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IRS LIHTC Newsletters

Written by Erik Whitton, Spectrum Enterprises

Many professionals in this industry are not aware of the LIHTC Newsletters which the IRS has been making available since 2000.  Here is a link to a document which combines all 54 newsletters into a single searchable (use ctrl-f) PDF file.  In the newsletters the IRS addresses common questions and problems faced by people who work in the affordable housing industry.  You can find guidance here not available through other outlets.

One of the reasons I feel strongly about encouraging people to read these newsletters is that the IRS uses the newsletter as an opportunity to provide insight on complicated scenarios where the existing code is unclear.

Here are instructions on subscribing to the newsletter:

“The LIHC Newsletter is distributed free of charge through e-mail. If you would like to subscribe,

just contact the IRS at sbse.lihc@irs.gov. Also designate whether you would like to

receive the Adobe pdf version or the Word document.”

Here is a list of each newsletter along with a brief summary of the topics covered:

Issue #54 – December 2013

  • HUD Handbook 4350.3 Chapter 5

Issue #53 – October 2013

  • Developer Fees

Issue #52 – August 2013

  • Eligible Basis: Construction Loans and Issuing Tax Exempt Bonds
  • Section 1602 Funds
  • IRC §42(g)(1): Minimum Set Aside
  • Exception for Married Students

Issue #51 – April 2013

  • Impact Fees & Dedicated Improvements: Audit Issues and Techniques
  • Credit, Compliance & Extended Use Periods: Audit Significance

Issue #50 – December 2012

  • Hurricane Sandy: IRS Relief Measures
  • Pre-Contract Analysis: Revenue Agent Q&A
  • Income Limits for 2013: New and Revised
  • Revenue Procedure 2012-41: Inflation Adjusted Items

Issue #49 – September 2012

  • Rev. Proc. 2012-27: Notification Procedures under IRC §42(j)(6)(B)
  • Notice of Proposed Rulemaking for Treas. Reg. §1.42-10, Utility Allowances
  • Revised Dictionary of Deficiency Definitions Released by HUD

Issue #48 – March 2012

  • “Relying” on New Income Limits
  • Suitable for Occupancy: Infestations
  • Dispositions in the 11th Year of the 15-Year Compliance Period: Allocating the Credit Between the Buyer and Seller

Issue #47 – December 2011

  • “AMGI” and “MTSP” Income Limits
  • Impact Fees & Dedicated Improvements
  • HUD Releases FY2012 Income Limits
  • Annual Certification to the State Housing Agency

Issue #46 – October 2011

  • IRC §42(l)(1), First-Year Certification
  • Auditing the Year of Disposition by Sale: Credit Recapture Under IRC §42(j)

Issue #45 – July 2011

  • Building Identification Numbers
  • Reporting Noncompliance with Utility Allowance Requirements: Specifics and General Guidelines
  • Claiming IRC §42 Credit for the 11th Year of the 15-Year Compliance Period

Issue #44 – May 2011

  • Guide Available on IRS Website
  • E-Filing “Bug” for Partnerships
  • Verifying Income and Assets
  • Instructions for Rescinding Forms 8823
  • IRS Audits: What to Expect
  • Interviewing Taxpayers

Issue #43 – February 2011

  • Suitable for Occupancy: Law
  • Suitable for Occupancy: State Agency Inspections
  • Suitable for Occupancy: HUD’s Uniform Physical Condition Standards
  • Suitable for Occupancy: IRS Provides Additional Guidance
  • Suitable for Occupancy: Audit Techniques
  • Suitable for Occupancy: Adjusting the Applicable Fraction

Issue #42 – November 2010

  • LIHC Compliance Unit has New Address
  • Compliance Monitoring by State Agencies

Issue #41 – September 2010

  • Auditing Partners
  • Disallowing & Recapturing Credit: What’s the Difference?
  • Large Partnerships: How Large is Large?

Issue #40 – August 2010

  • Auditing the Applicable Fraction for the First Year of the Credit Period
  • Documentation & Record Retention
  • Quiz Time

Issue #39 – April 2010

  • Reminder: Filing Season
  • Auditing Eligible Basis
  • Multiple Allocations of Credit
  • Form 8823: New Revision Released
  • Nit Picking Time

Issue #38 – December 2009

  • Requesting Information: Preparing Information Document Requests

Issue #37 – October 2009

  • Correction for Rev. Ruls. Providing Monthly Applicable Percentages
  • Filing Tax Returns for LIHC Property Owners
  • IRC §42(l)(1) Certification for the First Year of the Credit Period
  • Form 8877 Obsoleted
  • IRS Releases Updated Guide for
  • Completing Form 8823

Issue #36 – July 2009

  • Notice 2009-44, Clarification of Treasury Regulation 1.42-10
  • PLR 200916007: Treatment of Off-Site Improvements as Eligible Basis

