April 15, 2020
ACTION partners have been urging the IRS and the Treasury to take immediate action to provide deadline extensions and other necessary accommodations for the Housing Credit program in light of the severe disruptions the COVID-19 pandemic is having on development and construction activities and the ongoing operations of existing Housing Credit properties. To see the list of regulatory accommodations requested in a letter from NCSHA, click here
On April 10, the IRS published Notice 2020-23
providing additional relief for taxpayers affected by the coronavirus pandemic. The notice provides that taxpayers have until July 15, 2020, to perform specified time-sensitive actions due to be performed on or after April 1, 2020, and before July 15, 2020. While the notice does not specifically reference any Housing Credit or Housing Bond deadlines, it applies to the July 15 deadline to all time-sensitive actions included in IRS Revenue Procedure 2018-58
, which includes numerous deadlines related to these programs.
As a result of this ruling, taxpayers have until July 15, 2020, to perform any of the sensitive actions below if they were originally due to be performed on or after April 1, 2020, and before July 15, 2020.
Housing Credit Deadlines
- The 10 percent test requirement as referenced in Section 42(h)(1)(E) and (F)
- The 24-month period in which the requisite amount of rehabilitation expenditures has to be incurred as required in Section 42(e)(3)(A)(ii)
- The annual owner certification of compliance as required in regulation 1.42-5(c)(1)
- The annual tenant income certification requirement in regulation 1.42-5(c)(1)(iii)
- The 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)
- The 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 10-year rule for claiming credits on an existing building as required in Section 42(d)(2)(D)(i)(IV)
- The minimum set-aside requirement as referenced in Section 42(g)(3)(A)
- The 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)
Housing Bond and Mortgage Credit Certificate Deadlines
- The requirement that the issuer file an election not to issue an amount of qualified mortgage bonds if they are to instead distribute MCCs in Section 1.25-4T(c)
- The requirement that an issuer provide notice to the Commissioner of the establishment of a defeasance escrow within 90 days of the date such defeasance escrow is established
- The annual certification to the Secretary by operators of multifamily Housing Bond projects that they continue to meet the requirements of section 142(d)
- The election to carry forward bond authority after the year in which the state received such authority
- Requirements for making tax-exempt bond yield reduction payments and rebate payments
- The requirement that an issuer of a tax-exempt bond must submit to the Secretary a statement providing certain information regarding the bond not later than the 15th day of the second calendar month after the close of the calendar quarter in which the bond is issued
Both Notice 2020-23 and Housing Credit disaster guidance in IRS Revenue Procedure 2014-49
provide extensions for the 10 percent test deadline for Housing Credit allocations. However, Notice 2020-23 applies only to projects that would have needed to meet their 10 percent test between April 1 and July 15, and only allows an extension until July 15, while Revenue Procedure 2014-49 applies to any carryover allocation in effect prior to the beginning of the major disaster declaration incident period, which is January 20, 2020, in all cases, and allows the extension of up to six months from the date of the original 10 percent test deadline. Moreover, Notice 2020-23 does not require implementing action by the Housing Credit allocating agency, while Revenue Procedure 2014-49 does. In addition, allocating agencies have the ability to offer deadline relief on a project-by-project basis or a statewide basis under Revenue Procedure 2014-49.
The other eight Housing Credit time-sensitive actions extended by Notice 2020-23 are not addressed in IRS Revenue Procedure 2014-49.
NCSHA and ACTION partners continue to press IRS to provide Housing Credit COVID-19 guidance separate from both Revenue Procedure 2014-49 and Notice 2020-23, as we strongly believe the relief provided in both of these is insufficient and does not cover several areas where further guidance is needed.