IRS Form 8874-A – The New Markets Tax Credit (NMTC) program under IRC Section 45D encourages private investment in low-income communities by providing a federal tax credit worth up to 39% of a qualified equity investment over seven years. IRS Form 8874-A plays a critical compliance role in this program.
Community Development Entities (CDEs) use this form to officially notify investors that their investment qualifies as a Qualified Equity Investment (QEI). Without proper notification via Form 8874-A, investors may face challenges claiming the credit on their tax returns.
This comprehensive guide, based on official IRS sources (including the current Form 8874-A revision and related guidance), explains everything you need to know about Form 8874-A in 2026.
What Is IRS Form 8874-A?
Form 8874-A, titled Notice of Qualified Equity Investment for New Markets Credit, is a two-page IRS form (Rev. December 2011, OMB No. 1545-2065).
Qualified CDEs use it to document and notify taxpayers who acquire a QEI at its original issue. The form confirms that the investment entitles the taxpayer to claim the NMTC.
- Current official PDF: Download IRS Form 8874-A here
- Last IRS review/update of information page: January 30, 2026
- No recent developments noted by the IRS as of early 2026.
The form is not used to claim the credit (that’s Form 8874). Instead, it serves as the required official notice from the CDE to the investor.
Who Must Use Form 8874-A?
- Filers/Issuers: Only certified Qualified Community Development Entities (CDEs) that have received an NMTC allocation from the CDFI Fund.
- Recipients: Taxpayers (individuals, corporations, partnerships, etc.) making a QEI in the CDE at original issue.
CDEs must issue a separate Form 8874-A for each qualified equity investment. The CDE provides the original signed copy to the investor and sends a copy to the IRS.
Purpose of Form 8874-A (Official IRS Language)
According to the form instructions:
“CDEs must provide notice to any taxpayer who acquires a qualified equity investment in the CDE at its original issue that the equity investment is a qualified equity investment entitling the taxpayer to claim the new markets credit. This form is used to make the notification as required under Regulations section 1.45D-1(g)(2)(i)(A).”
This requirement ensures transparency and allows the IRS to verify that investors properly claim the credit on Form 8874.
Key Requirements for Qualified Equity Investments (QEIs)
For an investment to qualify (and thus require Form 8874-A):
- It must be acquired at original issue solely in exchange for cash.
- Substantially all (at least 85%) of the cash must be used by the CDE for Qualified Low-Income Community Investments (QLICIs).
- The CDE must designate it as a QEI on its books and records.
- The amount cannot exceed the CDE’s NMTC allocation from the CDFI Fund.
- It generally cannot be issued more than 5 years after the allocation agreement.
(Details drawn from Treas. Reg. §1.45D-1 and IRS guidance on NMTC.)
How to Complete IRS Form 8874-A (Line-by-Line)?
The form is straightforward. An authorized official of the CDE must complete and sign it under penalties of perjury.
Part 1 – Identification
- Name of qualified community development entity (CDE)
- EIN of qualified CDE
- (If applicable) Name of parent taxpayer with whom CDE files consolidated return
- (If applicable) EIN of parent taxpayer
Part 2 – Investor Information
- Name of taxpayer making qualified equity investment
- TIN of taxpayer making qualified equity investment
Part 3 – Investment Details
- Date of qualified equity investment (mm/dd/yyyy)
- Amount of qualified equity investment
Part 4 – Credit Information
- Total allowable credit (typically 39% of the QEI amount)
10a–10g. Allowable credit breakdown by year:- Years 1–3: 5% per year
- Years 4–7: 6% per year
Signature: Authorized official of the CDE signs and dates the form.
Important Deadlines and Filing Instructions
- To the Investor: The CDE must provide the original signed Form 8874-A to the taxpayer no later than 60 days after the date the taxpayer makes the investment.
- To the IRS: Send a copy of the completed form to:
Department of the Treasury
Internal Revenue Service Center
Philadelphia, PA 19255-0549 - Keep a copy for the CDE’s records.
Failure to provide timely notice can create compliance issues for both the CDE and the investor.
How Investors Use Form 8874-A?
Investors receive the form as proof that their investment qualifies. They then claim the annual NMTC portion on Form 8874 (New Markets Credit), which is attached to their federal income tax return (and flows through to Form 3800, General Business Credit).
The credit is claimed over seven years on each credit allowance date (the investment date and each of the next six anniversaries).
Related Forms in the NMTC Program
| Form | Purpose | Who Files/Uses |
|---|---|---|
| 8874-A | Notice of QEI to investor & IRS | CDE issues to investor |
| 8874 | Claim the New Markets Credit | Investor with tax return |
| 8874-B | Notice of Recapture Event | CDE issues if recapture occurs |
Form 8874-B is used if a recapture event occurs (e.g., CDE loses certification, substantially-all test fails without cure, or investment is redeemed).
Why Form 8874-A Matters for NMTC Compliance?
Proper use of Form 8874-A protects:
- Investors from disallowed credits during IRS audits.
- CDEs from compliance violations that could jeopardize future allocations.
- The overall integrity of the NMTC program, which has delivered billions in community development financing.
The IRS may request copies of these notices during examinations of CDEs or investors.
Where to Get the Latest Form and Instructions?
- Direct download: IRS Form 8874-A PDF
- About page: irs.gov/forms-pubs/about-form-8874-a
- For the full NMTC program: Visit CDFI Fund website for allocation details and CDE certification.
Note: The form has remained stable since its December 2011 revision, with no changes noted through 2026.
Frequently Asked Questions (FAQs)
Q: Can I use an older version of Form 8874-A?
A: Use the current December 2011 revision available on IRS.gov.
Q: Is Form 8874-A required for every NMTC investment?
A: Yes, for QEIs made at original issue after the form’s effective requirements.
Q: What if the investment is in a partnership CDE?
A: The form still applies; the credit flows through to partners who receive the notice.
Q: Are there state versions of this form?
A: Some states with their own NMTC programs have analogous forms (e.g., state-specific 8874-A equivalents), but the federal form is required for the federal credit.
Final Thoughts
IRS Form 8874-A is a simple but essential compliance document in the New Markets Tax Credit ecosystem. For CDEs, timely and accurate completion ensures investors can confidently claim their 39% credit over seven years. For investors, receiving and retaining this notice provides critical documentation for tax filings and potential audits.
Always consult a qualified tax professional or attorney familiar with NMTC transactions for advice specific to your situation. Tax laws and program rules can involve complex allocation agreements and ongoing compliance monitoring.
Official Sources Used:
- IRS About Form 8874-A page (updated Jan. 30, 2026)
- Form 8874-A instructions (Rev. Dec. 2011)
- IRS guidance on New Markets Tax Credit (including Treas. Reg. §1.45D-1)
- Related Form 8874 information
Bookmark this guide and the official IRS PDF for quick reference when handling New Markets Credit investments in 2026 and beyond. Proper use of Form 8874-A helps maximize community impact while maintaining full IRS compliance.