News:

2010

Novogradac archives Ad.

December

CONGRESS EXTENDS THE NEW MARKETS TAX CREDIT

Washington, D.C. – December 17, 2010

The House last night passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 by a vote of 277-148. The Senate approved the bill on December 15 by a vote of 81-19. The president is expected the sign the bill into law today. The final measure extends for two years the new markets tax credit (NMTC) program at a level of $3.5 billion each year. In remarks made at the New Markets Tax Credit Coalition's 9th Annual Conference on December 9, Community Development Financial Institutions (CDFI) Fund Director Donna Gambrell said that following congressional action to extend the NMTC, the CDFI Fund is “prepared to make an award announcement in January 2011.”

Join Novogradac & Company for the New Markets Tax Credit Conference on January 27-28, 2011 in San Diego, Calif. Director Gambrell is scheduled to give a keynote address at the event.

TAX EXTENDERS PACKAGE INTRODUCED IN SENATE

Washington, D.C. – December 10, 2010

Senate Majority Leader Harry Reid, D-Nev., last night introduced the  Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, a bill to extend current tax rates for all income levels, extend unemployment insurance benefits and temporarily reduce Social Security taxes. The bill also includes a one year extension through 2011 of the Section 1603 grant in lieu of energy tax credit program, a two year extension through 2011 of the new markets tax credit (NMTC) at a level of $3.5 billion each year, a two year extension of the increase in the rehabilitation tax credit for property placed in service through the end of 2011 in the Gulf Opportunity (GO) Zone, an extension for one year through 2011 of the placed in service date for GO Zone low-income housing tax credit (LIHTC) properties, and an extension for one year through 2011 of bonus depreciation for GO Zone property.

The Senate bill introduced yesterday does not include an extension of the Section 1602 LIHTC cash grant exchange program, additional funding for the Section 48C advanced energy manufacturing tax credit, an extension of the Build America Bonds program, a provision to allow the NMTC to offset the alternative minimum tax (AMT), nor any funding for the National Housing Trust Fund.

It is expected that additional changes to the tax extenders package may be made as the House and Senate consider the legislation in the coming days. Follow @Novogradac to get regular updates on the status of the bill, tune in to the Tax Credit Tuesday podcast on December 14 to hear about the latest developments, and join Novogradac & Company for the 17th Annual Tax Credit Developers Conference on January 20-21, 2011 in Miami, Fla. to hear expert discussion and analysis of the measure.

SEN. BAUCUS INTRODUCES NMTC, RECOVERY ZONE BOND PROGRAM EXTENSIONS

WASHINGTON, D.C. - December 3, 2010

Sen. Max Baucus, D-Mont., yesterday introduced the Middle Class Tax Cut Act of 2010. The act includes extensions of numerous affordable housing, new markets and renewable energy bonds and tax credits. Among other provisions, the bill would extend the New Markets Tax Credit program through 2011 and make an additional allocation of Recovery Zone Bonds and extend the authorization for issuing the bonds through 2011. A summary of the bill can be found on Novogradac & Company’s Hot Topics page.

Tune in to the Tax Credit Tuesday podcast on December 7 to hear more about the bill.

CDFI FUND PUBLISHES INTERIM RULE FOR CAPITAL MAGNET FUND

WASHINGTON, D.C. - December 3, 2010

The Community Development Financial Institutions (CDFI) Fund today announced and requested public comment on an interim rule for the Capital Magnet Fund. The interim rule is effective immediately and remains largely unchanged from the proposed rule that the CDFI Fund published in the Federal Register on March 15, 2010. The interim rule provides information about program eligibility and eligible uses; affordable housing activities, economic development activities and community service facilities; affordability qualifications; record retention; income determinations and rent limits; and the definition of “rural.” The CDFI Fund will accept comments on the rule until February 1, 2011.

October

OHIO AWARDS FIRST ROUND OF STATE NMTCS

COLUMBUS, OHIO - October 22, 2010

The Ohio Department of Development (ODOD) announced yesterday that it is making $10 million in Ohio New Markets Tax Credits (NMTCs) available to four Ohio entities. The program, based on the federal NMTC, will spur at least $25.6 million in economic investments. ODOD awarded the following: Cincinnati Development Fund will receive $2 million in tax credits for a minimum of $5.1 million in investments made in the city of Cincinnati; Finance Fund will receive $3 million in tax credits for a minimum of $7.7 million in investments made throughout the state; Key Community Development New Markets LLC will receive $3 million in tax credits for a minimum of $7.7 million in investments made throughout the state; and Northeast Ohio Development Fund LLC will receive a $2 million tax credits for a minimum of $5.1 million in investments made in Cuyahoga County. All of the recipients have received allocations of federal NMTCs. The Ohio credits will provide a 39 percent state tax credit over a seven-year period.

CDFI FUND RELEASES QUARTERLY NEW MARKETS REPORT COMMENTS

WASHINGTON, D.C. - October 21, 2010

The Community Development Financial Institutions (CDFI) Fund announced today that it has posted comments submitted in response to its request for public comment related to the Quarterly New Markets Report (QNMR). The CDFI Fund received letters from the Novogradac NMTC Working Group and Enterprise Community Investment Inc. in response to its February 19, 2010 request. Among other things, the two groups suggested that the CDFI Fund allow online QNMR submission through the Community Investment Impact System; that the CDFI Fund notify allocatees when it makes changes to the QNMR; and that the fund total positions created as a result of the Recovery Act allocation.

NPS PROPOSES CHANGES TO HISTORIC CERTIFICATION REGULATIONS

WASHINGTON, D.C. - October 15, 2010

The National Park Service (NPS) today proposed amending its procedures for obtaining historic preservation certifications for rehabilitation of historic structures. The proposed rule published in today's Federal Register incorporates references to the revised sections of the Internal Revenue Code containing the requirements for obtaining a tax credit; replaces references to NPS's regional offices with references to its Washington Area Service Office (WASO); requires NPS to accept appeals for denial of certain certifications; and removes the certification fee schedule from the regulation. Comments on the proposed rule will be accepted until December 14, 2010.

Tune in to the October 19 Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, discuss the proposed rule and other news of interest to the tax credit community.

