[Congressional Record Volume 154, Number 56 (Wednesday, April 9, 2008)]
[Extensions of Remarks]
[Page E566]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




        EXTENDING THE NEW MARKETS TAX CREDIT TO THE TERRITORIES

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                       HON. MADELEINE Z. BORDALLO

                                of guam

                    in the house of representatives

                        Wednesday, April 9, 2008

  Ms. BORDALLO. Madam Speaker, today I have introduced a bill to amend 
the Internal Revenue Code of 1986 to extend eligibility under the new 
markets tax credit for community development entities created or 
organized in American Samoa, Guam, the Commonwealth of the Northern 
Mariana Islands, Puerto Rico, and the Virgin Islands. This bill would 
make a technical correction to existing law governing the new markets 
tax credit program and specifically authorize the Secretary of the 
Treasury to certify corporations or partnerships organized in one of 
the five U.S. territories as entities qualified to participate in the 
new markets tax credit program.
  The Community Renewal Tax Relief Act of 2000 (Public Law 106-554) 
authorizes the new markets tax credit program for the purpose of 
increasing incentives for investment in low-income communities across 
the country. Under the program, qualified community development 
entities (CDEs) are eligible to be allocated credits from the Community 
Development Financial Institutions Fund at the Department of the 
Treasury. Taxpayers who then invest in the CDE are allocated some of 
those credits in return for their investment. The CDE must invest those 
funds in low-income communities, and the taxpayers are able to claim, 
over a 7-year period, credits equal to 39 percent of their investment. 
CDEs act as intermediaries for the provision of loans, investment 
funding, or financial counseling in low-income communities and are able 
to legally operate anywhere in the United States, including in the 
territories.
  Despite the ability of a CDE under current law to legally and 
practically operate in a U.S. territory, a corporation or partnership 
that is created or organized in a U.S. territory applying for CDE 
certification cannot qualify for such certification under the current 
law. This ineligibility stems from such organizations being deemed 
``foreign'' and not ``domestic'' under other provisions of the Internal 
Revenue Code of 1986. This nuance in law effectively prevents local 
CDEs in the territories, that is entities who would otherwise be 
recognized as such by the Department of the Treasury, from investing in 
their own communities.
  The bill I have introduced today would rectify this situation which I 
believe is an oversight in the Community Renewal Tax Relief Act of 
2000. The bill would allow for the certification of CDEs created or 
organized in a U.S. territory thereby enabling them, to operate and 
invest in their own communities. CDEs organized and operating in any 
one of the several States or the District of Columbia could continue to 
invest in low-income communities in the territories under this 
arrangement.
  I am joined by Mr. Faleomavaega of American Samoa, Mrs. Christensen 
of the Virgin Islands, and Mr. Fortuno of Puerto Rico, in introducing 
this bill. We look forward to working with the Chairman and Ranking 
Member of the Committee on Ways and Means to advance this bill and to 
support increased investment opportunities for our own communities. 
Ultimately, this bill is about making the new markets tax credit 
program work for the territories and ensuring Congressional intent 
behind the new markets tax credit is fully realized and fulfilled in 
our communities.

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