In order to receive an allocation under the NMTC Program, an organization must be certified as a CDE by the CDFI Fund. To qualify as a CDE, an organization must:
A taxpayer wishing to receive a New Markets Tax Credit must make a QEI in a CDE which has been granted an allocation of NMTCs. A QEI must be:
A QLICI is any investment (such as a loan or equity investment) made by a CDE in a Qualified Active Low Income Community Business.
A QALICB is any corporation or partnership (for profit or not for profit) engaged in the active conduct of a qualified business in a Low Income Community meeting standards pertaining to gross income, use of property, and services performed. In most cases, an entity formed to own real estate in a Low Income Community will meet the standards for a QALICB.
A LIC refers to any census tract which has a poverty rate of at least 20% or a median family income which is 80% or less of the metropolitan area median family income. Other factors may come into play as well for certain census tracts. A map showing eligible census tracts in downtown Oklahoma City and downtown Tulsa can be found by clicking here.
A NMTC investor receives a federal income tax credit equal to 39% of the total Qualified Equity Investment (QEI) made in a Community Development Entity (CDE). The Credit is realized over a seven-year period, 5% annually for the first three years and 6% annually in years 4-7.