September

CONGRESS PASSES SMALL BUSINESS JOBS BILL

NEW YORK, N.Y. - September 23, 2010

The House of Representatives passed H.R. 5297, the Small Business Jobs Act of 2010, today in a 237-187 vote. The measure, which includes $12 billion in tax relief, passed the Senate last week and now awaits President Barack Obama’s signature.

Download the September 21 Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, highlight the bill’s provisions of interest to the tax credit community.

And don’t miss the chance to discuss the Small Business Jobs Act and other developments at Novogradac & Company’s upcoming Affordable Housing Tax Credit Conference in San Francisco, Calif. and the New Markets Tax Credit Investors Conference in Chicago, Ill.

BILL WOULD ALLOW NMTC TO OFFSET ALTERNATIVE MINIMUM TAX

WASHINGTON, D.C. - September 23, 2010

Rep. Alcee L. Hastings, D-Fla., yesterday introduced H.R. 6181, the American Infrastructure Investment Act. Among other things, the bill would allow new markets tax credit investments made after March 15, 2010 and before January 1, 2012 to offset the alternative minimum tax. Additionally, H.R. 6181 would extend the Recovery Zone Bond program through 2011 and the Build America Bond program through 2012. The bill, co-sponsored by Reps. Ron Klein, D-Fla., and Theodore E. Deutch, D-Fla., has been referred to the House Committee on Ways and Means. Read the full text of H.R. 6181 on the legislation page of the New Markets Tax Credit Resource Center.

Want an in depth analysis of all the latest developments in the new markets tax credit program? Join Novogradac & Company at the New Markets Tax Credit Investors Conference in Chicago on October 20-21, 2010.

CDEs ALLOCATE NEARLY $16 BILLION IN 2009

WASHINGTON, D.C. - September 21, 2010

The Community Development Financial Institutions (CDFI) Fund today released preliminary data on new markets tax credit (NMTC) projects financed through the end of fiscal year (FY) 2009. Community development entities (CDEs) disbursed more than $15.8 billion in total qualified equity investment (QEI) proceeds to 2,955 qualified active low-income community businesses (QALICBs) last year, including real estate developments and operating low-income businesses. The information was collected from the CDEs, which are required to submit annual reports detailing their QEI investments in low-income communities. After the CDFI Fund finalizes the 2009 data, it plans to repost the numbers on its web site at www.cdfifund.gov. In addition to the summary of the data, the CDFI Fund also released a report listing all QALICBs financed by CDEs through FY 2009 and a map of QALICBs financed by CDEs through FY 2009.

Join NMTC professionals, allocatees and applicants to learn more about NMTC financing opportunities at the New Markets Tax Credit Investors Conference on October 20-21 in Chicago, Ill.

SENATOR BAUCUS INTRODUCES REVISED TAX EXTENDERS BILL

WASHINGTON, D.C. - September 16, 2010

Senate Finance Committee Chairman Max Baucus today introduced a new version of tax extenders legislation. The Job Creation and Tax Cut Act of 2010 includes provisions from H.R. 4213, the American Jobs and Closing Tax Loopholes Act (also known as the tax extenders bill), including an extension for one year (through 2010) of the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program; a $1 billion, one-time capitalization of the National Housing Trust Fund (NHTF); an extension for one year (through 2010) of the New Markets Tax Credit (NMTC) program; and a provision to allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. Upon the bill’s introduction Sen. Baucus requested unanimous consent, which would have expedited its consideration, but the request was rejected. This means the bill will be subject to consideration on the Senate floor, leaving unclear its chances of passage before the next congressional recess.

To stay updated on the bill’s progress in Congress, follow Michael J. Novogradac, CPA, on Twitter. You can also tune in to the Tuesday Credit Tuesday podcast for weekly updates.

To learn what the tax extender provisions of the Job Creation and Tax Cut Act of 2010 could mean for the low-income housing tax credit community, join Novogradac & Company for the 17th Annual Affordable Housing Tax Credit Conference, Sep. 30-Oct. 1, in San Francisco, Calif.

August

CDFI FUND INVITES PUBLIC COMMENT ON NMTC APPLICATION

WASHINGTON, D.C. - August 25, 2010

The Community Development Financial Institutions (CDFI) Fund today invited comments concerning the New Markets Tax Credit (NMTC) Program allocation application. Comments will be accepted through October 25, 2010. The 2010 allocation application and the notice of allocation availability (NOAA) for the fiscal year 2010 allocation round are available online at www.newmarketscredits.com or from the NMTC program page of the CDFI Fund’s web site.

To hear the latest updates on the 2010 allocation application round, join applicants, allocatees and other NMTC professionals at the New Markets Tax Credit Investors Conference on October 20-21, 2010 in Chicago, Ill.

HUD FINAL RULE PROHIBITS REQUIRED ESCROWING OF TAX CREDIT EQUITY

WASHINGTON, D.C. - August 23, 2010

The U.S. Department of Housing and Urban Development (HUD) released its final rule today on the prohibition of the escrowing of tax credit equity. The final rule, in accordance with a provision in the Housing and Economic Recovery Act of 2008, bars HUD from requiring the escrowing of equity from the sales of low-income housing tax credits (LIHTCs), historic tax credits (HTCs) and new markets tax credits (NMTCs) for HUD-insured mortgages. Mortgagors will now be able to deposit cash deemed by the Federal Housing Commissioner to be sufficient, when added to the proceeds of the insured mortgage, to assure completion of the project and to pay the initial service charge, carrying charges, and legal and organizational expenses incident to the construction of the project. Additionally, the tax credit equity need not be fully disbursed before the disbursement of mortgage proceeds.

Tune in to tomorrow’s Tax Credit Tuesday podcast to learn more.

FIRST APPLICATION ROUND OPENS FOR OHIO’S STATE NMTC PROGRAM

COLUMBUS, Ohio - August 20, 2010

Gov. Ted Strickland and Ohio Department of Development Director Lisa Patt-McDaniel today announced the opening of the first application period for the Ohio New Markets Tax Credit (NMTC) program. A total of $10 million in tax credits is available in the first round of funding. Community development entities (CDEs) serving Ohio that have already received a tax credit allocation from the federal NMTC program are eligible to apply. Applications for the Ohio NMTC are due on September 20, 2010. Approved applications will be announced by October 31, 2010.

