Form 8823 - Low-Income Housing Credit Agencies Report Of Noncompliance Or Building Disposition Page 3
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Form 8823 (Rev. 9-2015)
Page
year of the credit period. For buildings placed in service
The extended use agreement must (1) specify that the
after July 30, 2008, report any obligation the interest on
applicable fraction for the building for each year in the
which is exempt from tax under section 103 that is or was
extended use period will not be less than the applicable
used (directly or indirectly) with respect to the building or
fraction specified in the extended use agreement and
its operation during the compliance period and that was
prohibit the eviction or the termination of tenancy (other
not taken into account when determining eligible basis at
than for good cause) of an existing tenant of any low-
the close of the first year of the credit period.
income unit, or any increase in the gross rent with respect
to such unit not otherwise permitted under section 42, (2)
Item 11f. Failure to satisfy the minimum set-aside
allow individuals (whether prospective, present, or former
requirement for the first year of the credit period results in
occupants) who meet the income limitations applicable to
the permanent loss of the entire credit.
the building under section 42(g) the right to enforce in
Failure to maintain the minimum set-aside requirement
state court the requirements and prohibitions under
for any year after the first year of the credit period results
section 42(h)(6)(B)(i) throughout the extended use period,
in recapture of previously claimed credit and no
(3) prohibit the disposition to any person of any portion of
allowable credit for that tax year. No low-income housing
the building unless all of the building is disposed of to
credit is allowable until the minimum set-aside is restored
that person, (4) prohibit the refusal to lease to section 8
for a subsequent tax year.
voucher holders because of the status of the prospective
Item 11h. All units in the building must be for use by
tenant as such a holder, and (5) provide that the
the general public (as defined in Regulations section
agreement is binding on all successors of the taxpayer.
1.42-9 and further clarified in section 42(g)(9)),
The extended use agreement must be recorded as a
including the requirement that no finding of
restrictive covenant with respect to the property under
discrimination under the Fair Housing Act occurred for
state law.
the building. Low-income housing credit properties are
Noncompliance should be reported if an extended use
subject to Title VIII of the Civil Rights Act of 1968, also
agreement is not executed and recorded as a restrictive
known as the Fair Housing Act. The Act prohibits
covenant with respect to the property under state law or
discrimination in the sale, rental, and financing of
the owner failed to correct the noncompliance within the
dwellings based on race, color, religion, sex, national
one-year correction period provided by section 42(h)(6)(J).
origin, familial status, and disability. See 42 U.S.C.A.
The one-year correction period begins when the agency
sections 3601 through 3619.
notifies the owner in writing that an extended use
It also mandates specific design and construction
agreement is not recorded as a restrictive covenant with
requirements for multifamily housing built for first
respect to the property under state law. A copy of the
occupancy after March 13, 1991, in order to provide
notification letter should be included as an attachment to
accessible housing for individuals with disabilities. The
Form 8823 when filed with the IRS.
failure of low-income housing credit properties to comply
Item 11q. Check this box for noncompliance events
with the requirements of the Fair Housing Act will result in
other than those listed in 11a through 11p. Attach an
the denial of the low-income housing tax credit on a
explanation. For projects with allocations from the
per-unit basis.
nonprofit set-aside under section 42(h)(5), report the lack
Individuals with questions about the accessibility
of material participation by a non-profit organization (i.e.,
requirements can obtain the Fair Housing Act Design
regular, continuous, and substantial involvement) that the
Manual through
housing credit agency learns of during the compliance
period.
Item 11i. The owner must rent to low-income tenants all
comparable units that are available or that subsequently
Paperwork Reduction Act Notice. We ask for the
become available in the same building in order to
information on this form to carry out the Internal Revenue
continue treating the over-income unit(s) as a low-income
laws of the United States. You are required to give us the
unit. All units affected by a violation of the available unit
information. We need it to ensure that you are complying
rule may not be included in qualified basis. When the
with these laws and to allow us to figure and collect the
percentage of low-income units in a building again equals
right amount of tax.
the percentage of low-income units on which the credit is
based, the full availability of the credit is restored. Thus,
You are not required to provide the information
only check the “Noncompliance corrected” box when the
requested on a form that is subject to the Paperwork
percentage of low-income units in the building equals the
Reduction Act unless the form displays a valid OMB
percentage on which the credit is based.
control number. Books or records relating to a form or its
instructions must be retained as long as their contents
Item 11k. Section 42(h)(6) requires owners of tax credit
may become material in the administration of any Internal
properties to enter into an extended use agreement with
Revenue law. Generally, tax returns and return
the state agency that allocated the credits to the project.
information are confidential, as required by section 6103.
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 which is
15 years after the close of the 15-year compliance
period.
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