[Congressional Record (Bound Edition), Volume 155 (2009), Part 1]
[Extensions of Remarks]
[Page 630]
[From the U.S. Government Publishing Office, www.gpo.gov]




        EXTENDING THE NEW MARKETS TAX CREDIT TO THE TERRITORIES

                                 ______
                                 

                       HON. MADELEINE Z. BORDALLO

                                of guam

                    in the house of representatives

                       Tuesday, January 13, 2009

  Ms. BORDALLO. Madam Speaker, today I have reintroduced a bill to 
amend the Internal Revenue Code of 1986 to extend eligibility of the 
New Markets Tax Credit (NMTC) to Community Development Entities (CDEs) 
created or organized in American Samoa, Guam, the Commonwealth of the 
Northern Mariana Islands (CNMI), Puerto Rico, and the U.S. Virgin 
Islands. This bill would make a technical correction to existing law 
governing the New Markets Tax Credit (NMTC) Program and specifically 
authorize the Secretary of the Treasury to certify corporations or 
partnerships organized in one of the four U.S. territories as entities 
qualified to participate in the competitive application process for the 
New Markets Tax Credit.
  The Community Renewal Tax Relief Act of 2000 (Public Law 106-554) 
authorizes the NMTC Program for the purpose of increasing incentives 
for investment in low-income communities across the country. Under the 
NMTC Program, certified Community Development Entities (CDEs) are 
eligible to apply for a New Markets Tax Credit 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 seven-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 current law. 
This ineligibility stems from such organizations being deemed 
``foreign'' and not ``domestic'' under other relevant 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 reintroduced today would rectify this situation, 
which I recognize to be an oversight of Congress in the enactment of 
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 U.S. Virgin Islands, Mr. Pierluisi of Puerto Rico, and Mr. 
Sablan of the Commonwealth of the Northern Mariana Islands 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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