Questions about the program can be directed to Annette Stevenson, CPA, a partner in Novogradac & Company LLP’s Cleveland, Ohio office, at (216) 298-9000. This news will also be discussed in the Tax Credit Tuesday podcast on August 24.

July

BILL WOULD ALLOW NMTCs TO OFFSET ALTERNATIVE MINIMUM TAX

WASHINGTON, D.C. - July 28, 2010

Rep. Sander M. Levin, D-Mich., chairman of the Ways and Means Committee, tody announced the introduction of H.R. 5893, the Investing in American Jobs and Closing Tax Loopholes Act of 2010. The bill includes a provision to allow new markets tax credits (NMTCs) to be claimed against the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. It also extends the Build America Bonds program for two years.

Michael Novogradac, CPA, will discuss the bill in more detail in the Tax Credit Tuesday podcast on August 3. In the meantime, a summary of the legislative text and the estimated revenue effects are available at Novogradac & Company LLP’s New Markets Tax Credit Resource Center.

COMMENTS INVITED ON CDFI/CDE PROJECT PROFILE FORM

WASHINGTON, D.C. - July 27, 2010

The Community Development Financial Institutions (CDFI) Fund today invited comments on its CDFI/CDE Project Profile web form. The form allows CDFIs and community development entities (CDEs) to share stories of projects financed by the CDFI Fund’s programs. For clarification and to reflect new programs it administers, the CDFI Fund has also proposed additional narrative questions, clarifying language and program check boxes. Written comments should be submitted to the CDFI Fund on or before September 27.

2010 NMTC APPLICANTS REMINDED OF ELIGIBILITY DEADLINE

WASHINGTON, D.C. - July 21, 2010

Organizations that applied for the 8th round of new markets tax credits (NMTCs) and that have previously received an NMTC allocation (or whose affiliates have previously received an NMTC allocation) are reminded of today’s deadline to meet the qualified equity investment (QEI) threshold. In order to be eligible to apply for an allocation of NMTC authority in the 2010 round, applicants must have issued a requisite minimum amount of QEIs from their prior allocation(s). A complete description of the issuance thresholds can be found in section III of the notice of allocation availability (NOAA). Applicants are also reminded that the CDFI Fund will only consider as “issued” those QEIs that have been recorded and finalized (as opposed to listed as “pending”) in the CDFI Fund’s Allocation Tracking System.

Questions about the QEI threshold can be directed to Owen Gray, CPA, at (415) 356-8000.

Invest in your future, join applicants, allocatees and other NMTC professionals at the New Markets Tax Credit Investors Conference on October 20-21, 2010 in Chicago, Ill. 

LAWMAKERS PROPOSE SPECIAL NMTC ALLOCATION FOR GULF COAST

WASHINGTON, D.C. - July 6, 2010

Last week, Sen. Mary Landrieu, D-La., and a bipartisan group of lawmakers announced a package of tax incentives to provide relief for struggling small businesses hit hard by the oil spill, to create jobs and give a boost to travel and tourism along the Gulf Coast. Sen. Landrieu joined Sen. Bill Nelson, D-Fla., Sen. Roger Wicker, R-Miss., Sen. George LeMieux, R-Fla., and Sen. David Vitter, R-La., in signing a letter to Senate Finance Committee leadership urging them to consider quickly enacting the package. The proposal would provide a special allocation of new markets tax credits (NMTCs) for the oil spill recovery zone. The senators say that—similar to allocations of NMTC authority that were made following hurricanes Katrina and Rita—a special allocation of NMTCs, spread over a 2-year period, should be made to the oil spill recovery zone to contribute to the region's economic recovery.

IRS INVITES PUBLIC COMMENT ON NMTC RECAPTURE EVENT FORM

WASHINGTON, D.C. - July 1, 2010

The Internal Revenue Service, as part of the Treasury Department’s continuing effort to reduce paperwork and respondent burden, today invited public comments concerning Form 8874-B, Notice of Recapture Event for New Markets Credit. There are no changes being made to the form at this time. Written comments should be received on or before August 30, 2010 to be assured of consideration.

June

CDFI INVITES COMMENTS ON CAPITAL MAGNET FUND APPLICATION

WASHINGTON, D.C. - June 30, 2010

The Community Development Financial Institutions (CDFI) Fund today invited comments concerning the Capital Magnet Fund (CMF) application. The purpose of the CMF is to competitively award grants to certified CDFIs and qualified nonprofit housing organizations to finance affordable housing and related community development projects. Written comments should be received on or before August 30, 2010 to be assured of consideration.

TAX EXTENDERS BILL DEFEATED IN SENATE

WASHINGTON, D.C. - June 25, 2010

The Senate yesterday failed to pass H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, also known as the tax extenders bill. The bill was defeated 57 to 41, three votes short of the majority it needed to pass. The bill would have extended the New Markets Tax Credit (NMTC) program for one year and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. It would also have extended the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and made Gulf Opportunity (GO) Zone LIHTCs and Disaster LIHTCs eligible for the program. Reports indicate that Sen. Harry Reid will set aside the tax extender bill for now and instead concentrate on the small business tax bill.

Tune in to the Tax Credit Tuesday podcast on June 29 to hear what the next steps may be for the extenders package.

SENATOR BAUCUS DRAFTS REVISED EXTENDERS BILL

WASHINGTON, D.C. - June 22, 2010

Senate Finance Chairman Max Baucus has released a new Senate amendment substitute for H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, also known as the tax extenders bill. The latest version includes provisions to extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, expand the Section 1602 program to make Gulf Opportunity (GO) Zone LIHTCs and Disaster LIHTCs eligible for the program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for GO Zone LIHTCs. The Senate could vote on the revised extenders package this week. Follow Michael J. Novogradac, CPA, on Twitter for updates as they develop.

