A low-income housing partnership gets 9100 relief to fix an inadvertent "deep rent skewing" election on Form 8609

Plain-English summary

A partnership that owns a low-income housing tax credit project filed Form 8609 to certify its building, but it accidentally checked the box on line 10d that elects "deep rent skewing" under section 142(d)(4)(B) (a special rule made applicable to section 42 credits). That election is irrevocable and imposes strict extra rent and income limits, and the partnership says its contemporaneous records show it never intended to make it. Because the election deadline had passed, the partnership asked for relief under Treasury Regulation 301.9100-3, which lets the IRS extend the time to make (or correct) a regulatory election when the taxpayer acted reasonably and in good faith and relief won't prejudice the government. The IRS granted the relief: the partnership has 120 days from the date of the letter to file an amended Form 8609 with the correct, intended election. The ruling is narrow. The IRS expressed no opinion on whether the original Form 8609 was otherwise timely or correct, or on whether the project actually qualifies for the low-income housing credit.

Ruling snapshot

• Question: Should the IRS grant an extension of time under Treas. Reg. § 301.9100-3 to correct an inadvertent section 142(d)(4)(B) "deep rent skewing" election on Form 8609?
• Outcome: Approved (120-day extension to file an amended Form 8609 with the intended election)
• Key authorities: IRC § 42(g), § 42(g)(4); § 142(d)(4)(B); Treas. Reg. § 301.9100-1, § 301.9100-3, § 301.9100-7T

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202144015 Third Party Communication: None
Release Date: 11/5/2021 Date of Communication: Not Applicable
Index Number: 42.00-00, 9100.00-00
Person To Contact:
---------------------------------------------- --------------------------------, ID No. ----------
------------------- Telephone Number:
------------------------------------------ ---------------------
----------------------------------------- Refer Reply To:
In Re: CC:PSI:B05
------------------------------------------------- PLR-103523-21
Date:
August 10, 2021

LEGEND

Taxpayer = ----------------------------------------------------------------------------------------------
------------------------
----------------------------------------------------------------------------------------------
State = -------------

Address = ----------------------------------------------------------------------------------------------
------------------------------------

BIN = ------------------

Year 1 = -------

Dear ---------:

   This letter responds to your authorized representative's letter dated January 28,

2021, submitted on behalf of Taxpayer, requesting an extension of time to file an
amended Form 8609, Low-Income Housing Credit Allocation and Certification, with
respect to an election made for purposes of § 42(g) under § 142(d)(4)(B) (made
applicable by § 42(g)(4)) of the Internal Revenue Code, pursuant to §§ 301.9100-1 and
301.9100-3 of the Procedure and Administration Regulations.

   According to the information submitted and representations made, Taxpayer, a

partnership for federal income purposes, owns and operates project in State. The
project is located at Address and identified with a building identification number (BIN).
PLR-103523-21 2

The project was placed in service in Year 1. On the Form 8609 filed with respect to the
project, the box on line 10d was inadvertently checked to make the election for deep
rent skewing under § 142(d)(4)(B). Taxpayer’s intent to not make this election is
evidenced by Taxpayer's contemporaneous documentation.

   Section 42(g) provides rules defining a qualified low-income housing project.

Section 42(g)(4) makes applicable to § 42 projects the special rule under § 142(d)(4) for
deep rent-skewing. Section 142(d)(4)(B) provides that a project is a deep rent skewed
project if the owner of the project elects to have § 142(d)(4) apply and, at all times
during the qualified project period, the project meets the following requirements: (i) 15
percent or more of the low-income units in the project are occupied by individuals
whose income is 40 percent or less of area median gross income; (ii) the gross rent with
respect to each low-income unit in the project does not exceed 30 percent of the
applicable income limit that applies to individuals occupying the unit; and (iii) the gross
rent with respect to each low-income unit in the project does not exceed 50 percent of
the average gross rent with respect to units of comparable size that are not occupied by
individuals who meet the applicable income limit.

     Section 42(l)(1) describes the requisite certifications with respect to any qualified

low-income building for the first taxable year of the credit period (first-year
certifications). In the case of a failure to make the required certification on the date
prescribed for it, unless it is shown that the failure is due to reasonable cause and not to
willful neglect, no credit is to be allowable by reason of § 42(a) for the building for any
taxable year ending before the certification is made.

