New Markets Tax Credits
NATIONALLY RENOWNED NMTC ADVISOR AND PIONEER
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.
Maintain compliance
As a federal program, the NMTC Program is tightly controlled, and CDEs are faced with numerous regulatory and programmatic rules. Well-versed 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 required documentation to both agencies.
Minimize 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.
Our full range of NMTC services
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.
• 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
• 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
• 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
Frequently Asked Questions (FAQs)
New Markets Tax Credits (NMTCs) are federal, dollar-for-dollar tax credits to assist in the funding of neighborhood-changing, job-creating projects and businesses located in low-income census tracts. The program facilitates private investment in low-income communities to ultimately help these communities grow stronger and more resilient.
At a high level, NMTC projects must be located in low-income, “highly distressed,” or “deeply distressed” communities, and must be able to demonstrate that they would not have been possible “but for” the investments provided through NMTC. Projects often touch on healthcare, education, manufacturing, workforce development, and other social and family services.
The financial benefit to an NMTC project will vary by project. NMTCs should be thought of more as “the last piece of the puzzle” than the first.
Closing of an NMTC transaction will vary on a deal-by-deal basis. It will ultimately depend on the facts of the transaction: Does the project already have site control? If it’s construction, what is the status of the construction contract? What does the rest of the capital stack look like? The easier the answers to some of those initial questions, the smoother closing an NMTC transaction can go.
Finding allocation is the most difficult part of any NMTC deal, as the landscape is both collaborative and competitive. Among the keys to success are being able to clearly articulate your value proposition and impacts of your project; building strong relationships with sponsors and intermediaries; and maintaining data that demonstrate your track record and impact in a concise, compelling way.
CohnReznick’s role in closing an NMTC transaction will vary depending on how early we are involved, but typically includes assistance with structuring the NMTC transaction, consulting on term sheets and overall deal structure, and ending with a financial compilation of projections for the transaction as everyone works toward a closing. Additionally, CohnReznick provides comprehensive assurance, tax, transactional, and consulting services to investors, CDEs, and end users of NMTC capital. CohnReznick also hosts an annual NMTC Summit, offering idea-sharing and networking opportunities for stakeholders across the NMTC ecosystem. Save the date to join us May 3-5, 2027, in Miami.
Qualified Zone Map: Visit CohnReznick's Opportunity Zone Mapping Tool
New Markets Tax Credit Case Study Video Series
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