PUBLIC HEARINGS ON COMMUNITY REINVESTMENT ACT REGULATIONS ANNOUNCED

WASHINGTON, D.C. - June 17, 2010

The Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Office of Thrift Supervision announced today that the agencies will hold four public hearings on modernizing the regulations that implement the Community Reinvestment Act (CRA). The hearings will focus on regulatory, rather than statutory, changes and address the following topics: geographic coverage; performance tests, asset thresholds and designations; affiliate activities; community development; ratings and incentives; and disclosures and performance evaluations. Interested parties must register for the hearings and are encouraged to provide written copies of their testimony in advance. People may also submit written comments through August 31, 2010. Dates and locations of the hearings are available here. A formal notice about the hearings will also be published in the Federal Register.

SUMMARY, COST ESTIMATES POSTED FOR SENATE EXTENDER AMENDMENT

WASHINGTON, D.C. - June 9, 2010

The Senate Finance Committee has released additional documents related to Senate Amendment 4301, a substitute for H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010. Provisions included in H.R. 4213, also known as the tax extenders bill, would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The documents released yesterday include a summary of the amendment, a summary of changes made by the amendment, and estimates from the Congressional Budget Office (CBO) budget and Joint Committee on Taxation (JCT) of the budget effects of the amendment. The Senate resumed consideration of the bill today.

To hear more about the status of H.R. 4213, the American Jobs and Closing Tax Loopholes Act of 2010, download this week’s Tax Credit Tuesday podcast.

CDFI FUND REPORTS STRONG DEMAND IN 2010 NMTC ROUND

WASHINGTON, D.C. - June 9, 2010

The Community Development Financial Institutions (CDFI) Fund announced today that it received a total of 250 applications under the 2010 round of the New Markets Tax Credit (NMTC) program, requesting $23.5 billion in NMTC allocation authority. A total of $5 billion of allocation authority is available this round, pending Congressional approval.

The application deadline for the 2010 round was June 4. The CDFI Fund anticipates announcing the organizations that will receive NMTC allocations in December.

It’s not too late to join more than 360 professionals at Novogradac & Company’s 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C. The CDFI Fund’s Rosa Martinez, acting program manager for New Markets Tax Credits, will participate in a panel discussion entitled “Mid-Year Review – CDFI Fund” during the conference on June 10. The panel will recap the first half of 2010 NMTC activities, the status of applications and allocations, data collection and evaluation plans at the CDFI Fund in addition to industry news.

IRS GUIDANCE ON PASSIVE ACTIVITY CREDIT, RECOURSE LOANS

WASHINGTON, D.C. - June 8, 2010

The Internal Revenue Service (IRS) today released two revenue rulings (RRs) that address passive activity credit and recourse loans related to limited liability companies’ (LLCs’) qualified equity investments (QEIs) in qualified community development entities (CDEs) under the New Markets Tax Credit (NMTC) program.

In RR 2010-16 the IRS addresses whether the NMTC is disallowed under the passive activity credit rules for certain investors. Based upon the situations provided in the Revenue Ruling, the NMTC would not be disallowed, which clarifies the ability of certain investors to claim the credit. In RR 2010-17 the IRS concludes that the amount of the QEI made by an LLC classified as a partnership includes cash from a recourse loan to the LLC that the LLC invests as equity in a qualified CDE. The IRS will publish the rulings in Internal Revenue Bulletin 2010-26 on June 28.

Catch up on the latest IRS guidance at the 9th Annual New Markets Tax Credit Spring Conference this Thursday and Friday in Washington, D.C. There’s still time to register by clicking here or calling the events desk at 415-356-7970.

CHANGES MADE TO FLORIDA'S NMTC PROGRAM

TALLAHASSEE, Fla. - June 7, 2010

On May 28, Gov. Charlie Crist signed Senate Bill 1752. The bill changes several definitions of the Florida New Markets Development Program (NMDP). The bill, previously passed by the Florida House of Representatives and Senate, changes Florida’s definition of a qualified active low-income community business (QALICB) to match that of the federal New Markets Tax Credit (NMTC) program. The bill also extends the cure period from 90 days to six months to correct a failure to make a timely investment through the state program. The legislation also limits the number of times that an allocatee is allowed to correct a qualified equity investment (QEI) to once in a seven-year credit period. Florida’s NMDP, created in 2009 as a companion to the federal NMTC program, provides state tax credits for low-income community investments. Additional information on S.B. 1752 and other Florida enterprise-related bills can be found here and at Enterprise Florida’s web site.

Changes to state NMTC programs will be among the hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on Thursday and Friday in Washington, D.C. There’s still time to register for this industry event by clicking here or calling the events desk at 415-356-7970.

NMTC APPLICATIONS DUE TOMORROW

WASHINGTON, D.C. - June 1, 2010

Entities that wish to apply for new markets tax credit (NMTC) allocations in the 2010 round are reminded that in addition to submitting allocation applications by 5 p.m. (ET) tomorrow June 2, applicants for the 2010 round must meet additional remaining deadlines in order to be eligible for an allocation. An application is not complete, and will not be considered for review until the signature page and attachments (including investor commitment letters) for the electronic application have been uploaded electronically by 5:00 pm ET on June 4.

Questions about the NMTC program can be directed to Owen Gray, CPA, at (415) 356-8000.

And following the 2010 application deadline, join Novogradac & Company and industry experts at the 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

May

IRS RELEASES AUDIT GUIDE FOR NMTC PROGRAM

WASHINGTON, D.C. - May 27, 2010

The Internal Revenue Service (IRS) has published its audit guide for the New Markets Tax Credit (NMTC) program.  The guide is used to provide guidance to IRS revenue agents on how to conduct examinations and audits of federal tax returns involving new markets tax credits. The guide’s six chapters cover: an overview of the NMTC program; techniques for auditing a community development entity (CDE); techniques for auditing investors; issues related to not-for-profit entities; the disclosure of tax information; and how the report is to be written by the agent.

