Every State in America is Different

(especially with their LIHTC regulations) 

Written by Harold Tucker, Spectrum Enterprises

Why does every state have different LIHTC compliance rules? Some states count anticipated income, some don’t. Some states require certain documentation, some don’t. We here at Spectrum hear this question a lot. Why can’t every state just be uniform in their compliance of LIHTC projects? This is a very deep question which could take us back to the original thirteen colonies and their right to sovereign governorship. However, let’s skip the American History lecture.

In a nutshell, state and local housing credit agencies are responsible for monitoring low-income housing credit projects for compliance. The state agency determines whether the owner was always in compliance, has corrected the noncompliance, or remains out of compliance.

The IRC 42 requirements for LIHTC compliance are very complicated. Many state agencies interpret the code differently. The IRS has published a guide, but even the guide is not a legal authority. The guide provides state agencies with a reference. However, over the years some of the guide has become obsolete and/or changed. What the guide does try and do is provide the state agencies a standardized operational definitions for noncompliance with the IRC 42 code.

The important question to ask is “Is my state consistent with their methods of monitoring the LITHC program?” Yes, from state to state you will find inconsistencies in the way the LITHC program is ran. However, the IRS allows for the states to be more restrictive or more lenient in some areas.  If you have questions regarding compliance in your state you should always begin by asking your “state housing agency” what their interpretation of the rule is.

Every state has a state compliance manual with regards to the LITHC program. Spectrum always recommends to owners and managers that a copy be kept on site at every LITHC project.

Here is a link to the NCSHA website which has a directory to every state Housing Finance Agency. Find your state and get a copy of your state’s compliance manual today. http://www.ncsha.org/housing-help

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