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IRS Amends LIHTC Compliance-Monitoring Regulations

Tuesday, February 23, 2016 - 2:00PM

The Internal Revenue Service (IRS) will post in the Feb. 25 Federal Register final and temporary regulations relating to low-income housing tax credit (LIHTC) compliance monitoring. The amendments revise and clarify the requirement to conduct physical inspections and review low-income certifications and other documentation. Temporary regulations are effective upon publication in the Federal Register and expire Feb. 22, 2019. The text of the temporary regulations serves as the text of proposed regulations, also scheduled for publication in the Federal Register.

The IRS will concurrently issue Rev. Proc. 2016-15 to provide that the minimum number of low-income units in a LIHTC development that must undergo physical inspection is the lesser of 20 percent of the low-income units in the property, rounded up to the nearest whole number, or the number of low-income units set forth in the Low-Income Housing Credit Minimum Unit Sample Size Reference Chart in the revenue procedure. The same rule applies to determine the minimum number of units that must undergo low-income certification review. Rev. Proc. 2016-15 also permits the physical inspection protocol established by the U.S. Department of Housing and Urban Development (HUD) Real Estate Assessment Center (REAC protocol) to satisfy the physical inspection requirements of LIHTC compliance monitoring. The revenue procedure is effective Feb. 25, 2016. Agencies using the REAC protocol under the physical inspections pilot program may use the provisions for onsite inspections retroactively to Jan. 1, 2015.

Tune in to the March 1 Tax Credit Tuesday podcast to learn more.

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