Fillable Form 8823 2019 Report of Noncompliance

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Form 8823 2019 Report of Noncompliance

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Form 8823
(Rev. December 2019)
Department of the Treasury
Internal Revenue Service
Low-Income Housing Credit Agencies
Report of Noncompliance or Building Disposition
▶
File a separate Form 8823 for each building that is disposed of or goes out of compliance.
▶
Go to www.irs.gov/Form8823 for the latest information.
OMB No. 1545-1204
Check here if this is an
amended return
▶
IRS Use Only
1 Building name (if any). Check if line 1 differs from Form 8609
▶
Street address
City or town, state, and ZIP code
2 Building identification number (BIN)
3 Owner’s name. Check if line 3 differs from Form 8609 . .
▶
Street address
City or town, state, and ZIP code
4 Owner’s taxpayer identification number
EIN SSN
5 Total credit allocated to this BIN . . . . . . . . . . . . . . . . . . . . . . . .
▶
$
6 If this building is part of a multiple building project, enter the number of buildings in the project . . . . . . . . .
▶
7 a Total number of residential units in this building . . . . . . . . . . . . . . . . . . . . . . .
▶
b Total number of low-income units in this building . . . . . . . . . . . . . . . . . . . . . .
▶
c Total number of residential units in this building determined to have noncompliance issues (see instructions) . . . . .
▶
d Total number of units reviewed by agency (see instructions) . . . . . . . . . . . . . . . . . . .
▶
8 Date building ceased to comply with the low-income housing credit provisions (see instructions) (MMDDYYYY) . .
9 Date noncompliance corrected (if applicable) (see instructions) (MMDDYYYY) . . . . . . . . . . . .
10 Check this box if you are filing only to show correction of a previously reported noncompliance problem . .
▶
11 Check the box(es) that applies:
Out of
compliance
Noncompliance
corrected
a Household income above income limit upon initial occupancy . . . . . . . . . . . . . . . . .
b Owner failed to correctly complete or document tenant’s annual income recertification . . . . . . . . .
c Violation(s) of the UPCS or local inspection standards including casualty losses (see instructions) (attach explanation)
d Owner failed to provide annual certifications or provided incomplete or inaccurate certifications . . . . . . .
e Changes in Eligible Basis or the Applicable Percentage (see instructions) . . . . . . . . . . . . .
f Project failed to meet minimum set-aside requirement (20/50, 40/60, average income test) (see instructions) . . .
g Gross rent(s) exceeds limits . . . . . . . . . . . . . . . . . . . . . . . . . . .
h Project not available to the general public (see instructions) (attach explanation) . . . . . . . . . . .
i Violation(s) of the Available Unit Rule under section 42(g)(2)(D)(ii) . . . . . . . . . . . . . . . .
j Violation(s) of the Vacant Unit Rule under Reg. 1.42-5(c)(1)(ix) . . . . . . . . . . . . . . . . .
k Owner failed to execute and record extended-use agreement within time prescribed by section 42(h)(6)(J) . . . .
l Low-income units occupied by nonqualified full-time students . . . . . . . . . . . . . . . . .
m Owner did not properly calculate utility allowance . . . . . . . . . . . . . . . . . . . .
n Owner has failed to respond to agency requests for monitoring reviews . . . . . . . . . . . . . .
o Low-income units used on a transient basis (attach explanation) . . . . . . . . . . . . . . . .
p Building is no longer in compliance nor participating in the section 42 program. (Attach explanation.) . . . . .
q Other noncompliance issues (attach explanation) . . . . . . . . . . . . . . . . . . . .
12 Additional information for any line above. Attach explanation and check box . . . . . . . . . .
▶
13 a Building disposition by Sale Foreclosure Destruction Other (attach explanation)
b Date of disposition (MMDDYYYY) . . . . . . . . . . . . . . . . . . . . . . . . .
c New owner’s name
Street address
City or town, state, and ZIP code
d New owner’s taxpayer identification number
EIN SSN
14
Name of contact person
15 Telephone number of contact person
Ext.
Under penalties of perjury, I declare that I have examined this report, including accompanying statements and schedules, and, to the best of my knowledge and belief, it is
true, correct, and complete.
▲
Signature of authorizing official
▲
Print name and title
▲
Date (MMDDYYYY)
For Paperwork Reduction Act Notice, see instructions.
Cat. No. 12308D
Form 8823 (Rev. 12-2019)
Form 8823 (Rev. 12-2019)
Page 2
General Instructions
Section references are to the Internal Revenue Code
unless otherwise noted.
Future developments. For the latest information about
developments related to Form 8823 and its instructions,
such as legislation enacted after they were published, go
to www.irs.gov/Form8823.
Purpose of Form
Housing credit agencies use Form 8823 as part of their
compliance monitoring responsibilities under section
42(m)(1)(B)(iii) to notify the IRS of any building disposition
or noncompliance with the low-income housing tax credit
provisions.
The housing credit agency should also give a copy of
Form 8823 to the owner(s).
