Learning The Basics Housing Tax Credit 101 March 5-6, 2009 The Blackstone Hotel Chicago, IL Susan Pristo Reaman

Learning The BasicsHousing Tax Credit “101”

March 5-6, 2009The Blackstone Hotel

Chicago, IL

Susan Pristo Reaman

IRS Oversight and GuidanceUnder LIHTC Program

• IRS Small Business/Self-Employed Division Examination Division

– Oversees compliance of housing credit program and enforcement of IRC § 42

– Works with State Housing Agencies in the administration and monitoring of housing projects under the LIHTC program.

– Selects projects for audit

IRS Oversight and GuidanceUnder LIHTC Program (cont’d)

• Office of Chief Counsel IRS, National Office Washington, DC

– Associate Chief Counsel, Pass-throughs and Special Industries, Branch 5

• Issues Guidance for LIHTC through:

– Private Letter Rulings

– Revenue Rulings

– Revenue Procedures

– Income Tax Regulations

– Notices


• Provide Legal Advice to IRS Examination Division

– Technical Advice Memorandum

– Chief Counsel Advice

– Informal Advice


• Department of Treasury Office of Tax Policy

– Works with Congress to develop and draft Tax Legislation.

– Implements Executive Branch policy including policy under the LIHTC program

– Works with IRS Office of Chief Counsel to interpret, draft, and review all published guidance including:

• Revenue Rulings

• Income Tax Regulations

• Notices


• Office of Tax Policy and IRS Guidance Priority List

– Agreement between Treasury Department, IRS Commissioner, and IRS Chief Counsel to issue priority guidance within the Business Plan year which runs from July 1 to June 30

• Based upon new laws and requests from IRS and Taxpayers on issues needing published IRS Guidance. See, Notice 2008-47, 2008-18 IRB 869

• Plan is periodically updated

• Current LIHTC listed items:

– Relief from certain § 42 LIHTC requirements due to severe storms and flooding in Missouri (Published 7/16/2008 IRB 2008-31 Notice 2008-66

– Final regulations on the requirements for a qualified contract

– Guidance under § 42


• Private Letter Ruling (PLR) Process

– A private letter ruling is a ruling on a particular taxpayer’s proposed transaction

• May not be used as precedent

• Taxpayer must follow PLR procedures under Revenue Procedure 2009-1, 2009-1 IRB 1.


• Income Tax Regulations Process

– Regulations may arise from: • New legislation

• IRS or taxpayer’s request for guidance on a particular tax issue

• Regulation is drafted by IRS Chief Counsel Attorneys

• Reviewed by Treasury Attorneys

• Proposed Regulation is published and provides for comment period and public hearing

• After review of comments, final regulations are published


• Audits of LIHTC Properties

– IRS has internal process for audit selection

– Issuance of Form 8823 – “Low-Income Housing Credit Agencies Report of Non-Compliance or Building Disposition” may result in an audit of low-income housing project

– Legal issues that may arise in the course of an audit may be resolved through a request for Technical Advice from IRS Chief Counsel

– Requests for Technical Advice procedures are found in Revenue Procedure 2009-2, 2009-1 IRB 87


• Audit Process

– An Examination audit finding of tax deficiency may be appealed

– Taxpayer works with Appeals Officer for settlement

– Taxpayer that does not agree with Appeals Officer may file petition in Tax Court without paying tax deficiency (interest runs on unpaid tax deficiency)

– Taxpayer that pays tax deficiency may file claim for refund in District Court

Documents

Learning The Basics Housing Tax Credit 101 March 5-6, 2009 The Blackstone Hotel Chicago, IL Susan Pristo Reaman