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AHC staff is available
and well-equipped to assist owners and managers
of affordable housing in achieving, maintaining
and correcting compliance in a variety of
programs, as well as assessing and proposing
best practices for property managers, asset
management and owner staff. Please contact us to
discuss how we can help your organization to
manage in these critical areas of affordable
housing operations.
- Procedures and systems for compliance
- Correcting noncompliance
- File re-construction and clarification
- Capacity building for affordable housing organizations
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Section 42 Tenant File Reviews for IRS Waiver Requests
AHC provides consulting services to Owners that wish to request IRS waiver from certain income reverification requirements for their eligible tax credit properties. AHC can perform waiver reviews for Minnesota Housing projects and must undertake all tenant file reviews for prospective IRS waiver requests for Suballocator HTC projects (see your Suballocator HTC Compliance Monitoring Manual). Below is our process for handling waiver requests.
AHC will conduct a record inspection of 100% of
the units in a property and, if there is no
evidence of noncompliance, will issue a
certification to the Owner that each residential
rental unit in the building was a low-income
unit under Sec. 42 at the end of the most recent
credit period for the building. The Owner then
sends a copy of the AHC certification of
compliance to Minnesota Housing or to their
Suballocator.
See Minnesota Housing’s web site for detailed
information on their waiver procedures and see
your Suballocator’s most recent compliance
monitoring manual for their waiver procedures.
Properties that are 100% tax credit and not
participating in other programs requiring annual
reverifications of income (i.e., Rural Housing,
Section 8) and that have been placed in service,
completed one full year of annual compliance
monitoring reports, are in good standing with
Minnesota Housing or their Suballocator and have
no outstanding items of noncompliance are
eligible to apply for this waiver.
Contact Alan Halm for information on consulting
services for waiver reviews at 651-222-8319 or
alan@ahcinc.net
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Properties Eligible
for the Waiver Request
Owners may submit a request for the Waiver if
the property meets the following requirements:
- 100% of the
project’s rental units are tax credit
eligible as of the end of the most recent
credit year.
- No IRS Form 8823
Report of Noncompliance has been issued for
the property within the last three years.
For any properties with 8823’s that are more
than three years old, no 8823 noncompliance
issues remain uncorrected. Consideration may
be given to projects for which 8823’s have
been issued as corrected within the last
three years if the noncompliance was due to
circumstances beyond the Owner’s control.
- The property is
compliant with all Suballocator requests for
submissions required by the tax credit and
program.
- The property has
had at least one file review/physical
inspection of 20% of the units files. There
are no outstanding deficiencies or other
items from any file reviews or physical
inspections.
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Requesting the Waiver:
Step 1: Owner completes IRS
Form 8877, Request for Waiver of Annual Income
Recertification, Parts I and II. The Owner must
sign both parts of the form.
Management agents may not sign the form for the
Owner.
Submit the form to Minnesota Housing or the
appropriate Suballocator of the tax credits.
Step 2: Minnesota Housing/Suballocator
will review the request to determine whether to
approve the waiver. If approved, Minnesota
Housing/Suballocator will sign the form and
return it to the Owner.
Step 3: Send the original 8877
form signed by Minnesota Housing/Suballocator to
the IRS at the address indicated on the form.
Step 4: Provide Minnesota
Housing/Suballocator a copy of the 8877 form
signed by the IRS.
Note: Minnesota Housing/Suballocator
will not recognize the Waiver as approved until
receiving a fully executed copy of the 8877 that
has been signed by the IRS.
Tenant Self-Recertifications Still
Required if Waiver is Obtained
Once the waiver is approved, the Owner is no
longer required to verify income and assets for
households at the time of annual recertification
only. A self-certification from each household
is still required annually using a Tenant Income
Certification form acceptable to Minnesota
Housing or AHC, which must be signed by the
adult tenants and the Owner’s agent.
Certification and Verification of Income
Still Required at Move-in
The Waiver does not change the requirements for
Owners to determine household eligibility,
verify income and obtain and income
certification from the tenants at move-in.
Revocation of the Waiver
Please read the Revenue Procedure 2004-38 and
the IRS Form 8877 instructions carefully. Once
obtained, the Waiver remains in effect for the
entire compliance period unless it is revoked.
The IRS or the Suballocator may revoke the
Waiver at any time during the compliance period.
The Waiver will be revoked automatically if
there is a change in the Ownership for federal
tax purposes. The new Owner may apply for the
waiver by following the procedures described
above.
Please Note: All other requirements
under the property’s Land Use Restriction
Agreement (LURA) and Section 42 remain in place.
The Waiver only relieves certain recertification
requirements for the tax credit program.
Receiving the Waiver does not waive the
property’s recertification requirements for
other income restricted housing programs.
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