The IRS released a private letter ruling in April of 2009 that allows for the inclusion of offsite improvements in tax credit eligible basis. The project that received the ruling is a multiple building project with some of the buildings located more than six hundred feet from existing streets and infrastructure of the city in which it is located. The city required that the owner of the project construct streets, including curbs, sidewalks, storm water drainage, and domestic water in-flow as well as the necessary infrastructure needed by utility companies to install underground utilities and that these improvements be dedicated to the city upon their completion. The current IRS treatment of these "offsite improvements" is to capitalize them as land costs of the project.

The owner requested a ruling from the IRS allowing the cost of these offsite improvements which were necessary for the completion and operation of the project to be included in the tax credit eligible basis of the project. Private Letter Ruling 200916007 says that the cost of the streets and infrastructure required by the city for this project are includable in tax credit eligible basis.

Will this be the start of a new direction by the IRS on the treatment of costs of offsite improvements? Only time will tell, but it is a change from the past.