Download Five Documents to Help with Tax Credit Management
As a tax credit owner or manager, you should familiarize yourself with key documents to help you manage your tax credit site. To make it easy for you to get these documents, we’ll discuss five useful documents you can download from the Internet. We’ll tell you about each document and where you can download it. These documents are either required reading to meet the tax credit program’s requirements or helpful in improving your compliance efforts and running your site more efficiently. Here’s a rundown on each document and where to find it online.
#1: IRS Form 8823
You can find this document at www.irs.gov/pub/irs-pdf/f8823.pdf. IRS Form 8823 (“Low Income Housing Credit Agencies Report of Noncompliance or Building Disposition”) is the form your state housing agency must use to report all compliance violations, even minor ones, to the IRS. It’s a good idea to familiarize yourself with this form, even if you haven’t gotten any violations.
Review the categories listed on line 11 of the form so you know what constitutes a violation. Form 8823 divides into 16 categories the reasons your state housing agency may issue a violation. For example, it’s a violation to rent a low-income unit to a household that doesn’t qualify for one [line 11(a)], or if you rent to nonqualified full-time students [line 11(l)]. Form 8823 also includes a catchall category to allow for “other noncompliance issues” [line 11(q)].
Visiting this web address automatically launches the form in the portable document file (pdf) format. You can save or print the form to review later.
#2: ‘Fair Housing: Equal Housing Opportunity for All’ Booklet
You can find this booklet at https://www.hud.gov/sites/documents/FHEO_BOOKLET_ENG.PDF. If your state housing agency discovers that your site violates fair housing law, it must report your site to the IRS for tax credit noncompliance. This document reviews the basics of compliance with the federal Fair Housing Act (FHA). It identifies the FHA’s seven “protected classes,” outlines what types of conduct are banned, and notes special issues concerning individuals with disabilities and families with children.
Visiting this website automatically launches the booklet in the pdf format. You can print the booklet to circulate among your staff members or keep in your office for easy reference.
#3: NCSHA’s ‘Recommended Practices’
You can find this document at https://www.ncsha.org/wp-content/uploads/2018/05/NCSHA-Recommended-Practices-in-Housing-Credit-Administration-Updated-Dec-2017.pdf. The National Council of State Housing Agencies (NCSHA) represents the state housing agencies that administer the LIHTC program across the nation.
In 2000, NCSHA published its first recommended practices relative to LIHTC compliance monitoring, and in that same year, provided further updates to recommendations relating to allocation and underwriting, with additional recommendations provided in 2009 and 2010. This report released in early 2018 represents a comprehensive revision of NCSHA’s previous recommended practices. It consolidates what had been separate policies for compliance monitoring and LIHTC allocation and underwriting, thus covering the breadth of state LIHTC program administration responsibilities.
#4: Tax Credit Compliance Manual and QAP
If your state housing agency is among the many that offer their compliance manuals and qualified allocation plans (QAP) online, you should download copies. These documents contain your agency’s rules and procedures for monitoring tax credit compliance in your state, and for reporting noncompliance to the IRS.
After you download the documents, read them carefully. You may discover procedures or restrictions you didn’t know about. Even if you already have hard copies of the compliance manual and the QAP and are familiar with them, downloading these documents can be useful. You can easily search for information using key words on your computer. This is much more efficient than relying on a printed index or flipping through pages until you find the information you need.
If you download your compliance manual or QAP, periodically check for updates. Many agencies update their compliance manual and QAP each year.
#5: HUD Income Limits
Early each year, HUD releases new income limits for HUD programs, organized by county or municipality in addition to income limits for the LIHTC and tax-exempt bond programs. The limits for the LIHTC and bond sites are published separately from the limits for HUD programs.
LIHTC and bond properties use the Multifamily Tax Subsidy Project (MTSP) limits, and are held harmless from income limit (and therefore rent) reductions. These properties may use the highest income limits used for resident qualification and rent calculation purposes since the site has been in service. HUD program income limits are not held harmless.
Sites in service prior to 2009 may use the HERA Special Income Limits in areas where HUD has published such limits. Sites placed in service after 2008 may not use the HERA Special Limits.
Sites in rural areas that aren’t financed by tax-exempt bonds may use the higher of the MTSP limits or the National Non-Metropolitan Income Limits (NNMIL).
As a tax credit manager, you must use these limits to determine household eligibility and to calculate rent for your low-income units. The limits for HUD programs may be found at www.huduser.gov/portal/datasets/il.html. The limits for LIHTC and bond programs may be found at www.huduser.gov/portal/datasets/mtsp.html. You must begin using the new income limits within 45 days after HUD releases them.