CARH’S BROADCAST E-MAIL – Regulatory Alert

June 10, 2016

On June 8, 2016, the Government Accountability Office (GAO) released a second report on the Low-Income Housing Tax Credit (LIHTC) entitled, “Low-Income Housing Tax Credit: Some Agency Practices Raise Concerns and IRS Could Improve Noncompliance Reporting and Data Collection.” (GAO-16-360)

The report finds that allocating agencies generally have processes to meet requirements for allocating credits, reviewing costs, and monitoring projects, but some of these practices raised concerns. Specifically:

• More than half of the qualified allocation plans (developed by 58 allocating agencies) that GAO analyzed did not explicitly mention all selection criteria and preferences that Section 42 of the Internal Revenue Code requires.
• Allocating agencies notified local governments about proposed projects as required, but some also required letters of support from local governments. The Department of Housing and Urban Development (HUD) has raised fair housing concerns about this practice, saying that local support requirements (such as letters) could have a discriminatory influence on the location of affordable housing.
• Allocating agencies can increase (boost) the eligible basis used to determine allocation amounts for certain buildings at their discretion. However, they are not required to document the justification for the increases. The criteria used to award boosts varied, with some allocating agencies allowing boosts for specific types of projects and one allowing boosts for all projects in its state.

GAO recommends that IRS clarify when agencies should report noncompliance and also suggests that IRS participate in the Rental Policy Working Group to assess the use of HUD’s database to strengthen IRS oversight. Through the Rental Policy Working Group, HUD collects and analyzes housing data, including LIHTC inspection results.

The first of GAO’s three reports on LIHTC, “Low-Income Housing Tax Credit: Joint IRS-HUD Administration Could Help Address Weaknesses in Oversight” (GAO-15-330) was released July 23, 2015, and recommended joint administration of the LIHTC program by HUD and the IRS. The GAO’s review of the LIHTC program was requested by Senator Chuck Grassley, who serves as Chairman of the Senate Judiciary Committee.

CARH’s Annual Meeting and Legislative Conference will begin on Sunday, June 12. On Monday a panel, “The World of Tax Credits,” will further review the report with GAO officials who will be participating on the panel. Further discussions will no doubt take place throughout the meeting.

If you have any questions, please contact the CARH National Office at carh@carh.org or 703-837-9001.