New Markets Tax Credit: Compliance Requirements

CDEs must submit transaction-level reports to the CDFI Fund documenting all qualified low-income community investments, including transaction costs, fees, and compensation assessed to QALICBs.

Deadline: upon project close; all disclosures must be made for each set of QLICIs that close simultaneously

Source: CDFI Fund Compliance FAQ update (April 2025), referencing Allocation Agreement Section 6.12

QALICBs must submit annual compliance certifications and financial statements to their CDEs demonstrating continued QALICB status, asset composition, employee records, and verification that operations remain within qualifying census tracts.

Deadline: annually; typically due by calendar year-end or within 90 days of fiscal year-end

Source: CBO Financial NMTC guidance; CDFI Fund Allocation Agreement requirements

CDEs must deploy at least 85% of qualified equity investment (QEI) proceeds to make qualified low-income community investments (QLICIs) within 12 months of allocation receipt.

Deadline: within 12 months of allocation date

Source: CBO Financial NMTC guidance; 26 CFR 1.45D program requirements

CDEs must deploy all NMTC allocations within 3 years of receiving the allocation authority or lose unused credits.

Deadline: by end of three-year period from allocation award date

Source: CBO Financial NMTC guidance; Treasury regulation 26 CFR 1.45D

Qualified business property must be located within low-income communities and remain there throughout the 7-year compliance period; businesses cannot purchase or relocate substantial property outside qualifying census tracts.

Deadline: continuously throughout 7-year compliance period

Source: 26 CFR 1.45D-1(c); CDFI Fund compliance guidance

QALICBs must satisfy either the gross income test (at least 50% of total gross income derived from active business activity within low-income communities) or the employee services test (at least 40% of employees' services performed within low-income communities).

Deadline: continuously throughout 7-year compliance period

Source: 26 CFR 1.45D-1(c); CBO Financial NMTC compliance guidance

Investments in non-residential real estate must maintain at least 80% occupancy by QALICBs throughout the 7-year compliance period to preserve eligibility.

Deadline: continuously throughout 7-year compliance period

Source: CBO Financial NMTC guidance; 26 CFR 1.45D requirements

CDEs and QALICBs must maintain comprehensive documentation supporting qualification and compliance throughout the 7-year compliance period, including financial statements, asset schedules, employment records, property documentation, and tangible property location records.

Deadline: maintain records throughout 7-year compliance period plus applicable federal tax retention periods

Source: 26 CFR 1.45D; CBO Financial NMTC guidance; CDFI Fund compliance FAQs

Businesses receiving NMTC financing must maintain continuous qualification as a QALICB throughout the 7-year compliance period, including satisfying the 'substantially all' test requiring at least 85% of aggregate gross assets be qualified business property.

Deadline: throughout entire 7-year credit period

Source: 26 CFR 1.45D-1(c)(5); CBO Financial NMTC compliance guidance

CDEs must permit site visits and independent compliance verification by the CDFI Fund and maintain accountability to residents of low-income communities through governing or advisory board representation.

Deadline: upon request; CDEs must provide access within reasonable timeframe specified in allocation agreement

Source: CDFI Fund Allocation Agreement; CBO Financial NMTC compliance guidance