Form 8703 (Rev. 9-2013)
Page 3
Future Developments
The IRS has created a page on IRS.gov for
information about Form 8703 and its
instructions, at www.irs.gov/form8703.
Information about any future developments
affecting Form 8703 (such as legislation enacted
after we release it) will be posted on that page.
General Instructions
Section references are to the Internal Revenue
Code unless otherwise noted.
Purpose of form. Form 8703 is used by an
operator of a residential rental project to
provide annual information the IRS will use to
determine whether a project continues to be a
qualified residential rental project under
section 142(d). If so, and certain other
requirements are met, bonds issued in
connection with the project are considered
“exempt facility bonds” and the interest paid
on them is not taxable to the recipient.
Who must file. The operator of a residential
rental project for which an election was made
under section 142(d) must file Form 8703
annually. A separate Form 8703 must be filed
for each project.
When to file. File Form 8703 by March 31
after the close of the calendar year for which
the certification is made. Form 8703 must be
filed annually during the qualified project
period. See the instructions for line 2 for the
definition of “qualified project period.”
Where to file. File Form 8703 with the:
Internal Revenue Service
Service Center
Ogden, UT 84201
Penalty. Section 6652(j) provides for a penalty
of $100 for each failure to comply with the
section 142(d)(7) certification requirements
unless it can be shown that failure to file is due
to reasonable cause and not to willful neglect.
Questions on filing Form 8703. For specific
questions on how to file Form 8703, send an
email to the IRS at:
TaxExemptBondQuestions@irs.gov
Put "Form 8703 Question" in the subject
line. In the email, include a description of your
question, a return email address, the name of
a contact person, and a telephone number.
Specific Instructions
Part I—General Information
Enter the name, address (including ZIP or
foreign postal code), and taxpayer identification
number of both the operator and the owner of
the project. Enter the address of the project. Do
not use P.O. boxes.
Amended return. An issuer may file an
amended return to change or add to the
information reported on a previously filed
return for the same date of issue. If you are
filing to correct errors or change a previously
filed return, check the "Amended Return" box
in the heading of the form.
The amended return must provide all the
information reported on the original return, in
addition to the new or corrected information.
Attach an explanation of the reason for the
amended return.
Report number. This line is for IRS use only.
Do not make an entry.
Line 1. To be a qualified residential rental
project, one of the following tests must have
been elected for the project:
(a) 20-50 test. 20% or more of the residential
units must be occupied by individuals whose
income is 50% or less of the area median
gross income.
(b) 40-60 test. 40% or more of the residential
units must be occupied by individuals whose
income is 60% or less of the area median
gross income.
(c) 25-60 test (NYC only). 25% or more of the
residential units must be occupied by
individuals whose income is 60% or less of the
area median gross income.
(d) 20-60 test (Gulf Opportunity (GO) Zone,
Midwestern disaster areas, and Hurricane
Ike disaster areas only). 20% or more of the
residential units must be occupied by
individuals whose income is 60% or less of the
area median gross income.
(e) 40-70 test (GO Zone, Midwestern disaster
areas, and Hurricane Ike disaster areas
only). 40% or more of the residential units must
be occupied by individuals whose income is
70% or less of the area median gross income.
See Rev. Rul. 94-57, 1994-2 C.B. 5, for
guidance on computing the income limits
applicable to these tests. See Pub. 4492,
Information for Taxpayers Affected by
Hurricanes Katrina, Rita, and Wilma, for details
about the GO Zone. See Pub. 4492-B,
Information for Affected Taxpayers in the
Midwestern Disaster Areas, for details about the
Midwestern Disaster areas.
Line 2. The qualified project period is the
period beginning on the first day that 10% of
the residential units are occupied and ending on
the latest of (a) the date that is 15 years after the
date that 50% of the residential units are
occupied, (b) the first day that no tax-exempt
private activity bond issued for the project is
outstanding, or (c) the date that any assistance
provided for the project under section 8 of the
United States Housing Act of 1937 terminates.
Lines 3a and 3b. If a low-income housing
credit allocation was issued for more than one
building in the project, attach a schedule
listing the building identification number (BIN)
for each building.
Line 4. The determination of whether the
income of a resident of a unit in a project
exceeds the applicable income limit shall be
made at least annually on the basis of the
current income of the resident, except for
respect to any project for any year if during
such year no residential unit in the project is
occupied by a new resident whose income
exceeds the applicable income limit. See
section 142(d)(3)(A). Check "Yes" if there are
no new residents in the project whose income
exceeds the applicable income limits.
Therefore, if “Yes” is checked, complete Part
II, skipping lines 6 through 10.
Part II—Annual Determinations
Line 5. Enter the total number of residential
rental units in the project.
Line 6. Enter the number of residential rental
units occupied by individuals whose income
is:
(a) 50% or less of the area median gross
income (if box 1a was checked),
(b) 60% or less of the area median gross
income (if box 1b, 1c, or 1d was checked),
or
(c) 70% or less of the area median gross
income (if box 1e was checked).
Do not include any units included on line 7.
Line 7. Enter the number of residential rental
units occupied by continuing residents whose
income exceeds the applicable income limit
but whose income is treated as not exceeding
the applicable income limit. Do not include
any units included on line 6. See section
142(d)(3)(B).
Line 9. If line 9 is less than the percentage for
the test elected in item 1, Part I (i.e., 20%,
40%, or 25%), the project is considered in
post-issuance noncompliance. In this case,
check the box in Part IV to certify that the
project “does not meet” the requirements of
section 142(d).
In general, unless the noncompliance is
corrected within a reasonable period, the
noncompliance will cause the exempt facility
bonds for the project to not be qualified
bonds under section 141. When the bonds
are no longer qualified, the interest paid or to
be paid on the bonds is taxable, and the
issuers or brokers of the bonds must report
the taxable interest to bond holders as
required by section 6049. See Regulations
sections 1.103-8(b)(1)-(9) and sections 141,
142, and 103 for additional information.
Lines 10a and 10b. Complete these lines only
if an election was made to treat the project as
a deep-rent skewed project under section
142(d)(4). The 15-40 test that applies to the
deep-rent skewed project election is not an
additional test for satisfying the requirements
of section 142(d)(1). The 15-40 deep-rent
skewed project test relates to the
determination of a low-income tenant’s
income. Generally, a continuing resident’s
income may increase but not exceed 140% of
the applicable income limit (i.e., 50% or less
or 60% or less of the area median gross
income under the line 1a or 1b test). When
the deep-rent skewed election is made and
the requirements of section 142(d)(4)(B) are
met, the income of a continuing resident may
increase up to 170% of the applicable income
limit. If this election is made, at least 15% of
all low-income units in the project must be
occupied by tenants whose income is 40% or
less of the area median gross income.
On line 10a, enter the number of
low-income units occupied by individuals
whose income is 40% or less of the area
median gross income. Also include the
number of units occupied by continuing
residents whose income is treated as not
exceeding the applicable income limit. If the
percentage on line 10b is less than 15%, the
project is not a deep-rent skewed project, and
a continuing resident’s income may not
increase above 140% of the applicable
income limit for purposes of section 142(d).
