New Markets Tax Credit (NMTC) Program
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% of the
cost 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 purchase. 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.
NMTCs
will be allocated annually by the Fund to CDEs under a competitive application
process. These CDEs will then sell the credits to taxable investors in exchange
for stock or a capital interest in the CDEs. To qualify as a CDE, an entity
must be a domestic corporation or partnership that: 1) has a mission of
serving, or providing investment capital for, low-income communities or
low-income persons; 2) maintains accountability to residents of low-income
communities through their representation on a governing board of or advisory
board to the entity; and 3) has been certified as a CDE by the CDFI Fund. The
Fund is currently accepting applications from entities seeking CDE certification.
Throughout the life of the NMTC
Program, the Fund is authorized to allocate to CDEs the authority to issue to
their investors up to the aggregate amount of $15 billion in equity as to which
NMTCs can be claimed.
|
Funding Category: |
Credits against Federal income taxes for making qualified equity investments in Community Development Entities (CDEs) that in turn provide investments in low-income communities. |
|
Target Population: |
Residents
of low-income communities |
|
Funding Available: |
The Fund published its first annual NMTC Program Notice of Allocation Availability (NOAA) in the Federal Register on June 11, 2002. The NOAA invites CDEs to compete for tax credit allocations in support of an aggregate amount of $2.5 billion in qualified equity investments in CDEs. |
|
Application Information: |
|
|
Contact: |
Community Development Financial Institutions Fund, 601 13th Street, NW, Suite 200 South, Washington, DC 20005; tel. (202) 622-8662; fax (202) 622-7754. |
|
Links To More Info: |
|
|
Administering Agency: |