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GAO-03-223R 1 (2002-12-06)

handle is hein.gao/gaocrptapdw0001 and id is 1 raw text is: SGAO Accountability * Integrity * Reliability United States General Accounting Office Washington, DC 20548 December 6, 2002 Congressional Committees Subject: New Markets Tax Credit: Status of Implementation and Issues Related to GAO's Mandated Reports The New Markets Tax Credit (NMTC) Program provides a credit against federal taxes for up to $15 billion of investments made in low-income communities. The NMTC Program is part of a federal initiative that includes such programs as the Renewal Communities Program that are designed to provide tax and regulatory relief to economically distressed communities. The Community Renewal Tax Relief Act of 2000 that authorized the tax credit also mandated that we audit and report on the NMTC Program in January 2004, 2007, and 2010.' This report describes the status of our work toward developing a methodology for evaluating the NMTC Program. Our objectives are to provide information about (1) the NMTC Program, including its goals, its design, and progress in implementing the program, and (2) our mandated review of the program, including the potential scope of the review and how the program may be evaluated for effectiveness and compliance. To meet these objectives, we reviewed congressional and relevant executive branch documents to determine the goals and design of the NMTC Program and interviewed congressional staff to determine the scope of our legislatively mandated review. We also co- sponsored with the Treasury Department's Community Development Financial Institutions (CDFI) Fund a conference of experts to review methods for evaluating the program's effectiveness and compliance on the part of program participants. We conducted our work from January 2001 through July 2002 in accordance with generally accepted government auditing standards. From August 29 through November 4, 2002 we briefed your offices on the results of our work. This report transmits the material from those briefings.2 Results The goals of the NMTC Program are not stated explicitly in the legislation that authorizes the program. However, according to congressional supporters of the legislation, the program's goals are to direct new business capital to low-income communities, facilitate economic development in these communities, and encourage investment in high-risk areas. Although the legislation authorizing the NMTC Program requires that the investments be made in businesses and communities that meet certain eligibility standards, it does not specify that the investment be new capital, that performance measures be established to show that GAO-03-223R Implementation Status and Issues Related to Mandated Reports p. L. 106-554 2See the enclosure for details.

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