New Markets Tax Credits (NMTC) provide incentives for bringing jobs, businesses, and economic growth to distressed communities. The NMTC Program offers growth-oriented investors a cost effective method to enter underserved markets, but the process — from certification through closing — is complicated. As a nationally renowned NMTC advisor and pioneer, we are the go-to firm for investors, developers, and community oriented organizations. Our experts guide you through the entire lifecycle of your program. We prepare and submit Community Development Entity (CDE) certifications, file CDFI Fund data, conduct annual audits and reporting, address state and local tax issues, and provide transaction advisory and compilation services for qualified businesses in low-income communities.
CohnReznick provides comprehensive assurance, tax, transactional, and consulting services to investors, CDEs, and end-users of NMTC capital. Involved in the program since its inception, we also serve as NMTC advocates for our clients, before Congress, and in support of industry participants and coalitions.
As a federal program, the NMTC Program is tightly controlled, and CDEs are faced with numerous regulatory and programmatic rules. Experts in the requirements of the CDFI Fund and the IRS, we can help you maintain full program compliance with your allocation agreement, Internal Revenue Code Section 45D, and in submitting all required documentation to both agencies.
MINIMIZE YOUR NMTC TRANSACTION TAX OBLIGATIONS
We mitigate the impact of various federal and state taxes in your NMTC liquidation transaction. Specifically, we address original issue discount regulations, fee allocations with regard to deductibility timing, the impact of fees on recipients, QEI/investor redemption calculations under the Section 45D Safe Harbor provision, and imputed interest calculations, among other considerations.
SERVING YOUR NMTC PROGRAM NEEDS – FROM CERTIFICATION TO CLOSING
CohnReznick is your partner through the entire life cycle of your participation in the NMTC Program — from your certification as a CDE through the monetization of your credits.
Our full range of NMTC services
Allocation Application consulting
- Allocation strategy and investment plan focused on weighting factors impacting scoring of application
- Design of flexible loan products — developing underwriting criteria, consulting on loan application process
Audit, financial, and compliance support
- Agreed Upon Procedures compliance reports
- Annual CDE and NMTC Investment Fund audits
- Financial modeling of NMTC transactions
- Fund attestation, tax, and compliance
- Independent compliance program reviews
- Loan and investment structuring
- Federal, state, and local tax return preparation
- Financial structuring and modeling to address loan pools/funds, investor yields, net income/loss pass through, cash flows, dissemination of fees, residual returns and tax impact to beneficiaries and borrowers
- Tax planning and compliance
- Transaction structuring based on economic/quantitative/programmatic factors
Ongoing training and guidance
- In-house compliance program creation with customized onsite training
- Community Impact Information System (CIIS) reporting and documentation Documentation for maintenance of CDE status
- Semi-annual testing procedures
- Investment/QLICI/QALICB due diligence and documentation
- Establishing procedures for data collection and filing IRS Form 8874A
Could your project qualify for New Markets Tax Credits?