IRS lets a housing partnership amend Forms 8609 to fix inadvertent low-income housing credit election errors

Plain-English summary

A limited partnership owns a multi-building housing project that received low-income housing tax credits under section 42. To claim those credits, the owner files a Form 8609 for each building and makes several elections on it. Here the owner made three inadvertent paperwork mistakes across six buildings: it forgot to check the box electing the 40-60 minimum set-aside for two buildings, it failed to attach the required informational statements for the multiple-building election for two others, and it accidentally checked the box deferring the start of the credit period for the last two. The owner caught the errors during a file review and asked the IRS for extra time to fix them under the section 301.9100-3 relief rules, which allow more time for a missed regulatory election when the taxpayer acted reasonably and in good faith and relief will not prejudice the government. The IRS agreed those standards were met and granted the owner 120 days to file amended Forms 8609 correcting all three problems. The letter cautions that it does not decide whether the project or its buildings actually qualify for the credit, only that the owner may fix the elections.

Ruling snapshot

• Question: May the owner get an extension of time under section 301.9100-3 to file amended Forms 8609 correcting inadvertent section 42 election errors?
• Outcome: Approved (120-day extension to file amended Forms 8609)
• Key authorities: IRC § 42(f)(1), (g)(1), (g)(3)(D), (l)(1); Treas. Reg. § 301.9100-1 through -3; § 1.42-1(h)

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202236002                                              Third Party Communication: None
 Release Date: 9/9/2022                                         Date of Communication: Not Applicable
 Index Number: 42.00-00, 9100.00-00,
               9100.01-00                                       Person To Contact:
                                                                -----------------, ID No. -----------------
 --------------------------------------
 --------------------------------------------                   Telephone Number:
 ----------------------------------------------                 --------------------
 ---------------------------                                    Refer Reply To:
 ------------------------------------                           CC:PSI:B05
                                                                PLR-100377-22
                                                                Date:
 In Re: -------------------------------------------
                                                                June 16, 2022




LEGEND

Taxpayer          =        --------------------------------------------
--------------------------

Year              =        -------

A                 =        -----

BIN1              =        ------------------------------
BIN2              =        ------------------------------
BIN3              =        ------------------------------
BIN4              =        --------------------------------
BIN5              =        ---------------------------------
BIN6              =        ---------------------------------

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




Dear -------------------:

       This letter responds to your authorized representative's letter dated December
29, 2021, and subsequent correspondence, submitted on behalf of Taxpayer,
requesting an extension of time, pursuant to §§ 301.9100-1 and 301.9100-3 of the
Procedure and Administration Regulations, to file amended Forms 8609, Low-Income
Housing Credit Allocation and Certification, with respect to the elections related to §§
42(f)(1), 42(g)(1), and 42(g)(3)(D) of the Internal Revenue Code (Code) for buildings in
a housing project intended to be a qualified low-income housing project under § 42.
        According to the information submitted and representations made, Taxpayer,
a limited partnership for federal income tax purposes, owns and operates a multi-
building housing project. The project is located at Address. The project received an
allocation of the low-income housing credit under § 42. The project consisted of A
buildings for § 42 purposes. The buildings identified by BIN1, BIN2, BIN3, BIN4,
BIN5, and BIN6 are part of the project. Taxpayer placed the buildings identified by
BIN1, BIN2, BIN3, BIN4, BIN5, and BIN6 in service in Year.

        Taxpayer intended, as reflected by contemporaneous and other documents, to
elect the 40-60 minimum set-aside on Forms 8609 for the buildings identified by BIN1
and BIN2. In preparing Forms 8609 for the buildings identified in BIN1 and BIN2,
however, Taxpayer inadvertently failed to check the box for line 10c to make the
election for the 40-60 minimum set-aside.

      In preparing Forms 8609 for the buildings identified in BIN3 and BIN4,
Taxpayer correctly checked the multiple-building election on line 8b. However,
Taxpayer inadvertently failed to attach the required accompanying informational
statements to Forms 8609 that had been prepared for BIN3 and BIN4.

