New Markets Tax Credits
The New Markets Tax Credit (NMTC) Program revitalizes low-income and distressed communities—both urban and rural— by encouraging private investment and economic growth through access to capital that they otherwise would not have. CohnReznick has been active in the NMTC Program since its inception. We work closely with key participants, including the U.S. Treasury's Community Development Financial Institution (CDFI) Fund, the IRS, the NMTC Coalition, Community Development Entities (CDEs), Qualified Active Low-Income Community Businesses (QALICB) and others. As a result, we have become nationally recognized leaders in providing assurance, tax, transactional and consulting services for investors and developers looking to participate in the New Markets Tax Credit Program.
Our services include:
- Application preparation and submission: We help project developers establish a framework for designation as CDEs, develop strategic business plans and prepare CDE certification applications. Once CDE status has been granted, we help them prepare and submit NMTC allocation applications.
- Structuring around state and local tax issues: Once a NMTC allocation agreement has been issued, we then assist in finding and structuring the loans and investments that allow the CDE to fulfill its goals. We research the CDE’s state tax filing requirements and develop the appropriate tax strategy in structuring the transaction. We also prepare the associated tax returns.
- Compliance and reporting: A critical aspect of maintaining New Markets Tax Credit Program compliance is having an annual audit performed on the CDE’s financial statements by an independent accounting firm. We perform these audits, prepare Agreed Upon Procedures Compliance Reports on behalf of CDEs and investors, and complete CDE and NMTC investment fund audits.
- Transaction Advisory and Compilation Services for QALICBs: We work with project developers to help structure the NMTC transaction to align with the goals of all parties involved and maximize the net benefits of the credit. We help minimize adverse tax impacts for the QALICB and advise on tax and business issues related to the transaction. In addition to our advisory role, we compile and prepare financial projections which include schedules for all transaction entities and are required by many CDEs and NMTC investors in order to close the transaction.
Access our NMTC Resource Center for useful tools, industry alerts and other important information for NMTC Program participants.