Who Must File
Any authorized housing credit agency that becomes
aware that a low-income housing building was disposed
of or is not in compliance with the provisions of section 42
must file Form 8823.
When To File
File Form 8823 no later than 45 days after (a) the building
was disposed of, or (b) the end of the time allowed the
building owner to correct the condition(s) that caused
noncompliance. For details, see Regulations section
1.42-5(e).
Where To File
File Form 8823 with the:
Department of the Treasury
Internal Revenue Service Center
Philadelphia, PA 19255-0549
Specific Instructions
Amended return. If you are filing an amended return to
correct previously reported information, check the box at
the top of page 1.
Line 2. Enter the building identification number (BIN)
assigned to the building by the housing credit agency as
shown on Form 8609.
Lines 3, 4, 13c, and 13d. If there is more than one owner
(other than as a member of a pass-through entity), attach a
schedule listing the owners, their addresses, and their
taxpayer identification numbers. Indicate whether each
owner’s taxpayer identification number is an employer
identification number (EIN) or a social security number (SSN).
Both the EIN and the SSN have nine digits. An EIN has
two digits, a hyphen, and seven digits. An SSN has three
digits, a hyphen, two digits, a hyphen, and four digits, and
is issued only to individuals.
Line 7d. “Reviewed by agency” includes physical
inspection of the property, tenant file inspection, or
review of documentation submitted by the owner.
Regulations section 1.42-5(c)(2)(iii)(B) provides that a
housing credit agency must conduct on-site inspections
and low-income certification review of not fewer than the
minimum number of low-income units set forth in the
table found in Regulations section 1.42-5(c)(2)(iii).
Note: If the only noncompliance issue identified by the
physical inspection of the property on line 11c relates to
a common area, then the number of units identified on
line 7c should be -0-.
Line 8. Enter the date that the building ceased to comply
with the low-income housing credit provisions. If there are
multiple noncompliance issues, enter the date for the
earliest discovered issue. Do not complete line 8 for a
building disposition. Instead, skip lines 9 through 12, and
complete line 13.
Line 9. Enter the date that the noncompliance issue was
corrected. If there are multiple issues, enter the date the
last correction was made.
Line 10. Do not check this box unless the sole reason for
filing the form is to indicate that previously reported
noncompliance problems have been corrected.
Lines 11a through 11p. Check only the “Out of
compliance” box if the issue causing the noncompliance
remains uncorrected at the end of the correction period.
Check both the “Out of compliance” and “Noncompliance
corrected” boxes if the noncompliance was corrected
within the correction period. Check only the
“Noncompliance corrected” box if the noncompliance was
previously reported to the IRS on a separate Form 8823.
Line 11c. Housing credit agencies must use either (a) the
local health, safety, and building codes (or other
habitability standards); or (b) the Uniform Physical
Condition Standards (UPCS) (24 C.F.R. section 5.703) to
inspect the project, but not in combination. The UPCS
does not supersede or preempt local codes. Thus, if a
housing credit agency using the UPCS becomes aware of
any violation of local codes, the agency must report the
violation. Attach a statement describing either (a) the
deficiency and its severity under the UPCS (that is, minor
(level 1), major (level 2), and severe (level 3)); or (b) the
health, safety, or building violation under the local codes.
The Department of Housing and Urban Development’s
Real Estate Assessment Center has developed a
comprehensive description of the types and severities of
deficiencies entitled “Revised Dictionary of Deficiency
Definitions” found at www.hud.gov. Under Regulations
section 1.42-5(e)(3), report all deficiencies to the IRS
whether or not the noncompliance or failure to certify is
corrected at the time of inspection. Physical damage to
low-income housing credit projects caused by casualty
events and that render residential rental units or buildings,
or common areas associated with the property,
unsuitable for occupancy is reported as noncompliance
with the UPCS or local standards. While no credit is
allowable during the time the property is being restored
by reconstruction or replacement, section 42(j)(4)(E)
provides relief from the credit recapture provisions; that
is, the recapture provisions are not applied when there is
a reduction in qualified basis by reason of a casualty loss
to the extent such loss is restored by reconstruction or
replacement within a reasonable period.
Line 11d. Report the failure to provide annual
certifications or the provision of certifications that are
known to be incomplete or inaccurate as required by
Regulations section 1.42-5(c). As examples, report a
failure by the owner to include a statement summarizing
violations (or copies of the violation reports) of local
health, safety, or building codes; report an owner who
provided inaccurate or incomplete statements concerning
corrections of these violations.
Form 8823 (Rev. 12-2019)
Page 3
Line 11e. For buildings placed in service after July 30,
2008, report any federal grant used to finance any costs
that were included in the eligible basis of any building.
Report changes in common areas when they become
commercial, when fees are charged for facilities, etc. For
buildings placed in service after July 30, 2008, report any
obligation the interest on which is exempt from tax under
section 103 that is or was used (directly or indirectly) with
respect to the building or its operation during the
compliance period and that was not taken into account
when determining eligible basis at the close of the first
year of the credit period.
Line 11f. Failure to satisfy the minimum set-aside
requirement for the first year of the credit period results in
the permanent loss of the entire credit.