Issue #35 – May 2009

  • New Income Limits for 2009: Really New Income Limits
  • IRC §42 Low-Income Buildings Damaged by Casualty Events: Chief Counsel Advisory 200912012
  • Filing Requirement: State Agency’s Annual Report under IRC §42(l)(3)

Issue #34 – March 2009

  • Examiners Q&A
  • State Housing Agencies Q&A
  • Taxpayer Q&A
  • Tax Return Preparers Q&A

Issue #33 – December 2008

  • IRS Notices
  • Revenue Procedures
  • Revenue Rulings
  • Chief Counsel Advice Memos
  • SBSE* Memorandum
  • Newsletters
  • The Thrice Checked List

Issue #32 – October 2008

  • Annual Income Recertifications Not Relevant for 100% LIHC Projects
  • Military Basic Housing Allowances

Issue #31 – July 2008

  • IRC §42(l)(1): Owner’s Certification with Respect to the First Year of the Credit Period
  • Guide for Completing Form 8823: Updates Pending
  • New LIHC Audit Technique Guide: Request for HELP!

Issue #30 – June 2008

  • Chief Counsel Advisory 200812023
  • LIHC Partnerships and Credit Allocations under IRC §704 (b)

Issue #29 – February 2008

  • Congress Revises Student Rule for Single Parents
  • Filing Reminder: IRC §42(l) Report & Certification
  • Q&A From the Accountants’ Corner

Issue #28 – December 2007

  • LIHC Property Owners Subject to State Agency Reviews
  • Multiple Building LIHC Projects: Clarification of Election

Issue #27 – October 2007

  • LIHC Audit Expectations

Issue #26 – September 2007

  • Documenting Household Income
  • Defining “Married” Students
  • Treating Buildings as Part of a Multiple Building Project
  • Impact of Noncompliance Reported to the IRS on Forms 8823

Issue #25 – August 2007

  • Eligible Basis: Audit Strategy
  • Proposed Regulation Update for Utility Allowance Released for Public Comment
  • Revenue Procedure 2007-54: Updated Relief Procedures
  • Notice 2007-66: Relief for LIHC Projects in Gulf Opportunity Zone
  • Changing Faces: Departing
  • Changing Faces: Arriving

Issue #24 – April 2007

  • Guide for Completing Form 8823: an IRS Revenue Agent’s Viewpoint
  • IRC §42 Filing Requirements
  • LIHC and ESTG: Office of Examination Specialization and Technical Guidance (ESTG)
  • IRS Guidance

Issue #23 – December 2006

  • LIHC Partnership Returns & the Examination of Income

Issue #22 – September 2006

  • IRC §42: the Low-Income Housing Credit in Summary

Issue #20 – April 2006

  • Notice 2006-11: Relief from Certain LIHC Requirements Due to Hurricane Rita
  • Updated Regulations and Revised Forms 8609 and 8609-A, What’s the Difference?
  • New Form 8823: Follow-Up Questions (and Answers)
  • Computing Applicable Fractions: A Fundamental Math Puzzler
  • Converting 100% Low-Income Buildings to Mixed-Used Buildings
  • Auditing Related Investor Returns

Issue #19 – December 2005

  • Hurricane Katrina
  • Rent Limits & Providing Services: Regulation §1.42-11
  • Prohibition Against Evictions Without Good Cause
  • Rent Limits & Utility Allowances: Regulation §1.42-10
  • Available Unit Rule: IRC §42(g)(2)(D) and Reg §1.42-15
  • Suitability for Occupancy: IRC §42(i)(3)(B)
  • IRS Releases Revised Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition
  • How a Form 8823 Turns Into an IRS Audit

Issue #18 – August 2005

  • Frequently Asked Questions (The Revenue Agent’s Side)
  • Frequently Asked Questions (The Owner’s Side)
  • Frequently Asked Questions (The Management Company’s Side)
  • Frequently Asked Questions (The Accountant’s Side)

Issue #17 – June 2005

  • Read All About Them! Acquisition-Rehabilitation LIHC Projects Take Center Stage
  • Welcome to Barbara Dougherty, Acting Manager for the LIHC Compliance Unit
  • Monitoring LIHC Cases

Issue #16 – April 2005

  • Auditing Eligible Basis
  • Private Letter Rulings
  • Monitoring LIHC Cases

Issue #15 – November 2004

  • Fiscal Year 2005 LIHC Priorities
  • Getting a LIHC Recapture Adjustment onto the Examination Report
  • Transferring Tenants Between Buildings Under Rev. Rul. 2004-82
  • Resident Managers’ Units: Treatment Under Rev. Proc. 92-61
  • Treatment of Application Fees: PLR 9330013
  • Documenting Households with Zero Income

Issue #14 – August 2004

  • Frequently Asked Questions (The Management Company’s Side)
  • Frequently Asked Questions (The Taxpayer’s Side)
  • Frequently Asked Question (The States’ Side)
  • New Procedures for Income Recertification Waivers Under Revenue Ruling 2004-38

Issue #13 – April 2004

  • Reporting the LIHC Recapture Amount on Form 1040, Individual Income Tax Return
  • What’s NOT Included in Eligible Basis?

