Lane Powell provides services to municipalities, investors, developers, lenders, underwriters and service providers who are participating in the New Markets Tax Credit program.

Lane Powell’s New Markets Tax Credits Practice Group has assisted clients in development projects and programs using federal income tax incentives since the inception of the Low Income Housing Tax Credit program. This expertise helps us assist our clients in creating and implementing New Markets Tax Credit opportunities.

The New Markets Tax Credit (“NMTC”) Program permits taxpayers to receive a credit against Federal income taxes for making qualified equity investments in designated Community Development Entities (“CDEs”). Substantially all of the qualified equity investment must in turn be used by the CDE to provide investments in low-income communities. The credit provided to the investor totals 39 percent of the amount of the investment and is claimed over a seven-year credit allowance period. In each of the first three years, the investor receives a credit equal to five percent of the total amount paid for the stock or capital interest at the time of the investment. For the final four years, the value of the credit is six percent annually. Investors may not redeem their investments in CDEs prior to the conclusion of the seven-year period. The proceeds are used by CDEs to make loans and investments in qualifying community development projects and related activities. The leveraged method of utilizing NMTCs can result in robust subsidies for substantial projects.

NMTCs are allocated annually in a competitive application process. Throughout the life of the originally authorized NMTC Program, the Fund is authorized to award CDEs the authority to issue up to $15 billion in equity for which NMTCs can be claimed. The Fund allocated the first two years’ tax credit availability in 2003, and combined two years’ availability in the application round that closed on September 30, 2003, for award in March, 2004. The program is being considered for reauthorization by Congress during 2006.

Lane Powell’s team has the experience and expertise to assist clients in structuring CDE entities, drafting and submitting applications, structuring and negotiating investments, and in deploying capital and managing compliance risks.

Read more about New Markets Tax Credits in this document by Lewis Horowitz and Karen Williams.

Related Materials:

2009 Application Materials
2009 Application Center
2009 NMTC Program – Application Workshop Materials (.ppt)
2009 NOAA (.pdf)
2009 NMTC Program – Application (.pdf) 2009 NMTC Online Application Instructions (.pdf)
2009 NMTC Program – Application Q&A (.pdf)
2009 NMTC Program Application Webcast

Recent CDFI Fund Publications
QEI Investment Report (February 2009)
Working Paper: Addressing the Prevalence of Real Estate Investments in the NMTC Program
NMTC Program: Activities Financed Through 2007
NMTC Program: Promoting Investment in Distressed Communities (NMTC Program Data Through 2007)
NMTC Compliance & Monitoring Frequently Asked Questions (Nov 2006)
GAO Report on the NMTC Program (January 2007)

2008 Award Announcements
Press Release
List of Awards
Overview of Awards
Awards by Organization Name
Awards by State

2007 Award Announcements
List of Awards
Overview of Awards
Awards by Organization Name
Awards by State

2006 Award Announcements
Press Release
List of Awards
Overview of Awards
Awards by Organization Name
Awards by State

Treasury/CDFI Fund Notices and Regs

IRS Materials:

• IRS – Proposed Amendments to NMTC Program Regulations (Aug 2008)
• IRS Help Desk For General NMTC Questions
• IRS – NMTC Program Income Tax Regulations
• IRS – Guidance Regarding use of Borrowed Funds to Make Qualified Equity Investments in CDEs
• IRS – Form 8874 (2003)

Targeted Populations and Communities:

• Proposed Regulations for Targeted Populations
• Q&A: Low-Income Communities and Targeted Populations
• IRS Notice on Targeted Populations
• List of Qualifying NMTC Census Tracts Within High Migration Rural Counties
• Information on Qualifying Census Tracts in Non-Metropolitan Counties (.pdf)
• List of Qualifying Census Tracts in Non-Metropolitan Counties (.xls)
• List of Qualifying Counties and Eligible Low-Income Communities in the Go Zone
• Map of Gulf Opportunity Zones
• Katrina Severely Damaged Census Tracts

Revised Temporary Rule, March 2004
Federal Register Notice, March 2004
March 11, 2004 NMTC Amendments
Qualified Purchases of CDE Loans
Tiered CDE Investments Permissible
Leverage of Tax Credits
CRA Credit for NMTC
2003 Allocation Agreement
Modified Rule for Investment Look-back
New Markets Tax Credit Statute
New Markets Tax Credit Brochure
NMTC Allocation App. Press Release

Articles and Memoranda
Comment Letter (03/10/03)
“IRS Notice 2002–64 Allows Use of New Markets Tax Credit with Most Other Federal Tax Incentive Programs”
Reasonable Expectations Test