit under §A(2) of this regulation shall be conducted at the taxpayer’s expense by an independent auditor selected by the taxpayer and reasonably satisfactory to the Department.

The Department may initiate an audit by delivering to the taxpayer a written request for the performance of an audit stating the scope of the audit to be undertaken and the matters to be examined in the course of the audit.

Within 10 business days after a taxpayer receives a request from the Department for the performance of an audit under this regulation, the taxpayer shall submit to the Department a written response naming the independent auditor selected by the taxpayer.

If the Department approves the auditor, it shall give written notice to the taxpayer that the Department approves the auditor and shall provide instructions to the auditor for the scope and conduct of the audit.

If the Department disapproves of the selected auditor, it shall give written notice to the taxpayer of the disapproval and of the reasons for it. The taxpayer shall, within 5 business days after receipt of notice of the Department’s disapproval of an auditor, select an alternative auditor and submit to the requesting agency a written response naming the alternative independent auditor selected by the taxpayer.

The process pursuant to §§A(5)—(8) of this regulation for the selection and approval of an auditor will continue until the Department will have approved an alternative auditor pursuant to §A(7) of this regulation.

The approved auditor shall proceed to conduct the audit with due diligence and dispatch, and in accordance with the Department’s instructions. Within 90 days of the Department’s notice approving the selection of an auditor, the auditor shall submit to the Department and to the taxpayer a full report of its audit procedures, tests, matters examined, and findings.

The Comptroller retains its audit authority under the Tax-General Article, Annotated Code of Maryland.

If the Department becomes aware of facts and circumstances that reasonably warrant further inquiry into the factual basis of a taxpayer’s claim of eligibility for a tax credit under this chapter, or the basis of the taxpayer’s claim of a tax credit under this chapter, the Department may make written inquiry, including a request for the production, inspection, or copying of documents specified in the inquiry, of any taxpayer or holder of a certificate of eligibility for a tax credit under this chapter to obtain information bearing on the eligibility of the taxpayer or of the taxpayer’s partners, shareholders, members, or beneficiaries for that credit. The inquiry may include, but may not be limited to, whether the claimed costs were in fact incurred in the State.

A taxpayer to which a written inquiry from the Department is directed under §B(1) of this regulation shall submit a full and complete written response, with copies of all requested documents, within 45 days of the date of the inquiry. The response shall be verified as true and correct by oath or affirmation made under penalty of perjury by the individual proprietor or by an individual officer, partner, or member of the taxpayer.