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CDFI FUND SEEKS APPROVAL FOR NEW NMTC INFORMATION COLLECTION

WASHINGTON, D.C. - February 4, 2010

The Community Development Financial Institutions (CDFI) Fund today announced its intent to request approval from the Office of Management and Budget (OMB) for new information collection activities associated with an independent, multi-year evaluation of the New Markets Tax Credit (NMTC) program. In a notice in today’s Federal Register, the CDFI Fund describes a one-time information collection effort involving participants and stakeholders in the program, which is intended to describe and assess program activities as well as identify project-specific and community level outputs and outcomes. Click here for more information.

PLRS PROVIDE GUIDANCE ON USE OF 6-MONTH CURE PERIOD FOR NMTC

WASHINGTON, D.C. - February 3, 2010

The Internal Revenue Service (IRS) last week released two private letter rulings (PLRs) that discuss the eligibility of a six-month cure for failure to meet the substantially-all requirement within the initial 12 months as required by the new markets tax credit (NMTC) program. The IRS states in PLR 201004008 and PLR 201004021 that the six-month cure period is not automatically tacked on to the 12-month period; instead it begins when a community development entity (CDE) becomes aware (or reasonably should have become aware) of the failure to meet the substantially-all requirement.

“These two PLRs provide welcome guidance,” said Brad Elphick, CPA, a partner in the Atlanta office of Novogradac & Company LLP and head of the NMTC Working Group. “While it’s important to note that the letter rulings themselves cannot be used or cited as precedent, the position taken by the IRS provides some much needed clarification for the NMTC community regarding use of the cure period.”

Click here to access copies of PLR 201004008 and PLR 201004021. Additional analysis is also available in this article in the February issue of the Novogradac Journal of Tax Credits.

FEDERAL BUDGET PROPOSAL EXTENDS, ALLOWS NMTC TO OFFSET AMT

WASHINGTON, D.C. - February 1, 2010

Today President Barack Obama transmitted the fiscal year (FY) 2011 proposed budget to the Congress, which includes an extension of the new markets tax credit through 2011, with an allocation amount of $5 billion for each of 2010 and 2011. The proposal would also permit the NMTC to offset alternative minimum tax (AMT) liability. Click here for more information about NMTC extension proposals.

Tune in to the February 9 Tax Credit Tuesday podcast to hear more about this proposal and the next steps in the federal budget process.

REPORT: NMTC HELPS FUND PROJECTS IN LOW-INCOME COMMUNITIES

WASHINGTON, D.C. - January 29, 2010

Congress should consider options to simplify the structure of the new markets tax credit (NMTC) according to a report released today by the Government Accountability Office (GAO). The mandated report describes where and how community development entities (CDEs) are using NMTCs; assesses how CDEs use NMTCs to offer favorable financing terms to low-income community businesses and describes options for simplifying the NMTC; describes how NMTC investments support low-income community development; and determines how effective the Internal Revenue Service and the Community Development Financial Institutions (CDFI) Fund have been in monitoring NMTC compliance.

HISTORIC SCHOOLS REHABILITATION ACT INTRODUCED IN THE SENATE

WASHINGTON, D.C. - January 29, 2010

Senators Jim Webb, D-Va., and Mark Warner, D-Va., today introduced The Rehabilitation of Historic Schools Act of 2010. The bill, which provides a tax credit for communities to partner with private sector developers to rehabilitate the nation’s older school buildings, is a the companion bill to H.R. 4133, introduced in the House by Virginia Rep. Eric Cantor on November 19, 2009. The measure would change a provision in the federal rehabilitation tax credit that restricts renovation of older public school buildings, limiting the ability of local governments to partner with private developers to rehabilitate schools. A copy of the bill and a fact sheet about the legislation can be found here.

Novogradac & Company will follow the progress of the Rehabilitation of Historic Schools Act and provide updates during the Tax Credit Tuesday podcasts and in the newly expanded Novogradac Journal of Tax Credits.

DEBRIEFING MATERIAL POSTED FOR UNSUCCESSFUL NMTC APPLICANTS

WASHINGTON, D.C. - December 30, 2009

The Community Development Financial Institutions (CDFI) Fund has made debriefing documents available to community development entities (CDEs) that applied for new markets tax credits (NMTC) but did not receive an allocation in the last allocation round. The documents provide applicants with information about the strengths and weaknesses of their applications identified during the review process. Applicants can access the debriefing materials through their myCDFIFund accounts at www.cdfifund.gov.

SENATORS PLEDGE WORK ON TAX EXTENDERS IN EARLY 2010

WASHINGTON, D.C. - December 23, 2009

Sens. Max Baucus, D-Mont., and Chuck Grassley, R-Iowa, sent a letter to Senate Majority Leader Harry Reid, D-Nev., and Minority Leader Mitch McConnell, R-Ky., yesterday regarding adjournment of the first session of the 111th Congress without extending expiring tax assistance provisions. In addition to the letter, the Finance Committee leaders issued a joint statement declaring their intent to address expiring tax provisions early next year.

The House passed H.R. 4213, the Tax Extenders Act of 2009, on December 9. The House bill would provide individuals and businesses with approximately $31 billion in tax relief in 2009 by extending for one year, through 2010, more than 40 provisions that are scheduled to expire at the end of 2009. The bill would extend for one year, through 2010, the new markets tax credit (NMTC), permitting a maximum annual amount of qualified equity investments of $5 billion.

Click here for more information about tax extenders legislation. To discuss this and other current developments in the NMTC industry, join Novogradac & Company LLP on January 28 and 29 for the New Markets Tax Credit Conference in San Diego, Calif.

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