A Nod Toward Permanency: Senators Introduce Bill to Extend New Markets Tax Credit Program Indefinitely

By
3 min read

On June 11, U.S. Sens. Jay Rockefeller (D-W.Va.) and Roy Blount (R-Mo.) introduced legislation (S. 1133) that would make the federal new markets tax credit (NMTC) program permanent and permit new markets tax credits to offset federal alternative minimum tax liability.

Original co-sponsors of the measure, which was referred to the Senate Finance Committee, include Sens. Maria Cantwell (D-Wash.), Benjamin Cardin (D-Md.), and Susan Collins (R-Me.). Rockefeller, Cantwell, and Cardin are members of the Finance Committee.

The bill would extend the program permanently beyond the current expiration date of December 31, 2013 and provide for inflation adjustment after 2013 of the annual volume limit for new markets tax credit allocation authority.

The bill would also permit new markets tax credits claimed with respect to qualified equity investments made before January 1, 2014 to offset federal alternative minimum tax (AMT) liability.

Congress first authorized the NMTC program as part of the Community Renewal Tax Relief Act of 2000. The fiscal cliff legislation signed into law in January 2013 extended the program for 2012 and 2013 with $3.5 billion in annual allocation authority for each year.

“Unemployment across the country is still too high,” Sen. Rockefeller said in written remarks upon the introduction of S. 1133. “The New Markets Tax Credit is a proven tool for creating quality jobs and economic opportunity in rural and urban communities across the country. This is a market-driven economic development tool that works.”

Sen. Blount said, “The New Markets Tax Credit Program has already had a positive impact in Missouri, leading to more than $2 billion in investments and thousands of jobs. I’m glad to support this bipartisan bill to make this tax credit permanent so that we can continue to encourage investment, growth, and job creation in low-income communities nationwide.”

Legislation to extend the new markets tax credit program hasn’t yet been introduced in the House of Representatives. Rep. Dave Camp (R-Mich.), chairman of the House Ways and Means Committee, has asked committee and House lawmakers not to introduce tax bills for the time being prior to markup of tax reform legislation.

The new markets tax credit is a federal tax incentive that helps finance real estate projects, businesses, and other eligible activities in qualified low-income communities. Organizations certified as community development entities (CDEs) compete for allocations of NMTC authority in annual funding rounds held by the Community Development Financial Institutions (CDFI) Fund. CDEs that win allocation awards issue the tax credits to investors that provide capital that is deployed as qualified investments into Qualified Active Low Income Community Businesses. Investors claim the tax credits over seven years.