{"data":{"id":"us-ky/krs-141.433","jurisdiction":"us-ky","citation":"KRS 141.433","heading":"Application for New Markets Development Program tax credit.","body":"(1) A qualified community development entity that seeks to have an equity investment\nor long-term debt security certified as a qualified equity investment and eligible for\nthe tax credit permitted by KRS 141.434 shall apply to the department. The\nqualified community development entity shall submit an application on a form that\nthe department provides that shall include but not be limited to:\n(a) The name, address, tax identification number, and evidence of the certification\nof the entity as a qualified community development entity;\n(b) A copy of an allocation agreement executed by the entity or its controlling\nentity and the Community Development Financial Institutions Fund, which\nincludes the Commonwealth of Kentucky in its service area;\n(c) A certificate execu ted by an executive officer of the entity attesting that the\nallocation agreement remains in effect and has not been revoked or canceled\nby the Community Development Financial Institutions Fund;\n(d) A description of the proposed amount, structure, and purc haser of the equity\ninvestment or long-term debt security;\n(e) The name and tax identification number of any person or entity eligible to\nutilize tax credits as a result of the issuance of the qualified equity investment;\n(f) Information regarding the prop osed use of proceeds from the issuance of the\nqualified equity investment;\n(g) A nonrefundable application fee in an amount set by the department. This fee\nshall be paid to the department and shall be required of each application\nsubmitted; and\n(h) In the case of applications submitted on or after January 1, 2014, the\nrefundable performance fee required by subsection (8) of this section.\n(2) The department shall review applications in the order in which they are received.\nWithin thirty (30) days after recei pt of a completed application containing the\ninformation necessary for the department to certify a potential qualified equity\ninvestment, including the payment of the application fee, the department shall\napprove or deny the application. If the department intends to deny the application, it\nshall inform the qualified community development entity, by written notice sent via\ncertified mail and any other such means deemed feasible by the department, of the\ngrounds for the denial. Upon receipt of the notice of intended denial by the qualified\ncommunity development entity:\n(a) If the qualified community development entity provides any additional\ninformation required by the department or otherwise completes its application\nwithin fifteen (15) days, the application  shall be considered completed as of\nthe original date of submission, however the department shall have an\nadditional thirty (30) days to either approve or deny the application as\ncompleted; or\n(b) If the qualified community development entity fails to provide the information\nor complete its application within the fifteen (15) day period, the application\nshall be deemed denied and must be resubmitted in full with a new\nsubmission date.\n(3) If the application is deemed complete, the department shall certify the proposed\nequity investment or long -term debt security as a qualified equity investment and\neligible for tax credits under KRS 141.432 to 141.434, subject to the annual cap\nlimitations contained in KRS 141.434. The department shall provide written notic e\nsent via certified mail and any other means deemed feasible by the department, of\nthe certification to the qualified community development entity. The notice shall\ninclude the names of those taxpayers who are eligible to claim the credits and their\nrespective credit amounts. If the names of the persons or entities that are eligible to\nclaim the credits change due to a transfer of a qualified equity investment or a\nchange in an allocation pursuant to KRS 141.434, the qualified community\ndevelopment entity shall notify the department of such change.\n(4) Within ninety (90) days after receipt of the notice of certification, the qualified\ncommunity development entity shall issue the qualified equity investment and\nreceive cash in the amount of the certified pur chase price. The qualified community\ndevelopment entity shall provide the department with evidence of the receipt of the\ncash investment within ten (10) business days after receipt. If the qualified\ncommunity development entity does not receive the cash in vestment and issue the\nqualified equity investment within ninety (90) days following receipt of the\ncertification notice, the certification shall lapse, and the entity may not issue the\nqualified equity investment without reapplying to the department for certification. A\ncertification that lapses shall revert back to the department and may be reissued only\nin accordance with the application process outlined in this section.