New Markets Tax Credits

The New Markets Tax Credit program was founded in 2000 under the Community Renewal Tax Relief Act with the goal of using tax credit equity to incentivize business and real estate investment into economically distressed communities.  The Community Development Financial Institutions Fund (CDFI), an extension of the federal Department of the Treasury, awards New Markets Tax Credit allocation to Community Development Entities (CDEs).  In turn, the CDEs raise capital from investors and make Qualified Equity Investments (QEI) into low-income communities.  Investors into the CDEs are awarded a 39% tax credit, amortized over a seven-year period, whereas Qualified Active Low-Income Community Businesses (QALICB) are given capital with optimal financing terms, providing additional injection of capital into economically marginalized communities.

At Clocktower, we use our knowledge and analysis of the New Markets Tax Credit program, as well as our established relationships with qualifying CDEs, to advise prospective businesses as to how to procure New-Markets-based financing.  Our expertise in the program allows us to consult with potential businesses on their census tract site location, business capital stack, and interactions with investors to maximize allocation through the program, providing firms with the best chance at receiving additional investment at better-than-market rates through this highly competitive federal program.

Research and Experimentation (R&D) Tax Credits

The Federal Research and Experimentation Tax Credit was instituted in 1981, with the intention of incentivizing economic innovation by private companies across all sectors.  This is not limited to one particular field nor type of research; rather, the research expenditures that qualify for tax credits range from financial models to software testing to product engineering.  In addition, 39 states offer additional tax credits, incentivizing firms operating in their states to improve their products and operations.  Each state offers different incentives towards their different economic growth goals.

At Clocktower, we help firms identify the extent to which they can qualify for this broad and expansive program, and help firms interested in monetizing their R&D tax credits in doing so by assisting with their transfer to interested investors.  Our experience allows us to identify the intricacies of each state program and help firms maximize their tax credits in their given State in which they operate.  However, in many jurisdictions the R&D tax credits cannot be transferred, they are designed to be used by young companies slowly and gradually building profitability and eventually developing a tax liability.  If your firm owns or has access to certain types of R&D credits, please call Clocktower to help identify the options your tax credits offer you.

Enterprise Zone Tax Credits

Numerous states offer Enterprise, or Incentive Zone, tax credits, which incentivize businesses to operate in designated economically distressed areas of their states.  These range from job creation tax credits, which provide a tax credit figure per salaried and health-insured job created, to equipment purchases to be used in a designated economic area.  These help stimulate growth in targeted areas, and are wide-ranging in their eligibility — many firms qualify for the tax credits without realizing it!

At Clocktower, we assist firms in understanding their state’s program, as well as what tax credits they are eligible to receive.  In addition, we assist firms in understanding whether or not their tax credits are transferable; if so, we help facilitate the financial transaction, linking a business generating the tax credit with an interested buyer.  However, we are not a firm which helps you identify and apply for Enterprise Zone tax credits.  Other firms offer this service, typically on a contingency basis.  Once your firm has earned these credits, however, we can help you monetize these credits where possible.