On Friday, January 14, 2022, the IRS will release a notice (2022-05) extending widespread temporary relief from certain requirements for low-income housing tax credit (LIHTC) financed and private activity tax-exempt bond-financed properties due to the COVID-19 pandemic. Extended relief will include:

The notice also provides an extension to satisfy occupancy obligations. If the close of the first year of the credit period with respect to a  building was on or after  April  1,  2020,  and on or before December  31,  2022,  then,  for purposes of §  42(f)(3)(A)(ii),  the qualified basis for the building for the first year of the credit period is calculated by taking into account any increase in the number of low-income units by the close of the 6-month period following the close of that first year. This provides an additional six months after the first year of the credit period to qualify units in order to avoid the 2/3-unit rule.

Concerning compliance, the notice will provide an extension to the requirement for a 30-day notice for HFA reviews of tenant files through the end of 2022 and will permit HFAs to defer physical inspections through June 30, 2022, with the option to extend the deferral to the end of 2022 in consultation with local public health experts. An  Agency was not required to review tenant files in the period beginning on  April  1,  2020, and ending on  December  31,  2021.   The  Agency must have resumed tenant-file review as due under  §  1.42-5 as of  January  1,  2022.    For purposes of  §  1.42-5(c)(2)(iii)(C)(3),  between April  1,  2020,  and the end of 2022,  when the  Agency gives an Owner reasonable notice that it will review low-income certifications of not-yet-identified low-income units,  it may treat the reasonable notice as being up to 30  days.   Beginning on January  1,  2023,  for this purpose reasonable notice again is generally no more than 15 days. 

An  Agency is not required to conduct compliance monitoring physical inspections in the period beginning on  April  1,  2020, and ending on June  30,  2022.   Because of the high  State-to-State and intra-State variability of  COVID-19 transmission,  an Agency,  in consultation with public health experts,  may extend the waiver in the preceding sentence if the level of transmission makes such an extension appropriate.   Depending on varying rates of transmission,  the extension may be Statewide,  may be limited to specific locales,  or maybe on a project-by-project basis.   No such extension may go beyond December  31,  2022.   The  Agency must resume compliance-monitoring reviews as due under  §  1.42-5  once the waiver expires. For purposes of  §  1.42-5(c)(2)(iii)(C)(3),  between April  1,  2020,  and the end of 2022 only,  when the Agency gives an Owner reasonable notice that it will physically inspect not-yet-identified low-income units,  it may treat the reasonable notice as being up to 30  days.   Beginning on  January  1,  2023,  for this purpose reasonable notice again is generally no more than  15 days.   

The closure of amenities or common areas in LIHTC properties due to COVID-19 will not result in a reduction of eligible basis and essential workers may be provided emergency housing in LIHTC properties. This will apply until December 31, 2022.   During the above period,  an HFA may deny any application of the above waiver or,  based on public health criteria,  may limit the waiver to partial closure,  or to limited or conditional access of an amenity or common area.   (For  example,  the  Agency  may  apply  the  waiver  to  access  an  amenity  or common area that  is  limited  to  persons  wearing  masks  or  to  persons fully vaccinated against  COVID-19.)

The following relief is provided for tax-exempt bond properties:

THE  12-MONTH TRANSITION  PERIOD  TO  MEET  SET-ASIDES FOR QUALIFIED  RESIDENTIAL  RENTAL  PROJECTS.   For purposes of section 5.02  of  Rev.  Proc.  2004-39,  if the last day of a 12-month transition period for a qualified residential rental project originally was on or after  April  1, 2020,  and before December  31,  2022,  then that last day is postponed to December  31, 2022. B

THE § 147(d)  2-YEAR  REHABILITATION  EXPENDITURE  PERIOD  FOR BONDS USED  TO  PROVIDE QUALIFIED  RESIDENTIAL  RENTAL  PROJECTS.  If a bond is used to provide a qualified residential rental project and if the last day of the  §  147(d)  2-year  rehabilitation expenditure period for the bond originally was on or after  April  1,  2020,  and before  December  31,  2023,  then that last day is postponed to the earlier of eighteen months from the original due date or  December  31,  2023.

Owners of LIHTC or tax-exempt bond properties that may be affected by this relief should obtain a copy of the IRS Notice when published on January 14.