\n(5) The department shall certify qualified equity investments in the order applications\nare received by the department. Applications received on the same day shall be\ndeemed to have been received simultaneously. For applications received on the\nsame day and de emed complete, the department shall certify, consistent with\nremaining tax credit capacity, qualified equity investments in proportionate\npercentages based upon the ratio of the amount of qualified equity investment\nrequested in an application to the total  amount of qualified equity investments\nrequested in all applications received on the same day. If a pending request cannot\nbe fully certified because of the limitations contained in KRS 141.434, the\ndepartment shall certify the portion that may be certifi ed unless the qualified\ncommunity development entity elects to withdraw its request rather than receive\npartial credit.\n(6) (a) The department may recapture any portion of a tax credit allowed under this\nsection if:\n1. Any amount of federal tax credit that  might be available with respect to\nthe qualified equity investment that generated the tax credit under this\nsection is recaptured under 26 U.S.C. sec. 45D. In such case, the\ndepartment's recapture shall be proportionate to the federal recapture\nwith respect to the qualified equity investment;\n2. The qualified community development entity redeems or makes a\nprincipal repayment with respect to the qualified equity investment that\ngenerated the tax credit prior to the final credit allowance date of the\nqualified equity investment. In such case, the department's recapture\nshall be proportionate to the amount of the redemption or repayment\nwith respect to the qualified equity investment; or\n3. The qualified community development entity fails to invest:\na. In the case of a qualified equity investment issued prior to January\n1, 2014, at least eighty-five percent (85%) of the purchase price of\nthe qualified equity investment in qualified low -income\ncommunity investments in qualified active low-income community\nbusinesses located in the Commonwealth within twenty -four (24)\nmonths of the issuance of the qualified equity investment and\nmaintain this level of investment in qualified low -income\ncommunity investments in qualified active low-income community\nbusinesses loca ted in the Commonwealth until the last credit\nallowance date for the qualified equity investment; and\nb. In the case of a qualified equity investment issued on or after\nJanuary 1, 2014, at least one hundred percent (100%) of the\npurchase price of the quali fied equity investment in qualified low -\nincome community investments in qualified active low -income\ncommunity businesses located in the Commonwealth within\ntwelve (12) months of the issuance of the qualified equity\ninvestment and maintain this level of inv estment in qualified low -\nincome community investments in qualified active low -income\ncommunity businesses located in the Commonwealth until the last\ncredit allowance date for the qualified equity investment. In this\ncase, the department's recapture shall b e proportionate to the\namount of the redemption or repayment with respect to the\nqualified equity investment.\nFor purposes of calculating the amount of qualified low -income\ncommunity investments held by a qualified community development\nentity, an investm ent shall be considered held by the qualified\ncommunity development entity even if the investment has been sold or\nrepaid; provided that the qualified community development entity\nreinvests an amount equal to the capital returned to or recovered from\nthe o riginal investment, exclusive of any profits realized, in another\nqualified active low -income community business in this state within\ntwelve (12) months of the receipt of the capital. A qualified community\ndevelopment entity shall not be required to reinve st capital returned\nfrom qualified low -income community investments after the sixth\nanniversary of the issuance of the qualified equity investment, the\nproceeds of which were used to make the qualified low -income\ncommunity investment, and the qualified low -income community\ninvestment shall be considered held by the issuer through the qualified\nequity investment's final credit allowance date.\n(b) The department shall provide written notice sent via certified mail or other\nmeans deemed feasible by the departm ent, to the qualified community\ndevelopment entity of any proposed recapture of tax credits pursuant to this\nsubsection. The entity shall have ninety (90) days to cure any deficiency\nindicated in the department's original recapture notice and avoid such\nrecapture. If the entity fails or is unable to cure the deficiency within the\nninety (90) day period, the department shall provide the entity and the\ntaxpayer from whom the credit is to be recaptured with a final order of\nrecapture. Any tax credit for which a final recapture order has been issued\nshall be recaptured by the department from the taxpayer who claimed the tax\ncredit on a tax return.