The Internal Revenue Service (IRS), in partnership with the Treasury Department, recently announced a new tax relief program designed to help business owners and investors participating in tax credit transactions in new markets that have been adversely affected by COVID-19. In the following article, Optima Tax Relief reviews the new guidelines released for community development entities (CDEs) and qualified active low-income community businesses (QALICBs).
The IRS and the Treasury Department recently offered tax relief for qualified businesses and investors whose new market tax credit interests have been affected by the novel coronavirus pandemic. New market tax credits are incentives to private organizations to provide business stimulus and real estate investment to underserved and low-income communities.
The organizations that might qualify for the relief program include qualified active low-income community businesses (QALICBs) and community development entities (CDEs). Guidelines have been published in Notice 2020-49, stating that particular measures that had been scheduled to be executed between April 1, 2020 and December 31, 2020 of a time-sensitive nature may qualify for relief. These measures include:
- Investments. If a CDE had been scheduled to make a cash investment in a qualified low-income community investment (QLICI) between April 1, 2020 and December 31, 2020, then the cash investment will be considered invested if it has been invested by December 31, 2020, regardless of the previously scheduled due date.
- Reinvestments. If a CDE had been scheduled to make a cash reinvestment in a QLICI between April 1, 2020 and December 31, 2020, then the cash reinvestment will be considered continuously reinvested if it has been reinvested by December 31, 2020, regardless of the previously scheduled due date.
- Expenditure for property construction. If a QALICB is scheduled to use a loan or the returns from an equity or capital investment for real property construction between April 1, 2020 and December 31, 2020, then those returns will be considered an acceptable amount of the QALICB’s working capital if it has been spent by December 31, 2020 regardless of the specified due date.