The New Markets Tax Credits Roadmap

Since 2001, the U.S. Treasury Department, through its Community Development Financial Institutions (CDFI) Fund, has provided lucrative tax credit allocations to corporations or partnerships investing in low-income communities. The New Market Tax Credits (NMTC) Program enables Community Development Entities (CDEs) who apply for, and win, these tax credit allocations to then grant those tax credits to their equity investors as a powerful incentive to invest in communities that have been traditionally overlooked. Reznick Group has been active in the New Markets Tax Credit (NMTC) Program since the program’s inception. We work closely with key participants, including the CDFI Fund, the Internal Revenue Service, the NMTC Coalition, and numerous CDEs, providing assurance, tax, transactional and consulting services for the NMTC program..

The New Markets Tax Credits Roadmap (right) provides you with important information on the key steps required should you wish to establish a CDE and become involved in the NMTC Program. Click on the different boxes in the roadmap to access our thought leadership papers outlining best practices for success at each step of the process.

Step 1: Applying for CDE Certification
To be certified as a CDE, make sure you meet the three criteria in this document and use the checklist in the document as a model workplan.

Step 2: The NMTC Application
The NMTC application process demanding and highly competitive. Demand for NMTC allocations far outstrips supply. This document will help you navigate through the application process.

Step 3: The Allocation Agreement
The allocation agreement is the CDE’s operational “bible.” Learn about the types of regulations that must be followed under this agreement

Step 4: The Annual Audit
The annual audit is an important risk management check on the CDE’s operations, helping to ensure  the CDE is properly managing its risk.

Step 5: Structuring for State & Local Tax Issues
Once a New Markets Tax Credit Program allocation has been awarded, it is critical for the CDE to adopt an effective tax strategy on both a state and local level.

Step 6: NMTC Program Compliance
As a federal tax program, the NMTC Program is tightly regulated, with a long list of regulatory and programmatic rules and requirements that a community development entity (CDE) must follow, set by both the Treasury Department's Community Development Financial Institution (CDFI) Fund and the Internal Revenue Service (IRS).