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New Markets Tax Credit: What Does the New Allocation Mean for You?


Key Takeaways

  • The current 2013 round is approved for $3.5 billion
  • The application deadline is September 18, 2013
  • Allocation deployment deadline for prior allocatees is December 31, 2013

August 2013

The following was distributed as part of the New Markets Tax Credit Connection - Summer 2013 newsletter.

On July 24, the CDFI Fund released the Notice of Allocation Availability (NOAA) for the 2013 and 2014 NMTC application rounds. The calendar year 2013 $3.5 billion was approved by Congress and the CDFI Fund is also including the $5 billion that is requested in the President’s 2014 Budget. 

This is the first time that the CDFI Fund has attempted to combine allocation rounds in one application process.  If the calendar year 2014 does not receive timely Congressional approval, the CDFI will look to join the calendar year 2014 and 2015 rounds. The NOAA states “The CDFI Fund seeks to combine the CY 2013 and CY 2014 rounds in order to achieve cost and efficiency savings to the government in addition to realigning the program calendar.  The combined round would also prevent an anticipated deficit of available NMTCs and would allow the CDFI Fund to make additional allocation awards.” (Read CohnReznick’s industry alert on this topic).  

NMTC allocation applications must be submitted by September 18, 2013. Prior Allocatees must issue the prescribed amount of allocation, detailed in the NOAA, by December 31, 2013.

Details regarding requirements for each round are available in the NOAA; the two most recent rounds are listed below:

A prior Allocatee (with the exception of a Rural CDE Allocatee) in the CY 2011 round is not eligible to receive a NMTC allocation unless the Allocatee is able to demonstrate that it has:

(i) Finalized at least 50 percent of its QEIs relating to its CY 2011 NMTC allocation; or
(ii) It has finalized at least 40 percent of its QEIs and that at least 60 percent of its total CY 2011 NMTC allocation has been finalized, or has been committed by its investors. A prior Rural CDE Allocatee in the CY 2011 is not eligible to receive a NMTC allocation unless the Allocatee can demonstrate that it has finalized at least 30 percent of its CY 2011 NMTC Allocation.
 

A prior Allocatee (with the exception of a Rural CDE Allocatee) in the CY 2012 round of the NMTC Program is not eligible to receive a NMTC allocation unless the Allocatee is able to demonstrate that it has:

(i) Finalized at least 30 percent of its QEIs relating to its CY 2012 NMTC allocation; or
(ii) Finalized at least 20 percent of its QEIs and that at least 50 percent of its total CY 2012 NMTC allocation has been finalized, or has been committed by its investors. A Rural CDE is not required to meet the above QEI issuance and commitment with regard to its CY 2012 NMTC allocation award.
 

Contact:
For more information, please visit the CohnReznick New Markets Tax Credit webpage or contact David Norton, Partner and Editor, at 410-895-7827.


Circular 230 Notice: In compliance with U.S. Treasury Regulations, the information included herein (or in any attachment) is not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of i) avoiding penalties the IRS and others may impose on the taxpayer or ii) promoting, marketing, or recommending to another party any tax related matters.

This has been prepared for information purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and CohnReznick LLP, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

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