H&A’s General Counsel Evan Rice wrote an extensive piece on New Markets Tax Credits (NMTC) for the Institute for Professionals in Taxation’s (IPT) July 2013 Tax Report. As one of America’s foremost experts on NMTCs, Rice outlines the dynamics of the complex tax credit opportunity. The article also provides an update on the reauthorization and funding allocation approved by Congress and President Obama earlier this year.
Provided below is an abstract of Rice’s NMTC article. To read the full report, please visit the following link: IPT July 2013 Tax Report.
In early 2013, Congress passed and the President signed the American Taxpayer Relief Act of 2012 (“ATRA”). Among other important components of the so-called “extenders” provisions contained in that legislation, ATRA effectively reauthorized the federal New Markets Tax Credit (“NMTC”) program for two additional programmatic years and authorized the Department of Treasury’s CDFI Fund to allocate an aggregate of Seven Billion Dollars ($7,000,000,000.00) in NMTCs.
First enacted in 2000, the federal NMTC program is a powerful economic development tool designed to provide incentives that catalyze investments in low-income communities in circumstances in which those
investments would not otherwise occur. Although the financial structures that have evolved to implement NMTCs are complex and impose limitations during the seven-year compliance period required by the program, NMTCs nevertheless provide substantial value to eligible, qualifying projects that are properly constructed and implemented.
Both experience and new trends in the NMTC environment provide a backdrop for the effective use of NMTCs by a wide array of developers and corporations seeking to maximize return, particularly in the context of real estate, development, or business expansion projects requiring additional equity to be feasible. Consequently, and in light of certain new programmatic objectives of the CDFI Fund that will be implemented in connection with the NMTCs authorized by the ATRA, tax professionals should maintain an ongoing awareness of the program’s vitality, process, and opportunities.