Failure to maintain the minimum set-aside requirement
for any year after the first year of the credit period results
in recapture of previously claimed credit and no allowable
credit for that tax year. No low-income housing credit is
allowable until the minimum set-aside is restored for a
subsequent tax year.
In 2018, Congress revised section 42(g) to add a third
minimum set-aside: the average income test. See section
42(g)(1)(C) for more information about the requirements of
the average income test.
Line 11h. All units in the building must be for use by the
general public (as defined in Regulations section 1.42-9
and further clarified in section 42(g)(9)), including the
requirement that no finding of discrimination under the
Fair Housing Act occurred for the building. Low-income
housing credit properties are subject to Title VIII of the
Civil Rights Act of 1968, also known as the Fair Housing
Act. The Act prohibits discrimination in the sale, rental,
and financing of dwellings based on race, color, religion,
sex, national origin, familial status, and disability. See 42
U.S.C.A. sections 3601 through 3619.
It also mandates specific design and construction
requirements for multifamily housing built for first
occupancy after March 13, 1991, in order to provide
accessible housing for individuals with disabilities. The
failure of low-income housing credit properties to comply
with the requirements of the Fair Housing Act will result in
the loss of the low-income housing credit.
Individuals with questions about the accessibility
requirements can obtain the Fair Housing Act Design
Manual through www.huduser.org.
Line 11i. The owner must rent to low-income tenants all
comparable units that are available or that subsequently
become available in the same building in order to
continue treating the over-income unit(s) as a low-income
unit. All units affected by a violation of the available unit
rule may not be included in qualified basis. When the
percentage of low-income units in a building again equals
the percentage of low-income units on which the credit is
based, the full availability of the credit is restored. Thus,
only check the “Noncompliance corrected” box when the
percentage of low-income units in the building equals the
percentage on which the credit is based.
Line 11k. Section 42(h)(6) requires owners of low-income
housing credit properties to enter into an extended use
agreement with the state agency that allocated the
credits to the project. Building owners must agree to a
long-term commitment beginning on the first day of the
15-year compliance period and ending on the later of (1)
the date specified by the state agency in the agreement,
or (2) the date that is 15 years after the close of the
15-year compliance period.
The extended use agreement must (1) specify that the
applicable fraction for the building for each year in the
extended use period will not be less than the applicable
fraction specified in the extended use agreement and
prohibit the eviction or the termination of tenancy (other
than for good cause) of an existing tenant of any low-
income unit or any increase in the gross rent with respect
to such unit not otherwise permitted under section 42, (2)
allow individuals (whether prospective, present, or former
occupants) who meet the income limitations applicable to
the building under section 42(g) the right to enforce in state
court the requirements and prohibitions under section 42
(h)(6)(B)(i) throughout the extended use period, (3) prohibit
the disposition to any person of any portion of the building
unless all of the building is disposed of to that person, (4)
prohibit the refusal to lease to section 8 voucher holders
because of the status of the prospective tenant as such a
holder, and (5) provide that the agreement is binding on all
successors of the taxpayer. The extended use agreement
must be recorded as a restrictive covenant with respect to
the property under state law.
Noncompliance should be reported if an extended use
agreement is not executed and recorded as a restrictive
covenant with respect to the property under state law or
the owner failed to correct the noncompliance within the
1-year correction period provided by section 42(h)(6)(J).
The 1-year correction period begins when the agency
notifies the owner in writing that an extended use
agreement is not recorded as a restrictive covenant with
respect to the property under state law. A copy of the
notification letter should be included as an attachment to
Form 8823 when filed with the IRS.
Line 11q. Check this box for noncompliance events other
than those listed on lines 11a through 11p. Attach an
explanation. For projects with allocations from the
nonprofit set-aside under section 42(h)(5), report the lack
of material participation by a non-profit organization (that
is, regular, continuous, and substantial involvement) that
the housing credit agency learns of during the compliance
period.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the
right amount of tax.
You are not required to provide the information
requested on a form that is subject to the Paperwork
Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its
instructions must be retained as long as their contents
may become material in the administration of any Internal
Revenue law. Generally, tax returns and return
information are confidential, as required by section 6103.
Form 8823 (Rev. 12-2019)
Page 4
The time needed to complete and file this form will vary
depending on individual circumstances. The estimated
average time is:
Recordkeeping . . . . . . . . . 11 hr., 43 min.
Learning about the law
or the form . . . . . . . . . . . . 1 hr., 35 min.
Preparing and sending
the form to the IRS . . . . . . . . . 1 hr., 51 min.
If you have comments concerning the accuracy of
these time estimates or suggestions for making this form
simpler, we would be happy to hear from you. You can
send your comments to www.irs.gov/FormComments. Or
you can write to the Internal Revenue Service, Tax Forms
and Publications Division, 1111 Constitution Ave. NW,
IR-6526, Washington, DC 20224. Do not send the form to
this address. Instead, see Where To File, earlier.
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Form 8823 2019 Report of Noncompliance

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Completed 24 March 2020

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