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 | firstname.lastname@example.org
© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.