IRS Extends COVID-Related LIHTC, Opportunity Zones Relief

Internal Revenue Service Notice 2021-12 extends the temporary relief for qualified LIHTC projects. The 10 percent test for carryover allocations and the 24-month minimum rehabilitation expenditure period are extended until September 30. The deadline for income recertifications and compliance monitoring is extended until October 1 and the placed-in-service deadline is extended to December 31. QAP meetings may be held by telephone through September 30 and medical personnel or other essential workers who provide services during the pandemic may receive emergency housing in LIHTC properties through September 30.

Notice 2021-10 provides relief to qualified opportunity funds (QOFs) and their investors due to the COVID-19 pandemic, extending opportunity zones (OZ) relief provided by an earlier notice. Notice 2021-10 provides relief for the 180-day investment requirement, the 30-month substantial improvement period, 90 percent investment standard for QOFs, working capital safe harbor for OZ businesses and 12-month reinvestment period for QOFs. The relief largely extends relief provided earlier in Notice 2020-39.

All taxpayers’ whose last day of their 180-day window to invest capital gains was from April 1, 2020, to March 31, 2021, the 180-day deadline is now March 31. The 30-month substantial improvement period is now tolled from April 1, 2020, through March 31, 2021. A failure by a QOF to satisfy the 90 percent investment standard is considered reasonable if the last day of its first six-month period of a taxable year or last day of a taxable year falls from April 1, 2020, through June 30, 2021, and the QOF meets other requirements. All OZ businesses holding working capital assets intended to be covered by the working capital safe harbor before June 30, 2021, receive up to an additional 24 months. If a QOF’s 12-month reinvestment period includes June 30, 2020, the QOF receives up to an additional 12 months to reinvest.