Join Novogradac & Company to discuss this and other NMTC program developments at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

REVISED REVENUE ESTIMATES AVAILABLE FOR EXTENDERS BILL

WASHINGTON, D.C. - May 27, 2010

The House Ways and Means Committee released additional documents related to H.R. 4213, the American Jobs and Closing Tax Loopholes Act, also known as the tax extenders bill. Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The documents released today include a manager's amendment by Ways and Means Committee Chairman Rep. Sander Levin, D-Mich., updated revenue estimates and a description of changes made since May 20. The House is expected to vote today on H.R. 4213; the bill could be sent to the Senate tomorrow.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

TEXT OF REVISED TAX EXTENDERS LEGISLATION RELEASED

WASHINGTON, D.C. - May 21, 2010

The legislative text of H.R. 4213, the American Jobs and Closing Tax Loopholes Act, a package of tax extender legislation, has been released. The bill was released yesterday as a House Amendment to the Senate Amendment to H.R. 4213. The House vote on the extenders has been delayed until May 25 because of House concerns, including carried interest taxation and total cost.

Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The Tax Extenders Act of 2009 passed the House of Representatives on December 9, 2009 and the Senate on March 10 passed a similar package, the American Workers, State and Business Relief Act, as an amendment to the House bill. Ways and Means Committee Chairman Sander Levin, D-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., worked with House and Senate leadership and their colleagues to merge these two packages into the American Jobs and Closing Tax Loopholes Act.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

REVISED TAX EXTENDERS LEGISLATION TO BE INTRODUCED

WASHINGTON, D.C. - May 20, 2010

Ways and Means Committee Chairman Sander Levin, D-Mich., and Senate Finance Committee Chairman Max Baucus, D-Mont., will release today the legislative text of the American Jobs and Closing Tax Loopholes Act, a package of tax extender legislation. Provisions included in the legislation would extend for one year the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program, extend for one year the New Markets Tax Credit (NMTC) program, and allow the NMTC to offset the alternative minimum tax with respect to qualified investments made between March 15, 2010 and January 1, 2012. The bill would also fund the National Housing Trust Fund (NHTF) and extend by two years the placed-in-service date for Gulf Opportunity (GO) Zone LIHTCs.

The Tax Extenders Act of 2009 passed the House of Representatives on December 9, 2009 and the Senate on March 10 passed a similar package, the American Workers, State and Business Relief Act, as an amendment to the House bill. Sen. Baucus and Rep. Levin worked with House and Senate leadership and their colleagues to merge these two packages into the American Jobs and Closing Tax Loopholes Act, which they will introduce today as a House Amendment to the Senate Amendment to H.R. 4213. The House is expected to take up the bill tomorrow, May 21.

The NMTC program extension will be one of the many hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference on June 10-11 in Washington, D.C.

TREASURY TO EVALUATE THE NEW MARKETS TAX CREDIT PROGRAM

WASHINGTON, D.C. - May 19, 2010

The Treasury Department today announced that the Urban Institute, under contract to the Community Development Financial Institutions (CDFI) Fund, will conduct an evaluation of the New Markets Tax Credit (NMTC) program. According to a notice in today’s Federal Register, the evaluation includes a one-time information collection effort involving participants and stakeholders in the program, and is intended to describe and assess program activities, identify project-specific outputs and outcomes as well as community outcomes, and address the issue of the need for NMTC investment. Treasury will accept public comments on the information collection effort through June 18, 2010.

CDFI FUND RELEASES ONLINE APPLICATION FOR 2010 NMTC ROUND

WASHINGTON, D.C. - May 10, 2010

The Community Development Financial Institutions Fund (CDFI Fund) has released the online allocation application and instructions for the 2010 new markets tax credit (NMTC) allocation round. The online application is available through an applicant’s myCDFIFund account. The CDFI Fund opened the 2010 NMTC application round on April 7, 2010; electronic applications are due by 5 p.m. Eastern Time on June 2, 2010.

For a detailed review of the 2010 NMTC application round, download Novogradac & Company’s NMTC Application Webinar presented on April 27.

And following the 2010 application deadline, join Novogradac & Company and industry experts at the 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

CDFI FUND ACCEPTS COMMENTS ON ALLOCATEE ANNUAL REPORT

WASHINGTON, D.C. - May 7, 2010

The Community Development Financial Institutions (CDFI) Fund today solicited comments concerning the CDFI program awardee/allocatee annual report used by participants in the CDFI program, the Native American CDFI Assistance (NACA) program, and the New Markets Tax Credits (NMTC) program. The CDFI Fund says comments are invited on all aspects of the information collection, but commentators may wish to focus particular attention on: the cost for CDFIs and CDEs to operate and maintain the services/systems required to provide the required information;  ways to enhance the quality, utility and clarity of the information to be collected; whether the collection of information is necessary for the proper evaluation of the effectiveness and impact of the CDFI Fund's programs, including whether the information has practical utility; the accuracy of the CDFI Fund's estimate of the burden of the collection of information; ways to minimize the burden of the collection of information including through the use of technology, such as software for internal accounting and geocoding to capture geographic detail while streamlining and aggregating transaction level reporting for upload to the Community Investment Impact System (CIIS), and; what methods might be used to improve the data quality, internal accounting and efficiency of reporting transactions for serving other targeted populations. Written comments must be received on or before July 6, 2010 to be assured of consideration.

April

CDFI FUND SEEKS APPLICATION REVIEWERS FOR THE NMTC 2010 ALLOCATION ROUND

WASHINGTON, D.C. - April 29, 2010

The Community Development Financial Institutions (CDFI) Fund seeks application reviewers for the 2010 New Markets Tax Credit (NMTC) program allocation round. Well-qualified candidates possess considerable expertise in community and economic development and finance, encompassing business and real estate development, financing of community-based organizations, the pooling of community development loans for sale to secondary markets and financial counseling, particularly for small businesses. The CDFI Fund says that resumes must be submitted by June 4, 2010 to ensure consideration for the 2010 round NMTC review session, even if you were a past reviewer, or are currently a reviewer for another CDFI Fund program. Additional details about applying and serving as a reviewer are available in an NMTC application reviewer letter released by the CDFI Fund.

Questions about the NMTC program can be directed to Owen Gray, CPA, at (415) 356-8000 or John Sciarretti, CPA, at (330) 602-4600.

