Guide for Completing Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition
The scope of this guide is limited to guidelines for preparing Form 8823 for submission to the IRS. Taxpayers are responsible for evaluating the tax consequences of noncompliance with IRC 42.
Table of Contents
- Chapter 1 - Introduction
- Chapter 2 - Instructions for Completing Form 8823, IRS Noncompliance Notification Letter
- Chapter 3 - Guidelines for Determining Noncompliance
- Chapter 4 - Line 11a – Household Income Above Income Limit Upon Initial Occupancy
- Chapter 5 - Line11b – Owner Failed to Correctly Complete or Document Tenant’s Annual Income Recertification
- Chapter 6 - Line 11c – Violation(s) of the UPCS or Local Inspection Standards
- Chapter 7 - Line 11d – Owner Failed to Provide Annual Certification or Provided Incomplete or Inaccurate Certifications
- Chapter 8 - Line 11e – Changes in Eligible Basis
- Chapter 9 - Line 11e – Changes in the Applicable Percentage
- Chapter 10 - Line 11f – Project Failed to Meet Minimum Set-Aside Requirement
- Chapter 11 - Line 11g – Gross Rent(s) Exceed Tax Credit Limits
- Chapter 12 - Line 11h – Project not Available to the General Public
- Chapter 13 - Line 11h – Project not Available to the General Public (Notifications of Fair Housing Act Administrative and Legal Actions)
- Chapter 14 - Line 11i – Violations of the Available Unit Rule Under Section 42(g)(2)(D)(ii)
- Chapter 15 - Line 11j – Violation(s) of the Vacant Unit Rule under Reg. 1.42-5(c)(1)(ix)
- Chapter 16 - Line 11k – Owner Failed to Execute and Record Extended Use Agreement Within Time Prescribed by Section 42(h)(6)(J)
- Chapter 17 - Line 11l – Low-Income Units Occupied by Nonqualified Full-Time Students
- Chapter 18 - Line 11m – Owner Did Not Properly Calculate Utility Allowance
- Chapter 19 - Line 11n – Owner has Failed to Respond to Agency Requests for Monitoring Reviews
- Chapter 20 - Line 11o – Low Income Units Used on a Transient Basis
- Chapter 21 - Line 11p – Project is No Longer in Compliance Nor Participating in the LIHC Program
- Chapter 22 - Line 11q – Other Noncompliance Issue – Qualified Nonprofit Organization Failed to Materially Participate
- Chapter 23 - Line 11q – Other Noncompliance Issues
- Chapter 24 - Line 13 – Building Disposition
- Chapter 25 - Miscellaneous Noncompliance Topics
- Tenant Misrepresentation or Fraud
- Owner/Taxpayer Fraud
- Chapter 26 - Tenant Good Cause Eviction and Rent Increase Protection
Explanations of Revisions
- Asterisks used to identify revisions in the October 2009 version of the guide have been removed and now reflect significant changes made for the January 2011 version of the guide.
- Changes have been made through the text to correct typing and formatting errors. These changes, which do not impact the meaning of the text, are not identified.
- Chapter 1, Exhibit 1, Step 4: The text was updated to explain that a Form 8823 must be filed with the IRS to report the correction of previously reported noncompliance (back in compliance) if corrected within three years after the end of the correction period.
- Chapter 4:
- 4-1: The citation for nonmetropolitan areas in #1 of the list has been updated to reflect the correct Code section; i.e., IRC §42(d)(5)(B)(iv)(IV).
- 4-14: Clarification that assets disposed of for less than fair market value within two years of the effective date of a tenant’s initial certification or recertification, including assets placed in irrevocable trusts, are included as an asset in the determination of the tenant’s income.
- Page 4-21: The list of items specific excluded from income now includes a separate line item for the value of food stamps (line #3).
- Chapter 6: CCA 201042025 was added to the list of references.
- Chapter 7: a note has been added to item #4 on the list to explain that for tax years ending after July 30, 2008, if all the low-income buildings in the project are 100% low-income buildings, owners are not required to complete annual tenant income recertifications.
- Chapter 11: The second of three equations included in Example 1 has been corrected and now reads, “$35,430 x .30 = $10,629.00” instead of “$31,430 x .30 = $10,629.00.”
- Chapter 12: The first sentence of the second paragraph of Example 1 has been revised to read, “Although each unit fell out of compliance….” to reflect Treas. Reg.§1.42-9(c); i.e., the unit is treated as a residential rental unit that is not a low-income unit.
- Chapter 18: The “Out of Compliance” and “Back in Compliance” sections have been significantly expanded to provide additional discussion and examples. The text clarifies that determinations of noncompliance are made when gross rent exceeds the maximum gross rent limit as the result of computational or procedural errors.
Page Last Reviewed or Updated: 2013-06-04
