
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 26USC1392]

 
                     TITLE 26--INTERNAL REVENUE CODE
 
                        Subtitle A--Income Taxes
 
                  CHAPTER 1--NORMAL TAXES AND SURTAXES
 
Subchapter U--Designation and Treatment of Empowerment Zones, Enterprise 
           Communities, and Rural Development Investment Areas
 
                           PART I--DESIGNATION
 
Sec. 1392. Eligibility criteria


(a) In general

    A nominated area shall be eligible for designation under section 
1391 only if it meets the following criteria:

                           (1) Population

        The nominated area has a maximum population of--
            (A) in the case of an urban area, the lesser of--
                (i) 200,000, or
                (ii) the greater of 50,000 or 10 percent of the 
            population of the most populous city located within the 
            nominated area, and

            (B) in the case of a rural area, 30,000.

                            (2) Distress

        The nominated area is one of pervasive poverty, unemployment, 
    and general distress.

                              (3) Size

        The nominated area--
            (A) does not exceed 20 square miles if an urban area or 
        1,000 square miles if a rural area,
            (B) has a boundary which is continuous, or, except in the 
        case of a rural area located in more than 1 State, consists of 
        not more than 3 noncontiguous parcels,
            (C)(i) in the case of an urban area, is located entirely 
        within no more than 2 contiguous States, and
            (ii) in the case of a rural area, is located entirely within 
        no more than 3 contiguous States, and
            (D) does not include any portion of a central business 
        district (as such term is used for purposes of the most recent 
        Census of Retail Trade) unless the poverty rate for each 
        population census tract in such district is not less than 35 
        percent (30 percent in the case of an enterprise community).

                          (4) Poverty rate

        The poverty rate--
            (A) for each population census tract within the nominated 
        area is not less than 20 percent,
            (B) for at least 90 percent of the population census tracts 
        within the nominated area is not less than 25 percent, and
            (C) for at least 50 percent of the population census tracts 
        within the nominated area is not less than 35 percent.

(b) Special rules relating to determination of poverty rate

    For purposes of subsection (a)(4)--

        (1) Treatment of census tracts with small populations

        (A) Tracts with no population

            In the case of a population census tract with no 
        population--
                (i) such tract shall be treated as having a poverty rate 
            which meets the requirements of subparagraphs (A) and (B) of 
            subsection (a)(4), but
                (ii) such tract shall be treated as having a zero 
            poverty rate for purposes of applying subparagraph (C) 
            thereof.

        (B) Tracts with populations of less than 2,000

            A population census tract with a population of less than 
        2,000 shall be treated as having a poverty rate which meets the 
        requirements of subparagraphs (A) and (B) of subsection (a)(4) 
        if more than 75 percent of such tract is zoned for commercial or 
        industrial use.

        (2) Discretion to adjust requirements for enterprise 
                                 communities

        In determining whether a nominated area is eligible for 
    designation as an enterprise community, the appropriate Secretary 
    may, where necessary to carry out the purposes of this subchapter, 
    reduce by 5 percentage points one of the following thresholds for 
    not more than 10 percent of the population census tracts (or, if 
    fewer, 5 population census tracts) in the nominated area:
            (A) The 20 percent threshold in subsection (a)(4)(A).
            (B) The 25 percent threshold in subsection (a)(4)(B).
            (C) The 35 percent threshold in subsection (a)(4)(C).

    If the appropriate Secretary elects to reduce the threshold under 
    subparagraph (C), such Secretary may (in lieu of applying the 
    preceding sentence) reduce by 10 percentage points the threshold 
    under subparagraph (C) for 3 population census tracts.

     (3) Each noncontiguous area must satisfy poverty rate rule

        A nominated area may not include a noncontiguous parcel unless 
    such parcel separately meets (subject to paragraphs (1) and (2)) the 
    criteria set forth in subsection (a)(4).

                 (4) Areas not within census tracts

        In the case of an area which is not tracted for population 
    census tracts, the equivalent county divisions (as defined by the 
    Bureau of the Census for purposes of defining poverty areas) shall 
    be used for purposes of determining poverty rates.

(c) Factors to consider

    From among the nominated areas eligible for designation under 
section 1391 by the appropriate Secretary, such appropriate Secretary 
shall make designations of empowerment zones and enterprise communities 
on the basis of--
        (1) the effectiveness of the strategic plan submitted pursuant 
    to section 1391(f)(2) and the assurances made pursuant to section 
    1391(e)(3), and
        (2) criteria specified by the appropriate Secretary.

(d) Special eligibility for nominated areas located in Alaska or Hawaii

    A nominated area in Alaska or Hawaii shall be treated as meeting the 
requirements of paragraphs (2), (3), and (4) of subsection (a) if for 
each census tract or block group within such area 20 percent or more of 
the families have income which is 50 percent or less of the statewide 
median family income (as determined under section 143).

(Added Pub. L. 103-66, title XIII, Sec. 13301(a), Aug. 10, 1993, 107 
Stat. 545; amended Pub. L. 105-34, title IX, Sec. 954, Aug. 5, 1997, 111 
Stat. 888.)


                            Prior Provisions

    A prior section 1392, added Pub. L. 95-600, title VI, Sec. 601(a), 
Nov. 6, 1978, 92 Stat. 2893; amended Pub. L. 96-222, title I, 
Sec. 106(a)(5), Apr. 1, 1980, 94 Stat. 221; Pub. L. 96-595, 
Sec. 3(a)(3), (4), Dec. 24, 1980, 94 Stat. 3465, related to election by 
general stock ownership corporations not to be subject to taxes imposed 
by this chapter, prior to repeal by Pub. L. 99-514, title XIII, 
Sec. 1303(a), Oct. 22, 1986, 100 Stat. 2658.


                               Amendments

    1997--Subsec. (d). Pub. L. 105-34 added subsec. (d).

                  Section Referred to in Other Sections

    This section is referred to in sections 1391, 1400E of this title; 
title 29 section 2914.