\n(7) The department shall through administrative regulations promulgated in accordance\nwith KRS Chapter 13A provide r ules to implement the provisions of KRS 141.432\nto 141.434, and to administer the allocation of tax credits issued for qualified equity\ninvestments.\n(8) (a) On or after January 1, 2014, a qualified community development entity that\nseeks to have an equity investment or long -term debt security certified as a\nqualified equity investment and eligible for the tax credit permitted by KRS\n141.434 shall, as part of the application, pay a refundable performance fee in\nan amount equal to one-half of one percent (0.5%) of the amount of the equity\ninvestment or long -term debt security requested to be certified as a qualified\nequity investment, not to exceed five hundred thousand dollars ($500,000).\n(b) This fee shall be in the nature of a security deposit to ensure com pliance on\nthe part of a qualified community development entity. The fee shall be paid to\nthe department and deposited in the New Markets performance guarantee\naccount established by this subsection, and retained there as private funds\nuntil compliance with the provisions of this subsection has been established or\nas otherwise provided by this subsection.\n(c) The fee may be refunded to the qualified community development entity that\nsubmitted it as follows:\n1. In the case of any application that is ultimate ly denied pursuant to\nsubsection (2) of this section, the department shall refund the full\namount of the fee submitted with the denied application;\n2. In the case of any qualified equity investment that is certified in an\namount that is less than the amoun t requested, due to the limitations\ncontained in KRS 141.434 and pursuant to subsection (5) of this section,\nthe department shall refund a portion of the fee so that only an amount\nequal to one -half of one percent (0.5%) of the actual certified amount,\nnot to exceed five hundred thousand dollars ($500,000), is retained; and\n3. In the case of any qualified equity investment that is certified as eligible\nfor tax credits, the qualified community development entity may request\na refund of the fee no sooner than  thirty (30) days after having met all\nthe requirements of this subsection. The refund request shall be made in\nwriting to the department. The department shall review the refund\nrequest within thirty (30) days, and shall either comply with the request\nand issue the refund of the fee, without interest, if the qualified\ncommunity development entity has met all the requirements of this\nsubsection, or give written notice to the qualified community\ndevelopment entity that it is noncompliant and subject to possib le\nforfeiture of the fee as provided in this subsection.\n(d) The qualified community development entity shall forfeit the fee to the\nCommonwealth as follows:\n1. The entire amount of the fee shall be forfeited if the qualified\ncommunity development entity a nd its subsidiary qualified community\ndevelopment entities fail to issue the total amount of qualified equity\ninvestment certified by the department and receive cash in exchange\ntherefor within ninety (90) days after receipt of the notice of\ncertification; and\n2. A portion of the fee shall be forfeited if the qualified community\ndevelopment entity, or any subsidiary qualified community development\nentity, that issues a qualified equity investment certified by the\ndepartment fails to meet the percentage inve stment requirement under\nsubsection (6) of this section by the first credit allowance date of the\nqualified equity investment. The forfeiture shall be proportionate to the\namount of the qualified equity investment that is not invested as required\nby subsec tion (6) of this section. Forfeiture of the fee under this\nsubparagraph shall be subject to the ninety (90) day cure period allowed\nunder subsection (6) of this section.\n(e) The amount of the fee that is forfeited pursuant to this subsection shall be\ntransferred from the New Markets performance guarantee account and\ndeposited into the general fund.\n(f) 1. The New Markets performance guarantee account is hereby established\nas a fiduciary fund within the State Treasury, to be administered by the\ndepartment solely for the purposes set out in this subsection.\n2. Notwithstanding KRS 45.229, moneys in the account shall not lapse but\nshall be retained in the account at all times except as provided by this\nsubsection.","path":["KRS Chapter 141"],"source_url":"https://apps.legislature.ky.gov/law/statutes/statute.aspx?id=43423","current_through":"Includes enactments through the 2026 Regular Session","vintage":"09/05/2026","retrieved_at":"2026-09-05T20:50:35Z","sha256":"736747b1d9967367a758dc9927d963200990cba3b8eee9d6ca990b85052d297b","source_id":"us-ky","stale":false,"prev":"us-ky/krs-141.432","next":"us-ky/krs-141.434"},"notice":"GroundRules: Original legal text. Not legal advice."}