The IRS has published a revised Audit Guide for the Low-Income Housing Tax Credit Program, with a revision date of August 11, 2015. The Guide is intended to assist IRS examiners when auditing Partnerships that utilize the Federal Low-Income Housing Tax Credit under Section 42 of the Internal Revenue Code (LIHTC).
The Guide contains more than 330 pages and provides detailed and comprehensive information for IRS staff involved in program reviews and audits. Every area relating to the development and operation of LIHTC properties is covered in detail. The importance of the Guide cannot be overstated since it will be the primary source of guidance for IRS agents conducting audits of Section 42 properties and partnerships. Detailed discussion is included for the following areas:
- HFA/IRS Responsibilities;
- How tax returns are analyzed for audit potential;
- Techniques to be used during an audit;
- 8609 Issues;
- Relevance of the Extended Use Agreement;
- The Non-Profit Set-aside and related requirements;
- Removing taxpayers from the program;
- A comprehensive discussion of all elements relating to eligible basis;
- Determination of the applicable fraction;
- Calculation of qualified basis;
- Discussion of the 4% and 9% credit;
- Adjusting taxpayer credits; and
- Credit recapture
In order to provide information on the contents of the Guide in a way that will best suit my clients, I will be developing a series of articles on individual sections of the Guide and how those sections will affect development and operational decisions. As always, I will send copies of these articles directly to clients. The articles will also be posted on our website.
Feel free to contact me with any questions regarding the revised Guide.
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