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   New Markets Tax Credits in the GO Zone
Substantially all of the taxpayer's investment must in turn be used by the CDE to make qualified investments in low-income communities. Successful CDE applicants are selected only after a competitive application and rigorous review process that is administered by the U.S. Treasury's CDFI Fund. The NMTC Program enables CDEs that receive an allocation of NMTCs to attract private-sector capital to support investments in businesses, including operating businesses, commercial real estate and community facilities. The credits provide a taxpayer who invests in a qualified CDE a credit against income tax over a 7-year period (see chart at right). The tax incentive is provided to the investor who contributes equity funds to a qualified CDE that is:
There are very detailed definitions as to what qualifies as a CDE, but basically it is a corporation or partnership that invests heavily into low-income communities where the poverty rate is at least 20% according to the population census. The GO Zone Act expanded the New Markets Tax Credit program for the Katrina GO Zone. For the Gulf Opportunity Zone areas, an additional allocation of new market tax credits is providing amounts equal to $300 million for 2005 and 2006 and $400 million for 2007 to be allocated among qualified community development entities to make low-income investments within the GO Zone. Treasury's CDFI Fund has combined the 2005 and 2006 amounts and thus will allocate an additional $600 million of NMTC authority for specific use in the GO Zone in 2006. This is in addition to the previously announced allocation authority for the NMTC program of $3.5 billion annually for 2006 and 2007. A request has also been made to the U.S. Treasury to expand the qualified NMTC area to most, if not all of the GO Zone for all NMTCs, but that recommendation is still pending. However, nearly half of all census tracts located in GO Zone counties or parishes are eligible NMTC communities. Census tracts designated as qualified NMTC areas in Louisiana can be found at http://www.cdfifund.gov/docs/2006/ nmtc/qualifyingGoZoneCounties.pdf.
To find out more about New Markets Tax Credits in Louisiana , investors should contact Louisiana Economic Development at (225) 342-0215.
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The New Markets Tax Credit (NMTC) Program attracts private-sector capital investment into urban and rural low-income areas to help finance community development projects, stimulate economic growth and create jobs. Established by Congress in December 2000, the NMTC Program permits individual and corporate taxpayers to receive a credit against federal income taxes for making qualified equity investments in investment vehicles known as Community Development Entities (CDEs).