The Internal Revenue Service recently published the amount of unused low-income housing tax credits  (LIHTCs) for 2009 that were allocated in accordance with Internal Revenue Code Section 42(h)(3)(D). $4.61 million of unused LIHTCs were allocated among the states in the national pool as detailed in Revenue Procedure 2009-40. Pennsylvania received an allocation of $278,599 in LIHTCs from the national pool.

The availability of affordable housing is a critical factor in the economic success of a region. With real estate market factors so prominent in the news, appreciation for the importance of housing is at an all time high. The challenge of developing housing for persons with modest incomes has never been greater, but Cumberland and Perry counties are tackling this issue with vigor and confidence.

McKonly & Asbury is proud to be a sponsor of the Cumberland/Perry Fall Housing Seminar. Two of our own Gurus are participating in this event. Terry Harris will be speaking about “Evulating the Project as an Investment Opportunity” and Elizabeth Brooks is serving on the steering committee. This seminar will provide information from experts who have a track record at getting the job done right and is geared for individuals from the public and private sectors who want useful, practical information on housing production and delivery systems. This seminar offers four different tracks featuring four different stakeholder perspectives – developer/investor, homeless housing, permanent housing, and constituent/consumer advocacy and it has a theme of Getting the Job Done Right - An “Inside” Look at Affordable Housing.

No one wants to be told they’ve done something wrong and low-income housing project owners are no exception. No project manager or owner wants to receive a Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition for non-compliance. One way to prepare yourself for any noncompliance issues and try to avoid receiving the Form 8823 is to be familiar with the Internal Revenue Service’s Guide for Completing Form 8823 Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition (Guide for 8823).

The Guide for 8823 was originally issued in January 2007 and was a joint effort of the Internal Revenue Service and the National Council of State Housing Agencies. The goal was to provide instructions and guidance to state housing credit allocating agencies on how to identify and report non-compliance with the Low-Income Housing Tax Credit (LIHTC) program. The guide itself lists its purposes as: consistent interpretation and application of Internal Revenue Code Section 42 requirements among states, consistent reporting of noncompliance to the IRS, and enhanced program administration by the IRS. The IRS has just issued the first update to the Guide for 8823 and still looks to foster these goals and purposes. It was simply made to reflect and include any new regulatory developments since 2007 (for example, the final utility allowance regulations published in 2008).

It is important for LIHTC project owners to be aware of this guide to avoid receiving Forms 8823. Grace Robertson, an IRS senior analyst, recently commented that she selects tax returns of LIHTC project owners for audit based on filed Forms 8823. The triggers for the current LIHTC-specific audits are: claiming the housing tax credit before state agency approval (16% of audit cases); poor physical condition (15%); foreclosure (13%); casualty events (9%); failure to file first-year certification form, Form 8609, Part II (8%); credit year/credit computation errors (7%); disposition of the property (7%); no longer in LIHTC program (7%); and miscellaneous (18%).

At McKonly & Asbury, we have assisted clients who have received Forms 8823 in working to correct compliance matters with the credit allocating agency as well as working with the IRS. If you have a Form 8823 issue and we can be of assistance, contact us at affordablehousing@macpas.com.

To view the entire guide, please click here.