Congressional Letter Urges Expedited Action on Average Income Test Final Rule

On May 27, 2022, a bipartisan, bicameral group of House and Senate LIHTC champions sent a letter to Treasury Secretary Janet Yellen and Internal Revenue Service (IRS) Commissioner Charles Retting urging an expedited release of a final rule on income averaging that “ensures the average income test is workable and responsive to feedback on the Internal Revenue Service’s (IRS) October 30, 2020 proposed rule.”

Senate Finance Committee Chairman Ron Wyden (D-OR), Ranking Member Mike Crapo (R-ID), and House Ways and Means Committee Chairman Richard Neal (D-MA) joined Senators Michael Bennet (D-CO), Todd Young (R-IN), Rob Portman (R-OH) and Representatives Suzan DelBene (D-WA), Jackie Walorski (R-IN), and Don Beyer (D-VA) on the communication to Treasury and IRS.

While noting that the President’s recently-released Housing Supply Action Plan stated that the IRS will finalize the income averaging rule no later than September 30, 2022, the letter emphasized the urgency and severity of the affordable housing crisis, thus sending a strong signal for earlier action. The congressional letter urged that the final rule provide a “workable solution that incents affordable housing production.” To that end, we want to note that the letter referenced the December 2021 letter that 32 housing credit stakeholders sent to the Treasury Department and IRS offering a consensus position on how IRS could modify the proposed rule to address the industry’s concerns.