Issue #12 – February 2004

  • Interviewing LIHC Property Owners: What to Ask?
  • Computing the Credit for the First Year of the Credit Period: Impact on Subsequent Years’ Computation
  • Revenue Procedure 2003-82: Qualifying Tenants Before the Beginning of the First Year of the Credit Period

Issue #11 – December 2003

  • Noncompliance After A Disposition: Who is Responsible?
  • Recapture Bonds: Where can you find a bonding company?
  • Recordkeeping: How long does a taxpayer need to keep tenant files?
  • Student Rules: What if a newly married couple has never filed a joint tax return?
  • DDAs and Census Tracts: What’s the difference?
  • Where can I find a list of DDAs and Qualified Census Tracts?
  • How do I know if the credit is computed on a “stepped up” Eligible Basis?
  • Statutes of Limitations: What are they?
  • What if a return is filed fraudulently?
  • What if a taxpayer doesn’t file a tax return?
  • How do Statutes of Limitations apply to tax returns with IRC §42 credits?
  • IRS Audits: What’s the difference between the disallowance of credits and the recapture of credits?

Issue #10 – August 2003

  • New Technical Guidance Website Includes LIHC Information
  • “Calling” A Bond: Procedural Update
  • New Revenue Ruling for Community Service Facilities
  • HUD Releases Revised Handbook 4350.3
  • Guidance on Nonprofit Ownership of LIHC Projects Included on the 2003-2004 Priority Plan
  • Regulation Project to Update Rules for Utility Allowances
  • Frequently Asked Questions (The States’ Side)

Issue #9 – April 2003

  • First Year Applicable Fraction – Not as Simple as the Months in Service Divided by Twelve
  • Report Writing for an Unagreed Case—Getting Appeals and Others to Understand IRC § 42
  • Nonprofit Entities—Are they involved and do they have direct control?
  • Uniform Documentation Required to Comply with IRC § 42
  • “I don’t have Form 8609!”

Issue #8 – December 2002

  • Reviewing Tenant Files
  • Requirements for Participating Nonprofit Entities

Issue #7 – August 2002

  • Head’s Up: Treatment of State-Based Low Income Housing Credits
  • Posting Surety Bonds to Avoid Low-Income Housing Credit Recapture:
  • …And Just a Reminder (Again)….
  • Interviewing Taxpayers & Others
  • Contacting State Housing Agencies: Third Party Contact Notification

Issue #6 – June 2002

  • Technical Issue: Claiming the LIHC Without Completing the Certification
  • Back to Basics: Planning the Audit of a Low-Income Housing Project
  • LIHC Compliance Unit Contacts
  • New Project Code for Rehabilitation Tax Credit Cases (IRC §47)

Issue #5 – March 2002

  • New Revenue Ruling: Impact Fees Includable In Eligible Basis
  • Reasonable Developer Fees
  • Real Estate Facilitator Training
  • LIHC Cases and Penalties
  • PLR’s and Cases
  • Revising the Audit Technique Guide
  • Reducing LIHC Carryforwards & Getting Credit For It On Form 5344

Issue #4 – October 2001

  • LIHC and Rehab Credit Cases Designated as Mandatory Audits
  • ……And Just a Reminder……
  • Recapturing Accelerated Low Income Housing Credits
  • Remember Utility Allowances?

Issue #3 – May 2001

  • Touring LIHC Properties: What You See, Don’t See, and Should See
  • Sometimes It Really Is Easy
  • Assisted Living Facilities: Record Keeping Requirements and Optional Services
  • Eligible Basis Update: Land Cost
  • Private Letter Rulings
  • Disclosing Tenant Information
  • Who Do You Call? The LIHC Compliance Unit

Issue #2 – February 2001

  • Congress Ups the Low Income Housing Credit Cap
  • 15 to 30 Years of Due Diligence After LIHC is Received
  • Revenue Agents Attend NCSHA’s Southeastern Regional Conference
  • Land Value: What’s Your Guess?
  • TAM’s and PLR’s
  • Criminal Investigation: LIHC is Designated “Emerging Issue”

Issue #1 – October 2000

  • Participation of Nonprofits
  • How a MOU can Benefit the State Housing Authorities
  • Revenue Procedure 99-11: Alternative to Posting Bonds
  • Federal Grants Reduce Eligible Basis
  • Qualified Tenants & Records: Reviewing Internal Controls
  • Fair Housing Act: Memorandum of Understanding Between HUD, Department of Justice and Treasury

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