   Section 301.9100-7T(a)(2)(i) of the temporary Procedure and Administration

Regulations provides that the election under § 142(d)(4)(B) must be made by the due
date (taking extensions into account) of the tax return for the first taxable year for which
the election is to be effective. Section 301.9100-7T(a)(3)(i) provides that the election
under § 142(d)(4)(B) must be made by attaching a statement to the tax return for the
taxable year for which the election is to be effective. The statement must (A) contain the
name, address, and taxpayer identification number of the electing taxpayer; (B) identify
the election; (C) indicate the section of the Code under which the election is being
made; (D) specify, as applicable, the period for which the election is being made and/or
the property or other items to which the election is to apply; and (E) provide any
information required by the relevant statutory provisions and any information necessary
to show that the taxpayer is entitled to the election. For purposes of § 42, Form 8609
serves the purpose of the statement for making the § 142(d)(4)(B) election and the
information required by § 301.9100-7T(a)(3)(i). Section 301.9100-7T(a)(4)(i) provides
that the election under § 142(d)(4)(B) is irrevocable.

    Section 1.42-1(h) of the Income Tax Regulations provides that a completed Form

8609 must be filed by the building owner with the IRS. The requirements for completing
and filing Form 8609 are addressed in the instructions to the form.
PLR-103523-21 3

   The instructions to Form 8609 provide that the building owner must make a one-

time submission of Form 8609 to the Low-Income Housing Credit (LIHC) Unit at the IRS
Philadelphia campus. The building owner must file the original of the Form 8609 with
the LIHC Unit no later than the due date (including extensions) of its first tax return with
which it is filing Form 8609-A, Annual Statement for Low-Income Housing Credit.

   Sections 301.9100-1 through 301-9100-3 provide the standards the

Commissioner will use to determine whether to grant an extension of time to make an
election.

   Section 301.9100-1(b) defines the term “regulatory election” as including an

election whose due date is prescribed by a regulation published in the Federal Register,
or a revenue ruling, revenue procedure, notice, or announcement published in the
Internal Revenue Bulletin.

   Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable

extension of time under the rules set forth in §§ 301.9100-2 and 301.9100-3 to make a
regulatory election, or a statutory election (but no more than six months except in the
case of a taxpayer who is abroad), under all subtitles of the Code, except E, G, H, and I.

   Section 301.9100-2 provides automatic extensions of time for making certain

elections. Section 301.9100-3 provides extensions of time for making elections that do
not meet the requirements of § 301.9100-2.

   Requests for relief under § 301.9100-3(a) will be granted when the taxpayer

provides evidence (including affidavits described in § 301.9100-3(e)) to establish that
the taxpayer acted reasonably and in good faith, and that granting relief will not
prejudice the interests of the government.

   Based solely on the facts submitted and the representations made, we conclude

that the requirements of §§ 301.9100-1 and 301.9100-3 have been met. Accordingly,
Taxpayer is granted an extension of time to make the election for purposes of § 42(g)
under § 142(d)(4)(B) for the project by filing within 120 days from the date of this letter
an amended Form 8609 that includes the intended election. The amended Form 8609
(along with a copy of this letter) must be filed with the LIHC Unit at the following address
provided in the instructions to Form 8609:

   Department of the Treasury
   Internal Revenue Service Center
   Philadelphia, PA 19255-0549

   Copies of this letter are enclosed for this purpose.

   Except as specifically set forth above, we express or imply no opinion concerning

the federal tax consequences of the facts described above under any provisions of the
PLR-103523-21 4

Code or regulations. In particular, we express or imply no opinion on whether the Form
8609 for the project was timely or correctly filed for purposes other than the election for
purposes of § 42(g) under § 142(d)(4)(B), or whether the project is a qualified low-
income housing project and any buildings in the project qualify for the low-income
housing credit under § 42.

  This ruling is directed only to the taxpayer requesting it. Section 6110(k)(3) of the

Code provides that it may not be used or cited as precedent.

  The ruling contained in this letter is based on the information submitted and

representations made by Taxpayer and accompanied by a penalty of perjury statement
executed by an appropriate party. While this office has not verified any of the material
submitted in support of the request for ruling, it is subject to verification on examination.

    In accordance with the Power of Attorney on file with this office, copies of this

letter are being sent to your authorized representatives.

                                         Sincerely,

                                         Associate Chief Counsel
                                         (Passthroughs and Special Industries)



                                   By:
                                         JAMES A. HOLMES
                                         Senior Counsel, Branch 5
                                         Office of Associate Chief Counsel
                                         (Passthroughs and Special Industries)

Enclosures (2):
Copy of this letter
Copy for § 6110 purposes

cc: