The Guru Is In
You will be haunted by three spirits
By David A. Smith
4 min read
“You will be haunted,” resumed the Ghost,
“by Three Spirits.”
“I – I think I’d rather not,” said Scrooge.
Senator Chuck Grassley of the Finance Committee dislikes LIHTC. To be fair, he dislikes almost all tax credits. Thus one cannot be surprised that of the three GAO reports he has commissioned, the first, released in mid-July, is entitled Joint IRS-HUD Administration Could Help Address Weaknesses in Oversight.
“I am the Ghost of Christmas Past.”
“Long Past?” inquired Scrooge.
“No. Your past.”
The report found:
- “IRS oversight of HFAs has been minimal, particularly
in terms of reviewing QAPs and conducting on-site or desk audits of HFAs. “ - “IRS and Treasury were unclear about how to handle
instances in which a QAP did not meet requirements in the code.” - [In] 555 audits over 13 years, the IRS secured credit
changes in 24% of the cases, and went to court in 10% more.
To the surprise of no one, Senator Grassley seized upon the report as proof of incompetence.
“This report confirms what we’ve seen again and again. The federal government is good at giving out money and tax breaks and terrible at checking on results. No one at the IRS or HUD seems to have any way of knowing whether a multi-billion-dollar program for low-income housing has worked as intended. This doesn’t bring accountability, and it may or may not deliver affordable housing for people in need.”
GAO went on to urge greater IRS oversight, and as it acknowledged IRS lacked the housing expertise, “a peripheral program in terms of resources and mission,” it offered the bright idea of having HUD do the monitoring under IRS delegation.
At this, IRS, Treasury, and HUD all dived under their desks with their hands over their heads. Treasury said responsibility should stay with the IRS. IRS said it lacked resources to do more than it did now. HUD said it lacked data to do anything and needed more funding.
NCHSA, on behalf of the states who do the work IRS doesn’t, objected at length (7 pages) which boiled down to, Go away, nothing to see here. That triggered a lengthy GAO rebuttal (3 pages), You’re not looking hard enough.
This was only the first spirt. The second, I am told, will focus on HFA administration of the LIHTC.
“I am the Ghost of Christmas Present,” said the Spirit. “You have never seen the like of
me before!”
With my deep powers of clairvoyance, I predict it will find lacunae in HFA administration, perhaps on whether QAPs always comply with Section 42’s statutory requirements; challenge HFAs’ ability to monitor post-occupancy compliance; and fling the ‘34% failure rate’ (24% clawbacks plus 10% litigated) in the HFAs’ direction; and in general undermine the claim that HFAs are doing everything that should be done to protect the taxpayer. It will feature a lengthy NCSHA comment letter, and a lengthy GAO pre-rebuttal.
Then there will be the third report.
The Phantom slowly, gravely, silently,
approached. When it came near him,
Scrooge bent down upon his knee; for in the very air through which this Spirit moved it seemed to scatter gloom and mystery.
I have heard a rumor it will focus on total development costs.
“You are about to show me shadows of the things that have not happened, but will happen in the time before us,” Scrooge pursued. “Is that so, Spirit?”
Though I can foresee in detail what the third report will contain, a geas binds my mouth and stops me describing them, though it will not find the program efficient.
Where are the spirits going?
Back on January 15, Senate Finance’s chair (Hatch-UT-R) and ranking member (Wyden-OR-D) formed five bipartisan (two senators, one party each) tax reform working groups whose output (now overdue) will ‘serve as a foundation for the development of bipartisan tax reform legislation.’ Hatch called the system “too complicated, unfair, and hurting economic growth” and Wyden wants to fix “our broken tax code [to be] simple and fair [for] typical Americans and business alike.”
“No,” said a great fat man with a monstrous chin, “I don’t know much about it, either way. I only know he’s dead.”
“Why, what was the matter
with him?” asked another, taking a vast quantity of snuff out of a very large snuff-box. “I thought he’d never die.”
“God knows,” said the first,
with a yawn.
