IRS Updating 8823 Guide

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IRS SENIOR Program Analyst Grace Robertson said she is updating parts of the so-called 8823 guide for the low-income housing tax credit (LIHTC) program, and expressed hope they will be released by late June. She spoke 1/14/08 at the National Council of State Housing Agencies’ HFA Institute conference in Washington, DC.
         The current 8823 guide, written by Robertson and released in January 2007, provides instructions and guidance to state housing credit agencies on how to complete and file IRS Form 8823, which agencies must submit to the IRS to report discovered noncompliance in LIHTC projects. The guide cites applicable IRS statutory provisions, rules, and other guidance in 18 categories of noncompliance, explains credit program requirements, and provides examples for further clarity. (For details, see Tax Credit Advisor, February 2007, p. 3.)
         Robertson said she is in the process of updating guide Chapters 4 (household income limits, to reflect changes made to HUD Handbook 4350), 9 (changes in applicable percentage), 17 (student rules), and 18 (utility allowance rules). She noted Chapter 18 will be modified to reflect the changes made by the final regulation for utility allowances once the IRS publishes it. Depending on when this final rule is published, Robertson said the other updates might be released first separately, followed by the utility allowance update later. (See separate story on p. 3 on utility allowance final rule.)

Other Comments
         In other comments on LIHTC compliance, Robertson said that tax credit units in a project that are vacant for a prolonged period of time should be deemed to be not suitable for occupancy (e.g., because they are dirty), and reported as out of compliance. She defined prolonged as “longer than your usual turnover rate.”
         Robertson said vacant units should be assessed by agencies for compliance against the LIHTC program’s physical standards requirements.
         In response to another question, she said a unit in an LIHTC project qualifies as a manager’s unit only if it is occupied by a manager who is required to live on-site and isn’t charged rent.
         In another area, she said the IRS’ Office of Appeals, which handles audit appeals, has designated an LIHC Technical Guidance Coordinator.