IRS/Tax Issues

The National Council of State Housing Agencies (NCSHA) released a matrix comparing the LIHTC accommodations NCSHA is requesting from the IRS to those allowed under existing IRS Revenue Procedures 2014-49 and 2014-50, which provide relief in instances of Presidentially-declared Major Disasters, and to recent IRS Notice 2020-23, which extends certain program deadlines until July 15, […]

The IRS issued Revenue Procedure 2020-23 that allows, once again, the amending of Bipartisan Budget Agreement (BBA) partnership tax returns once Form 8609 is received for 2018 tax returns, as long as the partnership files an amended return by September 30, 2020.

The Internal Revenue Service issued Notice 2020-23, providing additional relief to taxpayers affected by COVID-19. Among other things, the notice automatically extends the 180-day deadline to invest capital gains in a Qualified Opportunity Fund to July 15 for taxpayers with a deadline between April 1 and July 15. While the notice does not specifically reference any Housing Credit or Housing Bond deadlines, it applies the July 15 deadline to all time-sensitive actions included in IRS Revenue Procedure 2018-58, which includes numerous deadlines related to these programs.

The Internal Revenue Service (IRS) told the National Council of State Housing Agencies (NCSHA) that the ten issues for which the NCSHA requested specific guidance are all relevant to the current COVID-19 situation and under active consideration by IRS while they await guidance from Treasury about how to proceed.

Following President Trump’s emergency declaration pursuant to the Stafford Act, the U.S. Treasury Department and Internal Revenue Service issued guidance allowing all individual and other non-corporate tax filers to defer up to $1 million of federal income tax (including self-employment tax) payments due on April 15, 2020, until July 15, 2020, without penalties or interest.

HUD published Fiscal Year (FY) 2019 average income minimum set asides for LIHTC properties, in ten percent increments from 20 to 80 percent of the area median income in each state and metropolitan fair market rent/income limits area, based on the fiscal year 2019 Multifamily Tax Subsidy Project income limits.

The Department of the Treasury and the Internal Revenue Service (IRS) released the final versions of Form 8996 – Qualified Opportunity Funds, 8996 instructions and Form 8997 – Initial and Annual Statement of Qualified Opportunity Fund Investments.

The Internal Revenue Service (IRS) released Revenue Ruling 2020-04, which clarifies the manner to properly compute the 70 and 80 percent income limits applicable to the LIHTC under Section 42 of the Internal Revenue Code. The 70 percent limit is 140 percent or less of the income limit for a very low-income family of the same size and the 80 percent limited is 160 percent or less of the income limit for a very low-income family of the same size.

The U.S. Department of the Treasury and Internal Revenue Service (IRS) issued final (and proposed) regulations on the Opportunity Zones (OZ) tax incentive. The regulations modify and finalize the two previous proposed regulations that were issued in October 2018 and April 2019. The Treasury notes that “the final rules provide clarity for Opportunity Funds and their eligible subsidiaries in determining qualification and levels of new investment in Opportunity Zones.”

Kentucky Housing Corporation (KHC) released the Income Averaging Compliance Policy. This policy establishes guidance for KHC partners electing the new average income set aside. The policy is effective for all owners electing income averaging with a placed in-service date of Wednesday, January 1, 2019, or later per their completed 8609 forms. Please contact Phyllis Clem […]

The Internal Revenue Service (IRS) has issued a final regulation on the implementation of the the base erosion and anti-abuse (“BEAT”) tax, which was part of the Tax Cuts and Jobs Act and was designed to prevent the reduction of tax liability by certain large corporate taxpayers through certain payments made to foreign related parties and certain tax credits.  The BEAT Tax impacts certain LIHTC, NMTC and Historic Credit investors that are either foreign owned or have significant foreign operations. It has the potential to erode an investor’s benefit from tax credits and losses over time.  The final regulations retain the basic approach and structure of the proposed regulations, with certain revisions.

The Internal Revenue Service (IRS) released Revenue Procedure 2019-44, which sets state ceilings for nine percent LIHTCs and private activity bonds (PAB). The LIHTC cap is the greater of $2.8125 multiplied by the state population or $3,217,500. The PAB cap is the greater of $105 multiplied by the state population or $321,775,000.