The 2010 application round and other hot topics will also be discussed at Novogradac & Company’s 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

CDFI FUND REVISES 2010 NMTC APPLICATION

WASHINGTON, D.C. - April 20, 2010

The Community Development Financial Institutions Fund (CDFI Fund) today released a revised application for the 2010 round of the New Markets Tax Credit (NMTC) Program. The CDFI Fund says it modified Question #29 to provide greater clarity for applicants.

For a detailed review of the 2010 NMTC application round, sign up for Novogradac & Company’s NMTC Application Webinar on April 27.

And following the 2010 application deadline, join Novogradac & Company and industry experts at the 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

CDFI FUND RELEASES 2010 NMTC APPLICATION Q&A

WASHINGTON, D.C. - April 19, 2010

The Community Development Financial Institutions (CDFI) Fund today released updated guidance for 2010 new markets tax credit (NMTC) applicants. Among other things, the 2010 NMTC Application Q&A document released today includes updated guidance regarding the related party test.

For a detailed review of the 2010 NMTC application round, including a discussion of the 2010 NMTC Application Q&A, tune in to Novogradac & Company’s NMTC Application Webinar on April 27.

The 2010 application round and other hot topics will also be discussed at Novogradac & Company’s 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

CDE CERTIFICATION DEADLINE NEARS FOR 2010 NMTC APPLICANTS

WASHINGTON, D.C. - April 16, 2010

Organizations interested in applying for the 8th round of new markets tax credits (NMTCs) are reminded that the deadline to apply for certification as a community development entity (CDE) is in 10 days. In order to be eligible to apply for an allocation of NMTC authority in the 2010 round, applicants must have submitted applications for CDE certification by April 26. If a certified CDE wishes to change its designated CDE service area, it must submit its request for such a change to the CDFI Fund by 5 p.m. on June 2, 2010 to be eligible in the 2010 application round.

Questions about CDE certification or the NMTC program can be directed to Owen Gray, CPA, at (415) 356-8000 or John Sciarretti, CPA, at (330) 602-4600.

For a detailed review of the 2010 NMTC application round, tune in to Novogradac & Company’s NMTC Application Webinar on April 27.

The 2010 application round and other hot topics will also be discussed at Novogradac & Company’s 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

CDFI FUND OPENS 2010 NEW MARKETS TAX CREDIT ROUND

WASHINGTON, D.C. - April 7, 2010

The U.S. Department of the Treasury announced today the opening of the 2010 round of competition for tax credits under the New Markets Tax Credit (NMTC) program and posted a copy of the 2010 NMTC application

The notice of allocation availability (NOAA) posted on the Community Development Financial Institutions (CDFI) Fund web site corrects an inconsistency in the community development entity (CDE) certification application deadline that was included in the advance copy published on the Federal Register Public Inspection Desk web page. The deadline to apply for CDE certification to be eligible in the 8th NMTC allocation round is April 26, 2010.

The CDFI Fund says that those interested in learning more about the 2010 NMTC funding round will be able to view a webcast after May 5, 2010 online at www.cdfifund.gov/how_to_apply/.

Novogradac & Company is also planning a webinar on the next NMTC allocation application round; stay tuned to www.novoco.com/events for details. In the meantime, for questions about applying in the 2010 NMTC allocation application round, please call Owen Gray, CPA, at (415) 356-8000 or John Sciarretti, CPA, at (330) 602-4600.

2010 NEW MARKETS TAX CREDIT PROGRAM ROUND TO OPEN TOMORROW

WASHINGTON, D.C. - April 7, 2010

A notice of allocation availability (NOAA) scheduled for publication in tomorrow's Federal Register will announce availability of tax credit allocation for the 2010 round of the New Markets Tax Credit (NMTC) program. The NOAA describes how a community development entity (CDE) may apply to receive an allocation of NMTCs and the competitive procedure through which NMTC allocations will be made. Electronic applications for the 2010 allocation round will be due by 5 p.m. Eastern Time on June 2, 2010. Allocation applicants that are not yet certified as CDEs must submit an application for certification as a CDE that is postmarked on or before April 23, 2010 to be eligible for an NMTC allocation in the 8th round.

Stay tuned to www.newmarketscredits.com for details; Novogradac & Company will post links to the 2010 NMTC allocation application and related materials as soon as additional information becomes available.

For questions about applying in the 2010 NMTC allocation application round, please call Owen Gray, CPA, at (415) 356-8000 or John Sciarretti, CPA, at (330) 602-4600.

To discuss the 2010 allocation round and other NMTC hot topics, join Novogradac & Company at the 9th Annual New Markets Tax Credit Spring Conference on June 10 and 11 in Washington, D.C.

SEN. LINCOLN URGES END TO NEGOTIATIONS OF H.R. 4213

WASHINGTON, D.C. - April 2, 2010

Sen. Blanche Lincoln, D-Ark., yesterday released the text of a letter she sent to Senate Majority Leader Harry Reid and Speaker of the House Nancy Pelosi urging the lawmakers to complete Senate-House negotiations of H.R. 4213, the American Workers, State, and Business Relief Act of 2010, also referred to as the tax credit extenders package. The Senate-passed version of the bill includes an extension of the New Markets Tax Credit program and makes Gulf Opportunity Zone and Midwestern Disaster Credits eligible for the low-income housing tax credit exchange program. Lincoln's letter urged Reid and Pelosi to prioritize the legislation when Congress reconvenes April 10. The text of Lincoln's letter can be found here. The version of H.R. 4213 that was passed by the Senate on March 10, 2010 can be found here.

The NMTC program extension will be one of the hot topics discussed at the 9th Annual New Markets Tax Credit Spring Conference June 10-11 in Washington, D.C.

March

REPORTING REMINDER FOR RECOVERY ACT NMTC ALLOCATEES

WASHINGTON, D.C. - March 31, 2010

New markets tax credit (NMTC) allocatees that are recipients of an allocation of NMTC authority under the Recovery Act are reminded that quarterly new markets reports are due by April 10. Recovery Act allocatees are required to report to the Community Development Financial Institutions (CDFI) Fund on a quarterly basis. The quarterly new markets report provides qualitative and quantitative information on allocatees’ compliance with performance goals as outlined in their allocation agreements with the CDFI Fund. The next deadline for the quarterly new markets report is Saturday, April 10; the information provided in the report should reference activities completed with Recovery Act allocations during the quarter/reporting period ended March 31, 2009. Additional information about these reporting requirements is available on the CDFI Fund’s Recovery Act web page.

