The Treasury Department released for publication in the Federal Register a notice from Treasury’s Community Development Financial Institutions Fund that announces amendments to the New Markets Tax Credit (NMTC) program—specifically, changes that combine the 2015 and 2016 NMTC allocation rounds and increase allocation authority to $7 billion.
The amended notice of allocation availability [PDF 169 KB] for 2015-2016 will be published in the Federal Register on April 20, 2016.
The amended notice of allocation authority availability includes the following:
Congress recently extended the NMTC program for five years through 2019 with $3.5 billion in annual NMTC allocation authority. By combining the 2015 and 2016 allocation rounds, Treasury’s Community Development Financial Institutions Fund said it would be able to award NMTC allocations in the year authorized, and therefore help more communities access the benefits of the tax credits sooner.
However, the Community Development Financial Institutions Fund also stated that it is not re-opening applications for this newly combined 2015-2016 round. All awards will be made from the existing pool of applications submitted for the 2015 round, which closed in December 2015. The Community Development Financial Institutions Fund stated that it received 238 applications requesting an aggregate total of $17.6 billion in NMTC allocation authority.
Currently, the Community Development Financial Institutions Fund anticipates announcing the combined 2015-2016 NMTC allocation awards in late 2016.
The NMTC program allows an investor a NMTC against its federal income taxes for making qualified equity investments (QEIs) in community development entities (CDEs).
The Community Development Financial Institutions Fund allocates the NMTCs to the CDEs which, in turn, make qualified investments (generally loans) to businesses located in low income communities. The tax credit totals 39% of the investor’s cash contributed in exchange for the QEI and is claimed over a seven-year period. Investors may leverage their QEI to receive the NMTC on the full amount of its cash contribution pooled with the borrowed funds.
For more information, contact a tax professional with KPMG’s Washington National Tax, Tax Credit and Energy Advisory Services (TCEAS) group:
Susan Reaman | +1 (202) 533-3541 | email@example.com
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