        Taxpayer intended, as reflected by contemporaneous and other documents, to
begin the credit period for the buildings identified by BIN5 and BIN6 in Year, the year
the buildings were placed in service. In preparing Forms 8609 for the building
identified by BIN5 and BIN6, however, Taxpayer inadvertently checked line 10a to
begin the credit period for the first year after the buildings were placed in service.

       After filing with the Internal Revenue Service (IRS) Forms 8609 for the
buildings identified in BIN1, BIN2, BIN3, BIN4, BIN5, and BIN6, Taxpayer discovered
the inadvertent errors during a review of its files.

       Section 42(f)(1) defines credit period as, with respect to any building, the period
of 10 taxable years beginning with the taxable year in which the building is placed in
service, or at the taxpayer's irrevocable election, the succeeding taxable year.

       Section 42(g)(1) defines the term "qualified low-income housing project" as any
project for residential rental property if the project meets the requirements of
§ 42(g)(1)(A), (B), or (C), whichever is elected by the taxpayer. The project meets the
requirements of § 42(g)(1)(A) if 20 percent or more of the residential units in the project
are both rent-restricted and occupied by individuals whose income is 50 percent or less
of area median gross income. The project meets the requirements of § 42(g)(1)(B) if 40
percent or more of the residential units in the project are both rent-restricted and
occupied by individuals whose income is 60 percent or less of area median gross
income. The project generally meets the requirements of § 42(g)(1)(C) if 40 percent or
more (25 percent or more in the case of a project described in § 142(d)(6)) of the
residential units in the project are both rent restricted and occupied by individuals whose
income does not exceed the imputed income limitation designated by the taxpayer with
respect to the respective unit. Any election under § 42(g)(1), once made, is irrevocable.

       Section 42(g)(3)(D) provides that a low-income housing project shall be treated
as consisting of only one building unless, before the close of the first calendar year in
the project period (as defined in § 42(h)(1)(F)(ii)), each building which is (or will be) part
of such project is identified in such form and manner as the Secretary may provide.

        In the instructions to Form 8609, the IRS requires each building that is (or will be)
part of a multiple building project to be identified by attaching a statement to the Form
8609 including the name and address of the project and each building in the project, the
BIN of each building in the project, the aggregate dollar amount for the project, and the
credit allocated to each building in the project.

       Section 301.9100-8(b) provides that the election under § 42(f)(1) must generally
be made for the taxable year in which the building is placed in service, or the
succeeding taxable year if the § 42(f)(1) election is made to defer the start of the credit
period and must be made in the certification required pursuant to § 42(l)(1).

     Section 301.9100-7T(b) provides, in part, that the election under § 42(g)(1) is to
be made in the certification required to be filed pursuant to § 42(l)(1).

         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 1.42-1(h) of the Income Tax Regulations provides, in part, that, unless
otherwise provided in forms or instructions, a completed Form 8609 (or any successor
form), which contains the first-year certifications, must be filed by the building owner
with the IRS. The instructions to Form 8609 states, in relevant part, that a building
owner must make a one-time submission of Form 8609 to the Low-Income Housing
Credit (LIHC) Unit at the IRS Philadelphia campus (Service Center) no later than the
due date (including extensions) of the first tax return with which the building owner 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 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 amend the following Forms 8609 for the
Project: (1) Forms 8609 for the buildings identified in BIN1 and BIN2 for the purpose of
checking the box for line 10c to make the election under § 42(g)(1) for the minimum set-
aside; (2) Forms 8609 for the buildings identified in BIN3 and BIN4 for the purpose of
attaching the required informational statements to those forms as part of the multiple-
building election under § 42(g)(3)(D); and (3) Forms 8609 for the buildings identified by
BIN5 and BIN6 for the purpose of checking the box for line 10a so that the taxpayer
does not make the election under § 42(f)(1) to begin the credit period for the first year
after the buildings were placed in service. The amended Forms 8609 must be filed
within 120 days from the date of this letter. The amended Forms 8609 (along with
copies 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

        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
Code or regulations. In particular, we express or imply no opinion on whether the
Forms 8609 for the project were timely or correctly filed for purposes other than the
elections related to §§ 42(f)(1), 42(g)(1), and 42(g)(3)(D), 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)




Enclosure:
      Copy for section 6110 purposes



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