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

++ 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

++ 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.

++ 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.