Qualifying employees

To receive the Philadelphia Re-Entry Program (PREP) Tax Credit, the employee must:

• Have been convicted of a crime and incarcerated, or be on parole or probation.
• Work 20 hours or more per week.
• Receive a salary comparable to other employees in similar positions, or if there aren’t any other employees in similar positions, make 150% of the hourly minimum wage and receive benefits and tuition assistance.
• Have been released from a Philadelphia jail or prison in the last seven years, or have been released from a jail or prison elsewhere in Pennsylvania in the last three years.
• Have lived in Philadelphia for at least a year before being incarcerated.
• Live in Philadelphia since release from jail or prison, or have lived in Philadelphia for three years since being released.
• Complete a PREP Employee Agreement before being hired (this is provided by the employer).
• Get certified by RISE (the Mayor’s Office of Re-Integration Services) as a qualifying employee.
• Earn taxable income from the employer.

Qualifying businesses

To receive the PREP Tax Credit for someone it employs, a business must:

• Enter a PREP Tax Credit agreement before hiring the employee.
• Be certified by RISE as eligible for the tax credit.

Qualifying exempt organizations

To receive the PREP Tax Credit through contributions rather than direct employment, a business must contribute to an organization that:

• Has been certified as tax-exempt by the IRS and is exempt from the Business Income and Receipts Tax (BIRT).
• Employs a qualifying employee (see employee criteria above).
• Has been certified by RISE as a qualifying exempt organization.

To claim the tax credit for qualifying full-time employees, a business must contribute at least $10,000 to the qualifying exempt organization for each qualifying employee in a given tax year. The employee must work for the organization for at least six months in order to qualify for the credit.

To claim the tax credit for qualifying part-time employees, a business must contribute at least $5,000 to the qualifying exempt organization for each qualifying employee in a given tax year. The employee must work for the organization for at least six months in order to qualify for the credit.

An organization is only allowed to receive a contribution from one business for each qualifying employee that the organization employs.

The tax credit is available for a total of 36 months of employment, whether the employee is full-time or part-time.

The amount of tax credit a business can receive for any one qualifying full-time employee is:

• $10,000 multiplied by the percentage of the tax year that employee was employed by the business.
• $7,000 multiplied by the percentage of the tax year that the employee was employed by the qualifying exempt organization.

The maximum amount of tax credits a business may receive for employing a full-time employee over all tax years is $30,000.

The total amount of tax credits a business may receive for making a contribution to a qualified exempt organization cannot exceed $21,000 for any one full-time employee.

The amount of tax credit a business can receive for any one qualifying part-time employee is:

• $5,000 multiplied by the percentage of the tax year that the employee was employed by the business.
• $3,500 multiplied by the percentage of the tax year that the employee was employed by the qualifying exempt organization.

The maximum amount of tax credits a business may receive for employing any part-time employee over all tax years is $15,000.

The total amount of tax credits a business may receive for making a contribution to a qualified exempt organization cannot exceed $10,500 for any one part-time employee.

Paper application forms are available via the resource links on this page. The application can also be submitted through the Philadelphia Tax Center:

• Log into your https://tax-services.phila.gov,
• Under the “Summary” tab, find your BIRT account,
• Select the “Apply for credit programs” link on this screen,
• Pick a program you wish to apply to,
• Make sure to read the brief instruction before hitting “Next” to access the full application.

Follow the on-screen prompts to complete the process. Be sure to check all the eligibility requirements before applying for credits.

Businesses must also submit:

• A copy of the certification issued by RISE for each employee.
• A list of each employee for which the credit is calculated, including their name, social security number, employment dates, and tax credit amount.
• A list of each certified qualifying exempt organization to which a contribution is made. For each organization, the list must include:
  • The name, social security number, and employment dates for each qualifying full-time and part-time employee hired by the organization.
  • The organization’s Employer Identification Number (EIN).
  • The date and amount of the contribution.
  • A copy of both sides of the cancelled contribution check.

The tax credit calculated for each contribution and for each qualifying employee.

Tax credits apply to the total Business Income and Receipts Tax (BIRT) liability of participating businesses.

A business may claim the PREP Credit for each qualifying employee for no more than five years from the date the PREP Tax Credit was executed. Any unused credit may be carried forward for three years from the date of hire of the qualifying employee.

To claim the credit, the business must submit their BIRT return through the Philadelphia Tax Center, along with schedule SC.