Compliance

Compliance

IRS Issues Memo on Tenant Income Increases, Conflicts with Other Housing Programs

May 29, 2015    

The IRS recently released a memo, entitled “Low-Income Housing Credit—Noncompliance Resulting from Conflicting Program,” directed to examiners auditing LIHTC issues. The memo addressed whether a building could continue to qualify as low income under Section 42 of the Internal...

Characterization of Employee Units When Charging Rent, Utilities

March 31, 2015    

The IRS recently released a memorandum issued by the Office of Chief Counsel dated June 2, 2014, which addressed circumstances that could affect the eligibility of employee units such as manager or maintenance personnel units in a LIHTC site to qualify for the tax credit. Specifically, the memo...

How to Document Resolutions of Discrepancies Found While Verifying Income

December 23, 2014    

When you verify a household’s income with employers or other verification sources, you may get information that contradicts what household members told you during the household’s certification or annual recertification. For instance, a household member may tell you that he gets $50...

Six Tips for Avoiding Violations When Using Model Units

November 26, 2014    

You may want to keep a unit at your tax credit site available as a model to show prospects. But you should be careful about which unit you choose to set aside as your model, and what you do with that unit as occupancy changes occur.

IRS Releases Updated LIHTC Audit Technique Guide

September 30, 2014    

The IRS recently released its new audit technique guide (ATG) for IRC Section 42, Low-Income Housing Credit. The purpose of the ATG is to help IRS examiners audit owners of LIHTC projects. It’s organized in the order an examiner might address issues during an examination, starting with an...

Follow Six Rules to Avoid Converting Common Areas into Commercial Space

June 30, 2014    

Commercial space isn’t LIHTC basis eligible, but the IRS Code does allow for commercial use at a tax credit site. That commercial space may even be located in the same building where your low-income households live. For example, suppose a 50-unit tax credit building proposes that the...

Avoid Costly Lawsuits and Fines with Lead-Safe Work Practices

May 30, 2014    

Many contractors and maintenance workers who have been on the job for years believe they know all about the dangers of and the precautions necessary for working with lead paint. Others think lead paint poisoning simply went away years ago. It didn’t.

Effects of Foreclosure When Tax Credit Sites Fail

April 30, 2014    

Tax credit sites tend to operate on tight margins because of the competition to obtain these credits initially and the allocating agencies’ obligation to provide the minimum amount of credit necessary to make a deal feasible. Given these constraints, it’s no surprise that some sites...

Use Form Letter to Reject Applicants, Avoid Disputes

January 31, 2014    

If applicants fail to meet your tax credit site’s eligibility requirements or if they can’t pass your site’s screening criteria, you don’t want them arguing with you over the rejection, or worse, filing a fair housing complaint. But that can happen if you leave it to your...

2013 LIHTC Compliance Recap

December 12, 2013    

As we wind down 2013 and prepare for a new year, the Insider looks back and reviews the major events and changes that affected the low-income housing tax credit (LIHTC) industry:

Five Rules to Keep Market-Rate Units in Compliance

November 26, 2013    

It’s not unusual for tax credit sites to be mixed-income, consisting of both low-income and market-rate units. Market-rate units aren’t rent-restricted and may be rented to households of any income. Even so, certain provisions of the tax credit law apply to those units. If you don...

Four Rules for Claiming Extra Credits After Building’s Applicable Fraction Increases

August 29, 2013    

Sometimes tax credit site owners aren’t entitled to claim all the credits they were allocated for a building. This happens when owners don’t lease up as many units to qualified low-income households as they must in the first year of the building’s compliance period. As a result...