CDFI FUND TO HOLD INFORMATION CALLS ON CAPITAL MAGNET FUND

WASHINGTON, D.C. - March 29, 2010

The Community Development Financial Institutions (CDFI) Fund will conduct two conference calls for potential applicants to the Capital Magnet Fund. The calls will be held on Wednesday, March 31, and Friday, April 2. The CDFI Fund says the calls will serve as a forum for potential applicants to ask questions of CDFI Fund staff about the current round of the Capital Magnet Fund. Click here for details and instructions for accessing the conference calls.

For additional information about applying for the Capital Magnet Fund program, please contact Diana Letsinger in Novogradac & Company's Long Beach, Calif. office. She can be reached at (562) 432-9482 or Diana.Letsinger@novoco.com.

HOUSE APPROVES JOBS BILL WITH NMTC AMT OFFSET PROVISION

WASHINGTON, D.C. - March 24, 2010

The House of Representatives today approved H.R. 4849, the Small Business and Infrastructure Jobs Tax Act, by a vote of 246-178. The bill includes tax relief for small businesses and financing measures to create jobs. Among other things, the bill would allow the new markets tax credit (NMTC) to be used to offset the alternative minimum tax (AMT).

CDFI FUND SEEKS CAPITAL MAGNET FUND APPLICATION REVIEWERS

WASHINGTON, D.C. - March 24, 2010

The Community Development Financial Institutions (CDFI) Fund today extended to March 31 its deadline for interested parties to submit resumes for consideration as application reviewers for the fiscal year 2010 funding round of the Capital Magnet Fund (CMF). The CMF program will provide competitively awarded grants to CDFIs and qualified not-for-profit housing organizations to finance affordable housing and related community and economic development activities.

WAYS AND MEANS TO CONSIDER SMALL BUSINESS, INFRASTRUCTURE JOB CREATION BILL

WASHINGTON, D.C. - March 15, 2010

U.S. House Committee on Ways and Means Chairman Sander M. Levin, D-Mich., today unveiled a discussion draft of the Small Business and Infrastructure Jobs Tax Act, legislation that would provide tax relief to small businesses and extend financing measures to create jobs. Among other things, the bill would make tax-exempt bond-financed properties eligible for the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program and allow the new markets tax credit (NMTC) to be used to offset the alternative minimum tax (AMT). The Committee on Ways and Means is expected to consider the legislation on Wednesday.

COMMENTS ACCEPTED ON CERTIFICATION OF MATERIAL EVENTS FORM

WASHINGTON, D.C. - March 12, 2010

The Community Development Financial Institutions (CDFI) Fund will accept comments on CDFI Form 0036, Certification of Material Events, through April 12, 2010. According to a notice in today's Federal Register, the form will capture information related to community development entities' (CDEs') material events under the New Markets Tax Credit (NMTC) program as well as capture information related to CDFIs' material events in a single form. The notice says the form will provide a more comprehensive list of potential material events to inform CDEs and CDFIs of the events that need to be reported to the CDFI Fund and will require the CDE or CDFI to affirmatively indicate, through a series of specific questions, whether or not the event will have an impact on areas of operations that are of particular concern to the CDFI Fund. Today's notice says this information will enable the CDFI Fund to better manage the material events review process and monitor the effects of material events on certification or compliance status.

AGENCIES ADOPT FINAL INTERAGENCY CRA QUESTIONS AND ANSWERS

WASHINGTON, D.C. - March 11, 2010

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision today adopted as final a revised set of “Interagency Questions and Answers Regarding Community Reinvestment.” The Questions and Answers provide guidance for use by agency personnel, financial institutions and the public regarding implementation of the Community Reinvestment Act (CRA). The Questions and Answers were last revised on January 6, 2009; in response to comments received on the last revisions, the agencies made minor clarifications to the CRA guidance. Those revisions are included in the final Questions and Answers that are effective today.

CDFI FUND OPENS FUNDING ROUND OF THE CAPITAL MAGNET FUND

WASHINGTON, D.C. - March 4, 2010

The Community Development Financial Institutions (CDFI) Fund today released a notice of funds availability (NOFA) for the inaugural application round of the Capital Magnet Fund. The Capital Magnet Fund was established through the Housing and Economic Recovery Act of 2008. Through the fund, the CDFI Fund will make $80 million available to certified CDFIs and not-for-profit housing organizations to support the financing of affordable housing and related economic development activities and community service facilities. It is anticipated that awardees will leverage the $80 million of Capital Magnet Fund award dollars to support in excess of $800 million in aggregate costs. Capital Magnet Fund application materials are due to the CDFI Fund by April 15.

REPORT DESCRIBES IMPACT OF FEDERAL HISTORIC TAX CREDIT

WASHINGTON, D.C. - March 3, 2010

The federal historic tax credit is a highly efficient job creator-accounting for the creation of 1.8 million new jobs over the life of the program, according to the "First Annual Report on the Economic Impact of the Federal Historic Tax Credit," which was released today. The report found that historic tax credits generated jobs more efficiently than other stimulus options and the study concludes that the economic activity leveraged by the historic tax credit returns more tax revenue to the U.S. Treasury than the cost of implementing the program. The report, the first to ever to comprehensively examine the economic impact of the federal historic tax credit, also underscores the need for additional legislation to strengthen the federal credits, making them more widely available for smaller, rural projects and also encouraging their use for green and sustainable rehab projects.

Tune in to next week's Tax Credit Tuesday podcast to hear Michael J. Novogradac, CPA, discuss the report's findings and their significance.

SENATE CONSIDERS TAX EXTENDERS LEGISLATION THIS WEEK

WASHINGTON, D.C. - March 2, 2010

The Senate yesterday began consideration of the American Workers, State, and Business Relief Act of 2010, which would extend tax provisions that expired on December 31, 2009, as well as address several provisions that expired on February 28, 2010. Senate Finance Committee Chairman Max Baucus, D-Mont., and Senate Majority Leader Harry Reid, D-Nev., introduced the amendment that would, among other things, extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions.

