Instructions For Form Dtf-627 - Low-Income Housing Credit Surety Bond
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2New York State Department of Taxation and Finance
DTF-627- I
Instructions for Form DTF-627
(9/04)
Low-Income Housing Credit Surety Bond
If the principal fails to post a strengthening or superseding bond
General information
within 60 days from the date of the notice of termination of
Use Form DTF-627, Low-Income Housing Credit Surety Bond , to
registration, or on which a surety’s liability on a bond terminates,
post a bond under Tax Law section 18(b)(7) to avoid recapture of
recapture under section 18(b) is required.
the low-income housing credit.
Period of the bond
The bond ensures payment of the recapture amount imposed
under Tax Law section 18(b). The conditions of the bond are that
The liability stated on the bond must be for the period of years
the principal (taxpayer):
remaining in the 15-year compliance period of the building plus an
additional 58 months. The compliance period begins with the tax
• does not attempt to defraud the state of New York of any tax
year the building was placed in service or the succeeding tax year
under section 18;
if an election is made under New York State Public Housing Law,
• files all returns and statements as required by law or regulation;
Article 2-A, section 21(3)(b).
• pays all taxes including any penalties and interest charges; and
Who must file
• complies with all other requirements of the law and regulations
under section 18.
Taxpayers who claimed a low-income housing credit on a
residential building and disposed of the building or an ownership
Qualifying sureties
interest in it in a tax year during the 15-year compliance period
Form DTF-627 must be:
must file this form or Form DTF-627.1, Low-Income Housing Credit
Collateral Security , to avoid recapture of the credit claimed. A
• properly executed by a surety company that is registered with,
de minimis rule may apply to certain dispositions of interests in
and under the supervision of, the New York State Insurance
partnerships that own buildings in which a credit was claimed. See
Department;
Federal Rev. Rul. 90-60 1990-2 C.B. 3, for additional information.
• approved by the Department of Taxation and Finance; and
• in the amount of tax required to be recaptured under Tax Law
Partnerships
section 18(b).
Internal Revenue Code (IRC) section 42(j)(5) partnerships
Any person holding a power of attorney in an IRC section 42(j)(5)
A taxpayer may not be a surety for itself, nor may a member of a
partnership (a partnership with 35 or more partners that has not
firm or partner in a partnership be a surety for the firm or
elected out of the section 42(j)(5) provisions) may post bond as
partnership of which he or she is a member or partner.
principal on behalf of the partnership. A bond posted on behalf of a
Surety termination
partnership must be posted in the partnership’s name, with the
name of the authorized representative of the partnership posting
If a surety’s registration is terminated, the surety may be relieved of
the bond appearing immediately below the partnership’s name.
liability under the bond provided it notifies the principal and the
Commissioner of the Department of Taxation and Finance within
Partnerships that elected out of the IRC section 42(j)(5)
ten days of the termination. The notice must be sent by certified
provisions or have fewer than 35 partners — If partners in
mail and must state that the principal has 60 days from the
partnerships to which IRC section 42(j)(5) does not apply want to
postmark date to get an adequate strengthening or superseding
post bond, the partners must post bond in their individual capacity
bond with another surety that is registered with, and under the
as principals.
supervision of, the New York State Insurance Department. If notice
is given, the principal’s rights under the bond will end 60 days after
When and where to file
the postmarked date of the notice.
Within 60 days after the date of disposition of the building or
A qualified surety (or coinsuring surety) may terminate its liability
interest therein, the taxpayer or the surety must submit the original
on a bond only if the surety notifies the principal and the Tax
and one copy of Form DTF-627 to:
Department at least 60 days before the date the surety wants to
INCOME TAX AUDIT ADMINISTRATOR
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terminate its liability. The notice must state that the principal has
INCOME/FRANCHISE DESK AUDIT BUREAU
60 days from the termination date to obtain an adequate
BUILDING 9 – ROOM 430
superseding or strengthening bond from another qualified surety
W A HARRIMAN CAMPUS
(or coinsuring surety).
ALBANY NY 12227-0170
When filing your income or franchise tax return, also attach a copy
If the surety does not provide this notice, it remains liable for the
of Form DTF-627.
amount posted on the bond. If the surety gives notice but does not
meet the 60-day notification requirement or fails to include a
Private delivery service
termination date in the notice, the surety’s liability will terminate
If you choose, you may use a private delivery service, instead of
60 days after the postmark date on the notice.
the U.S. Postal Service, to file this Form DTF-627. However, if, at a
Send the Tax Department copy of the notice to:
later date, you need to establish the date you filed this form, you
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cannot use the date recorded by a private delivery service unless
INCOME TAX AUDIT ADMINISTRATOR
INCOME/FRANCHISE DESK AUDIT BUREAU
you used a delivery service that has been designated by the U.S.
BUILDING 9 – ROOM 430
Secretary of the Treasury or the Commissioner of Taxation and
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Finance. (Currently designated delivery services are listed in
ALBANY NY 12227-0170
Publication 55, Designated Private Delivery Services. See
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