IRS Guidance Extends Many LIHTC Deadlines Through July 15

Published by Dirk Wallace, Mark Shelburne on Thursday, April 16, 2020 - 12:00am

On April 10 the Internal Revenue Service (IRS) issued Notice 2020-23, entitled “Additional Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic.” The guidance has broad applicability. Although it does not specifically mention the low-income housing tax credit (LIHTC), the provisions effectively include temporary relief for several deadlines.

Under the notice, taxpayers now have until July 15 to accomplish the following for their LIHTC properties which otherwise were due to be performed on or after April 1:

  • 10 percent expenditure test under Internal Revenue Code (IRC) Section 42(h)(1)(E) and (F)
  • 24-month period to meet the minimum rehabilitation expenditure requirement in IRC Section 42(e)(3)(A)(ii)
  • annual owner certification of compliance in regulation 1.42-5(c)(1)
  • annual tenant income certification requirement in regulation 1.42-5(c)(1)(iii)
  • requirement to notarize a binding agreement by the fifth day following the end of the month in which the binding agreement was made as referenced in regulation 1.42-8(a)(3)(v)
  • requirement to notarize a binding agreement by the fifth day following the end of the month in which the tax-exempt bonds are issued as referenced in regulation 1.42-8(b) (1)(vii)

The notice also covers the following, although its application to each is unclear:

  • 10-year rule for claiming credits on an existing building as required in IRC Section 42(d)(2)(D)(i)(IV); the requirement is to hold a property for 10 years, so there is not necessarily a deadline to extend
  • minimum set-aside requirement as referenced in IRC Section 42(g)(3)(A); this test is applied at the end of a calendar year
  • requirement that a low-income housing commitment must be in effect as of the beginning of the year for a building to receive credit as referenced in Section 42(h)(6)(J); these agreements needed to have been in place on Jan. 1

Unlike extensions possible under Revenue Procedure 2014-49, which require action by a LIHTC allocating agency, the above are already in effect.