The IRS exercised its disaster relief authority to extend three deadlines for the new markets tax credit until December 31, 2020, in light of the coronavirus outbreak.
Notice 2020-49, 2020-27 IRB 1, released June 12, postpones deadlines under the new markets tax credit for making investments or reinvestments and real property construction expenditures until the end of the year.
Like the IRS’s previous extensions for time-sensitive actions, Notice 2020-49 applies to actions that took place after April 1.
Section 45D provides a credit for investments that find their way to qualifying active low-income community businesses. The regulations generally require community development entities to invest the cash received from the taxpayer in a qualified low-income community investment within 12 months of receipt and to reinvest the proceeds from one of those investments into another within 12 months.
A qualified low-income community business can’t have more than 5 percent of its basis in property attributable to some kinds of financial assets. Loan or investment proceeds intended for construction fall outside the non-qualified category so long as the money is used within 12 months of receipt.
Now, if any of those 12-month deadlines expires between April 1 and the end of the year, the community development entity will instead have until the end of the year regardless of when it received the money.
The New Markets Tax Credit Working Group requested a full 12-month extension for all three deadlines in its April 22 letter to the IRS and Treasury.