Novogradac LIHTC Working Group Comments on Key Compliance Form

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Letter Calls for Revisions to Reduce Respondent Burden, Increase Program Efficiency

Members of the LIHTC Working Group on Sept. 15, 2014 sent a letter to the Internal Revenue Service (IRS) recommending changes meant to improve compliance monitoring for low-income housing tax credit (LIHTC) properties. State and local housing agencies are responsible for monitoring LIHTC properties for compliance with the health and safety standards, rent ceilings, income limits and tenant qualifications of the program. When a housing agency becomes aware of noncompliance or disposition of a building, the agency must notify the IRS using to Form 8823, Low-Income Housing Agencies Report of Noncompliance or Building Disposition.

“Form 8823 is an important tool for addressing noncompliance in low-income housing tax credit properties. But there are several ways to reduce respondent burden without sacrificing the quality of affordable housing provided by the LIHTC program,” said Stacey Stewart, CPA, a partner in Novogradac & Company LLP’s Dover, Ohio office who leads the LIHTC Working Group’s efforts. “The LIHTC Working Group appreciates this opportunity to offer our members’ technical and administrative insights to suggest ways to make sure the low-income housing tax credit remains as effective and efficient as possible.”

In its letter to Treasury, the LIHTC Working Group notes that Form 8823, last revised June 2011, currently implies that there is no distinction between major and minor violations of the uniform physical condition standards (UPCS) or local inspection standards, regardless of whether it is a singular minor violation or numerous minor violations. The letter suggested emphasizing that a minor violation does not need to be reported unless there is a pattern of the same violation occurring or if there is a significant number of minor violations that take place. The change would reduce the number of reported minor violations, reducing paperwork and respondent burden. The LIHTC Working Group said that this change would not negatively impact the living conditions of low-income tenants because many of the minor violations do not involve tenant health or safety issues.

Among other recommendations, the LIHTC Working Group also suggested that the following items be added to Form 8823: a line item for a violation regarding transfers to a different building when the household’s most recent income is more than 140 percent of the applicable limit; a line asking if the development is mixed-income or 100 percent low-income housing tax credit (LIHTC) income-restricted; a request for the current owner’s contact information and phone number; and a section for the name, address and employee identification number (EIN) of the housing credit agency.

“Implementing these suggested changes could make a significant difference in how efficiently the IRS deals with noncompliance,” said Michael J. Novogradac, CPA, managing partner in the firm’s San Francisco office and the LIHTC Working Group’s adviser on industry and governmental affairs. “It would also allow property managers and housing agencies more time to prioritize issues that most directly affect the health and safety of low-income residents.”

For details and a copy of the letter, please go to The LIHTC Working Group was established by Novogradac & Company LLP in 2008 to provide a platform for LIHTC industry participants to work together to resolve technical and administrative LIHTC program issues. Members meet monthly via conference call to provide input regarding pending action items as agreed to by the members of the group. Comments and suggestions generated during the group discussions are agreed to and submitted in writing directly to Treasury, the Department of Housing and Urban Development and/or various state agencies. For more information, visit or email lwg(at)novoco(dot)com.

Novogradac began operations in 1989, and the allied group of Novogradac companies has since grown to more than 500 employees and partners with offices in San Francisco and Long Beach, Calif.; the Washington, D.C., Atlanta, Ga., Detroit, Mich., Kansas City, Mo. and Seattle, Wash. metro areas; St. Louis, Mo., Boston, Mass.; Austin, Texas; Dover, Columbus and Cleveland, Ohio; New York, N.Y.; Portland, Ore.; Naples, Fla. and Chicago, Ill. Specialty practice areas include tax, audit and consulting services for tax-credit-assisted multifamily and affordable housing, community revitalization, rehabilitation of historic properties and renewable energy developments.

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Stacey Stewart

Peter Lawrence
Novogradac & Company LLP
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