Maryland Senate Proposes Tax Credit for Security Clearance Expenses
Maryland State Senator Roger Manno and 27 of his Senate colleagues have proposed a State income tax credit for costs incurred to obtain federal security clearances. The bill (SB296) would require “the Governor of Maryland to make a $6,000,000 appropriation in FY2014 and FY21015 for the tax credit, applying the Act to all taxable years beginning after December 31, 2011.”
Sounds great, but who would actually benefit from this tax credit. The bill does not define “federal security clearance” and it’s unclear whether the term “security clearance” is being used generically to cover all federal clearances (such as National Security Clearances, Public Trust Clearances, HSPD-12 Credentialing, and Transportation Worker Identity Credentials) or whether only National Security Clearances for access to classified national security information will be covered. Nor does the bill hint at the potential number of Maryland residents who might be able to claim the tax credit or the nature of the clearance-related expenses that will be covered. A call to Senator Manno’s office disclosed that the tax credit is primarily intended to benefit federal contractors and/or their employees, but no specific information was readily available.
The vast majority of federal contractor security clearances are processed by the Defense Industrial Security Clearance Office (DISCO), a component of the Defense Security Service (DSS). DOD approved $238.5M in federally appropriated funds for FY2012 to pay for the cost of DSS processing contractor security clearances, and DSS has never charged defense contractors or defense contractor employees for either the cost of personnel security clearances or facility security clearances.
So, the question remains, who will benefit from this tax credit? Will most of the $6M languish in a special fund and be unavailable for other State purposes, or will someone in the Maryland Senate research the subject and either withdraw the bill or rewrite it so it might actually provide some benefit to Maryland workers who are seeking jobs in the defense industry?