IRS Housing Credit COVID-19 Relief Notice Addresses All NCSHA Recommendations

On January 15, the Internal Revenue Service (IRS) issued Notice 2021-12 which extends all COVID-19 relief measures originally provided under Notice 2020-53 and provides further relief not included in that original COVID-19 relief notice. The deadline extensions and waivers provided under Notice 2020-53 expired at the end of 2020.

NCSHA, in a November 16 letter to IRS and Treasury, urged the Service to extend all the provisions of Notice 2020-53 and expand the relief provided to include additional measures. NCSHA applauds the IRS and Treasury for taking action on all our recommendations.

Notice 2021-12 provides the following relief from program deadlines:

  • Extends the deadline to meet the carryover allocation 10 percent test to the earlier of one year from the original due date or September 30, 2021;
  • Extends the 24-month minimum rehabilitation expenditure period to the earlier of one year from the original end date or September 30, 2021;
  • Extends the placed in service deadline for buildings with original deadlines of December 31, 2020, to December 31, 2021;
  • Extends the reasonable period for property restoration or replacement in the event of casualty loss to the earlier of one year from the original end date or December 31, 2021 (applies to casualty losses not due to a presidentially-declared major disaster and to casualty losses due to a pre-COVID-19 presidentially-declared major disaster);
  • Extends the deadline by which a property must meet occupancy obligations by providing that the qualified basis of a building for the first year of the credit period is calculated by taking into account any increase in the number of low-income units by the close of the six-month period following the first year of the credit period;
  • Extends the noncompliance corrective action period by one year, but not beyond December 31, 2021;
  • Extends the 12-month transition period for a tax-exempt bond financed project to satisfy the set-aside for qualification as a residential rental project to September 30, 2021; and
  • Extends the two-year rehabilitation expenditure period for tax-exempt bond financed projects to the earlier of one year from the original due date or September 30, 2021.

The notice extends the two compliance monitoring waivers from Notice 2020-53 as follows:

  • Building owners are not required to perform income recertifications for the period beginning April 1, 2020, and ending September 30, 2021; and
  • State Housing Credit agencies are not required to conduct compliance monitoring inspections or reviews for the period beginning April 1, 2020, and ending September 30, 2021.

Finally, the notice provides guidance clarifying the following:

  • Housing Credit agencies may satisfy their Qualified Allocation Plan public comment requirements through telephonic hearings rather than in-person meetings from April 1, 2020, through September 30, 2021;
  • The temporary closure of property amenities and common space facilities from April 1, 2020, through September 30, 2021, in response to the COVID-19 pandemic will not negatively impact a property’s eligible basis; and
  • Housing Credit properties may be used temporarily to provide emergency housing for medical personnel and other essential workers providing services during the COVID-19 pandemic regardless of income eligibility.

For more information about the relief provided by the notice, see NCSHA’s side-by-side chart comparing the provisions of this notice to NCSHA’s recommendations to IRS in our November 2020 letter and to relief allowed under other IRS revenue procedures related to disasters.

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