New Markets Stabilization Act

I 116TH CONGRESS 2D SESSION H. R. 8965 To amend the Internal Revenue Code of 1986 to make certain improvements to the new markets tax credit, and for other purposes. IN THE HOUSE OF REPRESENTATIVES DECEMBER 14, 2020 Ms. SEWELL of Alabama (for herself and Mr. REED) introduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to make certain improvements to the new markets tax credit, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘New Markets Sta- 4 bilization Act’’. 5 SEC. 2. IMPROVEMENTS TO NEW MARKETS TAX CREDIT. 6 (a) ADDITIONAL ALLOCATIONS.— 7 (1) IN GENERAL.—Section 45D(f)(1) of the In- 8 ternal Revenue Code of 1986 is amended by striking 9 VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 8965 IH subparagraphs (G) and (H) and inserting the fol- 1 lowing new subparagraphs: 2 ‘‘(G) $3,500,000,000 for each of calendar 3 years 2010 through 2018, 4 ‘‘(H) $4,000,000,000 for calendar year 5 2019, 6 ‘‘(I) $7,000,000,000 for calendar year 7 2020, 8 ‘‘(J) $6,500,000,000 for calendar year 9 2021, and 10 ‘‘(K) $5,500,000,000 for calendar year 11 2022.’’. 12 (2) CONFORMING AMENDMENT.—Section 13 45D(f)(3) of such Code is amended by striking 14 ‘‘2025’’ and inserting ‘‘2027’’. 15 (3) SPECIAL RULE FOR ALLOCATIONS OF IN- 16 CREASED 2019 AND 2020 LIMITATION.—The amount 17 of the increase by reason of the amendments made 18 by paragraph (1) in the new markets tax credit limi- 19 tation for calendar year 2019 and the amount of 20 such increase for calendar year 2020 shall each be 21 allocated in accordance with section 45D(f)(2) of the 22 Internal Revenue Code of 1986 to qualified commu- 23 nity development entities (as defined in section 24 45D(c) of such Code) which— 25 VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 8965 IH (A) submitted an allocation application 1 with respect to the calendar year to which such 2 increase relates, and 3 (B)(i) did not receive an allocation with re- 4 spect to such calendar year, or 5 (ii) received an allocation for such calendar 6 year in an amount less than the amount re- 7 quested in the allocation application. 8 (b) PERMANENT ALLOWANCE OF CREDIT AGAINST 9 ALTERNATIVE MINIMUM TAX.— 10 (1) IN GENERAL.—Section 38(c)(4)(B) of the 11 Internal Revenue Code of 1986 is amended clauses 12 (vii) through (xii) as clauses (viii) through (xiii), re- 13 spectively, and by inserting after clause (vi) the fol- 14 lowing new clause: 15 ‘‘(vii) the credit determined under sec- 16 tion 45D to the extent attributable to 17 qualified equity investments originally 18 issued after the date of the enactment of 19 this clause,’’. 20 (2) EFFECTIVE DATE.—The amendments made 21 by this subsection shall apply to taxable years end- 22 ing after the date of the enactment of this Act. 23 (c) CREDIT ALLOWED TO BE CARRIED BACK 5 24 YEARS AND TO OFFSET ENTIRE TAX LIABILITY AS TEM- 25 VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 8965 IH PORARY INCENTIVE FOR MAKING INVESTMENTS IN 1 QUALIFIED COMMUNITY DEVELOPMENT ENTITIES.— 2 (1) IN GENERAL.—In the case of the portion of 3 the new markets tax credit determined under section 4 45D of the Internal Revenue Code of 1986 which is 5 attributable to qualified equity investments originally 6 issued after the date of the enactment of this Act 7 and before January 1, 2023— 8 (A) sections 38 and 39 of such Code shall 9 be applied separately with respect to such por- 10 tion, 11 (B) notwithstanding section 39(d) of such 12 Code, section 39(a) of such Code shall be ap- 13 plied— 14 (i) by substituting ‘‘each of the 5 tax- 15 able years’’ for ‘‘the taxable year’’ in para- 16 graph (1)(A) thereof, 17 (ii) by substituting ‘‘25 taxable years’’ 18 for ‘‘21 taxable years’’ in paragraph (2)(A) 19 thereof, and 20 (iii) by substituting ‘‘24 taxable 21 years’’ for ‘‘20 taxable years’’ in subpara- 22 graph (2)(B) thereof, 23 VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 8965 IH (C) the amounts described in subpara- 1 graphs (A) and (B) of section 38(c)(1) of such 2 Code shall each be treated as being zero, and 3 (D) the limitation under section 38(c)(1) 4 of such Code (as modified by subparagraph 5 (C)) shall be reduced by the credit allowed 6 under section 38(a) for the taxable year (other 7 than the portion of qualified new markets tax 8 credit to which this paragraph applies). 9 (2) COORDINATION WITH OTHER LIMITA- 10 TIONS.—The portion of the new markets tax credit 11 to which paragraph (1) applies— 12 (A) shall not be taken into account as a 13 credit allowed under section 38(a) of such Code 14 for purposes of paragraphs (2)(A)(ii)(II) and 15 (4)(A)(ii)(II) of section 38(c) of such Code, and 16 (B) shall not be treated as described in 17 section 38(c)(4)(B)(vii) of such Code, as 18 amended by this Act. 19 (d) TEMPORARY OVERRIDE OF CERTAIN REGULA- 20 TIONS TREATING DEBT MODIFICATIONS AS EX- 21 CHANGES.— 22 (1) IN GENERAL.—For purposes of the Internal 23 Revenue Code of 1986, any modification of a QCDE 24 loan which occurs during the period beginning on 25 VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 8965 IH March 12, 2020, and ending on December 31, 2022, 1 shall not be treated an exchange of an existing debt 2 instrument for a new debt instrument. 3 (2) QCDE LOAN.—For purposes of this sub- 4 section, the term ‘‘QCDE loan’’ means any debt in- 5 strument held by a qualified community development 6 entity (as defined in section 45D(c) of the Internal 7 Revenue Code of 1986) to the extent that the bor- 8 rower is a qualified active low-income community 9 business (as defined in section 45D(d)(2) of such 10 Code). 11 Æ VerDate Sep 11 2014 00:08 Dec 29, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\H8965.IH H8965 pamtmann on DSKBC07HB2PROD with BILLS