February

BILL TO CREATE STATE NMTC MAKES PROGRESS IN WISCONSIN

MADISON, Wis. - February 25, 2010

The Wisconsin Assembly Committee on Jobs, the Economy and Small Business on February 17 approved Assembly Bill 642, a bill to establish a state tax credit program modeled after the federal new markets tax credit (NMTC). A companion bill, Senate Bill 461, was approved unanimously by the Senate Committee on Economic Development last week. Click here for more information about existing and proposed state NMTCs

REID INTRODUCES TAX EXTENDERS PACKAGE

WASHINGTON, D.C. - February 25, 2010

Sen. Harry Reid yesterday introduced legislation to extend several tax provisions that expired on December 31, 2009. The American Workers, State, and Business Relief Act of 2010 would extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions. The package of tax extenders is estimated to cost about $31 billion over 10 years. One of the cost offsets included in the bill is codification of the economic substance doctrine. Reports indicate the bill could be considered as early as next week.

CDFI FUND INVITES COMMENTS ON QUARTERLY ILR

WASHINGTON, D.C. - February 24, 2010

The Community Development Financial Institutions (CDFI) Fund today invited comments about a version of its institutional level report (ILR). The CDFI Fund requires new markets tax credit (NMTC) allocatees under the American Recovery and Reinvestment Act to complete, on a quarterly basis, a much shorter version of the ILR. The CDFI Fund says the QILR will help it meet its own reporting requirements under the Recovery Act and standardize the data that awardees submit.

HEALTHY FOOD PLAN INCLUDES $250 MILLION IN NMTC AUTHORITY

WASHINGTON, D.C. - February 22, 2010

The Obama Administration on Friday released details of a Healthy Food Financing Initiative to expand access to nutritious foods in underserved urban and rural communities not currently served by grocery stores and other healthy food retailers. The initiative will make available more than $400 million in federal tax credits, below-market rate loans, loan guarantees and grants to attract private sector capital that are expected to more than double the total investment, including $250 million in authority for the New Markets Tax Credit (NMTC) program devoted to helping finance healthy food options. Through the joint initiative, which was included in the President’s proposed budget for 2011, the departments of Treasury, Agriculture, and Health and Human Services would make available financial and technical assistance to community development financial institutions, not-for-profits and businesses with sound strategies for addressing the healthy food needs of communities.

Communities without access to grocery stores or other healthy food retailers are sometimes called “food deserts,” and the Administration says its proposal builds on the Community Development Financial Institutions (CDFI) Fund’s history of supporting these kinds of investments through the NMTC program. Click here to read about how the NMTC has helped bring grocery stores to these underserved communities.

CDFI FUND INVITES COMMENTS ON QUARTERLY REPORT FOR RECOVERY ACT NMTC ALLOCATEES

WASHINGTON, D.C. - February 19, 2010

The Community Development Financial Institutions (CDFI) Fund today invited comments on the Quarterly New Markets Report (QNMR) for new markets tax credit (NMTC) allocatees under the American Recovery and Reinvestment Act of 2009 (Recovery Act). No changes are being proposed at this time. Comments will be accepted through April 20, 2010.

GEITHNER ANNOUNCES PROPOSALS TO EXTEND, ENHANCE NMTC

WASHINGTON, D.C. - February 18, 2010

Treasury Secretary Tim Geithner today met with individual and small business recipients of New Markets Tax Credits (NMTC) to discuss how the credits can be used to attract additional investments to help revitalize distressed communities. Secretary Geithner described the President’s proposal to improve, extend and broaden the NMTC under the fiscal year 2011 budget. To restore demand and broaden the NMTC’s appeal, he announced today that the President is asking Congress to change the NMTC so it can be used to offset the Alternative Minimum Tax (AMT), including where NMTC allocations have been made but where money has not yet been invested. In addition, Treasury and the Internal Revenue Service (IRS) are developing guidance to help provide investors greater certainty whether they will qualify for and be able to benefit from the credit. Secretary Geithner today stressed that Treasury is committed to making further enhancements to the NMTC to encourage greater investment in small businesses. Click here for a Treasury Department fact sheet about the NMTC enhancements in the FY 2011 budget request.

BAUCUS, GRASSLEY RELEASE DRAFT JOBS BILL WITH TAX EXTENDERS

WASHINGTON, D.C. - February 11, 2010

Senate Finance Committee Chairman Max Baucus, D.-Mont., and Ranking Member Chuck Grassley, R-Iowa, today released a draft of jobs legislation called the Hiring Incentives to Restore Employment (HIRE) Act. The draft bill extends several tax provisions that expired on December 31, 2009; the HIRE Act would extend the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); extend for one year the new markets tax credit (NMTC); and extend Gulf Opportunity (GO) Zone provisions. The tax extenders are estimated to cost about $31 billion over 10 years. Sens. Baucus and Grassley list three offsets for the cost of the HIRE Act, including codification of the economic substance doctrine.

Novogradac & Company will provide regular updates via e-mail to Industry Alert subscribers regarding the progress of jobs legislation and related proposals.

In addition, Michael Novogradac, CPA, will review the proposed legislation in detail in the next Tax Credit Tuesday podcast. You will find the podcast in iTunes or online at www.novoco.com/podcast.

In the meantime, you can also follow us on Twitter @taxcreditnews and @Novogradac.

SENATE JOBS BILL COULD INCLUDE TAX CREDIT EXTENSIONS

WASHINGTON, D.C. - February 9, 2010

Despite inclement weather that could delay a vote, Senate Majority Leader Harry Reid, D-Nev., is reported to be working to get a bill designed to spur job growth to the Senate floor by the end of this week. A draft of the bill circulated today features several tax extensions, including an extension of the Section 1602 low-income housing tax credit (LIHTC) cash grant exchange program that was created by the American Recovery and Reinvestment Act (Recovery Act); an extension for one year of the new markets tax credit (NMTC); and a retroactive extension of deadlines for Gulf Opportunity (GO) Zone provisions that expired in 2009. The draft bill also includes the codification of the economic substance doctrine, but reports indicate that the issue is still under discussion.

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.

January

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.