IRS/Tax Issues


IRS Guidance on BEAT

The Internal Revenue Service (IRS) issued final regulations providing additional guidance on the base erosion and anti-abuse tax (BEAT). The final regulations provide detailed guidance regarding how to compute certain BEAT calculations for groups of related taxpayers.


IRS Extends Grandfathering for the One-Year Historic Tax Credit

The Tax Cut and Jobs Act of 2017 made significant changes to the Historic Tax Credit, turning it from a one-year credit with a five-year compliance period to a five-year credit taken ratably. Transition rules were set in place that permitted some projects currently underway to be grandfathered in under the former one-year credit. That grandfathering rule had an end date in June 2020. Now, in light of the COVID-19 pandemic, the IRS has provided an extension of the grandfathering rule, into 2021.

QAP Arizona

Arizona Issues COVID-19 Compliance Guidance for Assisted Rental Properties

The Arizona Department of Housing (ADOH) issued updated compliance guidance for rental properties with LIHTC, HOME, state and national Housing Trust Fund and Neighborhood Stabilization Programs funding sources. IRS Notice 2020-53 allows income recertifications to be delayed for the remainder of the year. However, it does not delay or exempt owners/agents from ensuring LIHTC households are still meeting student eligibility requirements.

QAP Texas

Texas Hosts Average Income Webinar on Sept. 2

The Compliance Division of the Texas Department of Housing and Community Affairs will present a training on the LIHTC Average Income Minimum Set-Aside on September 2, 2020, from 2:00 to 4:00 pm CT. Register here.


IRS Extends Deadline for Historic Substantial Rehabilitation Test

IRS recently published Notice 2020-58 which extends the measuring period used in satisfying the substantial rehabilitation (sub rehab) test requirement for historic tax credits. Projects with a 24- or 60-month measuring period ending on or after April 1, 2020, and before March 31, 2021, now have until March 31, 2021 to incur sufficient qualified rehabilitation expenditures to satisfy the sub rehab test.


IRS Issues Final Regulations and Other Guidance on Business Interest Expense Deduction Limitation

The Internal Revenue Service (IRS) issued final regulations regarding the provision of the Tax Cuts and Jobs Act that limits the deduction for business interest expense, including basic statutory amendments made by the CARES Act.

QAP California

California Issues New Average Income Test Guidance”

On June 25, 2020 the California Tax Credit Allocation Committee issued a new memo providing additional guidance on the Average Income Test Federal Election.  In May 2018, TCAC adopted regulations that allowed projects with an existing tax credit reservation to elect the Average Income Test and make changes to the application’s housing unit designations, increasing some to 80% AMI.


IRS provides tax relief for the low-income housing credit and bonds for qualified residential rental projects

In response to the ongoing COVID-19 pandemic, the Internal Revenue Service today issued Notice 2020-53 to provide tax relief to issuers, operators, owners, and tenants of qualified low-income housing projects or qualified residential rental projects financed with exempt facility bonds, and state agencies that have jurisdiction over these projects.


IRS Issues New Proposed Rule on LIHTC Compliance Monitoring

The Internal Revenue Service issued a proposed rule on the compliance-monitoring duties of state agencies for purposes of the low-income housing credit. The proposed regulations relax the minimum compliance-monitoring sampling requirement for purposes of physical inspections and low-income certification review, providing flexibility and reduced burdens with respect to the requirements set forth in the final regulations published on February 26, 2019.


IRS Publishes COVID-19 Relief for Opportunity Zone Funds and Investors

The Internal Revenue Service (IRS) released Notice 2020-39, providing guidance for investors in the Opportunity Zones (OZ) incentive in the wake of the COVID-19 pandemic. The guidance provides that taxpayers whose last day of the 180-day period to invest capital gains in a Qualified Opportunity Fund (QOF) falls on or after April 1, 2020, and before December 31, 2020, to postpone the last day to December 31, 2020


IRS Notice Extends Continuity Safe Harbor to Five Years for PTC, ITC Properties Affected by COVID-19-Related Delays

The Internal Revenue Service issued Notice 2020-41 to extend the continuity safe harbor for renewable energy production tax credit (PTC) and investment tax credit (ITC) properties that began construction in 2016 or 2017. The notice adds an extra year to the four-year continuity safe harbor in existing guidance, stating that those projects placed in service within five years will be deemed continuous.


IRS Issues Revenue Procedure, Notice Providing Guidance for Private Activity Bonds During COVID-19-Related Economic Disruption

In Revenue Procedure 2020-21, the IRS provides temporary guidance to allow hearings held by teleconference due to the COVID-19 pandemic to meet the statutory public approval requirement for PABs. Notice 2020-25 temporarily expands the circumstances and period for which a PAB is treated as “continuing in effect” without requiring the reissuance or retirement.

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