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GAO Recommends IRS Improve LIHTC Noncompliance Reporting, Data Collection

Thursday, June 9, 2016 - 8:30AM

A report released yesterday by the Government Accountability Office (GAO) suggested the Internal Revenue Service (IRS) and U.S. Department of Housing and Urban Development (HUD) could work with state allocating agencies to improve their practices in administering the low-income housing tax credit (LIHTC). The report, “Low-Income Housing Tax Credit: Some Agency Practices Raise Concerns and IRS Could Improve Noncompliance Reporting and Data Collection,” found that agencies generally have processes to meet requirements for allocating LIHTCs, reviewing costs and monitoring practices. However, the GAO also reported that more than half of qualified allocation plans (QAPs) reviewed did not explicitly mention all selection criteria and preferences that Section 42 of the Internal Revenue Code (IRC) requires; some allocation agencies required letters of support from local governments for proposed developments, which raises fair housing concerns; and agencies can boost the eligible basis for certain buildings but are not required to document the justification for the increases. The report includes a series of recommendations on how HUD and the IRS could work with state agencies to improve LIHTC noncompliance reporting and data collection. The report is the second in a three-report series by GAO on the LIHTC. Details will be posted to the Notes from Novogradac blog

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