Housing partnership received extra time to defer its credit period

Plain-English summary

A partnership acquired and rehabilitated a building for low-income rental housing. It intended to begin the ten-year low-income housing credit period in the year after the building was placed in service, but its tax adviser inadvertently failed to check line 10a on Form 8609. The partnership sought relief under Treasury Regulations §§ 301.9100-1 and 301.9100-3 to make the section 42(f)(1) election late. The IRS concluded that the relief requirements were met and gave the partnership 120 days to file an amended Form 8609 solely to check that box. The ruling did not decide whether the building was a qualified low-income housing project or otherwise eligible for the credit.

Ruling snapshot

• Question: Should the partnership receive extra time to amend Form 8609 and elect to begin the section 42 credit period in the year after the building was placed in service?
• Outcome: approved (120 days to file the amended Form 8609)
• Key authorities: IRC § 42(f)(1) and (l)(1); Treas. Reg. §§ 1.42-1(h), 301.9100-1, 301.9100-3, and 301.9100-8

Full text (IRS public release)

 Internal Revenue Service                                       Department of the Treasury
                                                                Washington, DC 20224

 Number: 202251006                                              Third Party Communication: None
 Release Date: 12/23/2022                                       Date of Communication: Not Applicable
 Index Number: 42.00-00, 9100.00-00
                                                                Person To Contact:
 ------------------------                                       ------------------, ID No. -----------------
 -------------------------------------                          Telephone Number:
 ------------------------------------------------               --------------------
 ------------------------                                       Refer Reply To:
 --------------------------------                               CC:PSI:B05
                                                                PLR-108105-22
                                                                Date:
                                                                September 28, 2022


         Re: -------------------------------------


LEGEND

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

Tax Advisor =               ------------------------
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-----------------------------------------
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Property          =         -------------------------------------------------
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BIN               =        ----------------

Year              =        -------


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

This letter responds to Taxpayer’s authorized representative’s letter, dated March 3,
2022, 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 an amended Form 8609, Low-Income Housing Credit
Allocation and Certification, with respect to the election under § 42(f)(1) of the Internal
Revenue Code made for a certain building intended to be a low-income housing project
under § 42.
PLR-108105-22                                  2


According to the information submitted and representations made, Taxpayer, a
partnership for federal income tax purposes, acquired and rehabilitated the Property in a
manner to provide low-income residential rental housing. Taxpayer placed the building
identified by BIN in service in Year. Taxpayer retained the services of Tax Advisor to
provide federal and state compliance services for the taxable period ended December
31, Year and relied on the advice of Tax Advisor to prepare Form 8609. Based on the
information submitted, Taxpayer inadvertently failed to check the box on line 10a to
begin the credit period the first year after the building identified by BIN is placed in
service.

Section 42(f)(1) defines the credit period of any building as the period of 10 taxable
years beginning with the taxable year in which the building is placed in service, or at the
election of the taxpayer, the succeeding taxable year, but in either case only if the
building is a qualified low-income building at the close of the first year of such period.

Section 301.9100-8(b) provides that the election under § 42(f)(1) generally must 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 to be filed pursuant to § 42(l)(1) and (2).
Section 301.9100-8(a)(4)(i) provides that the election under § 42(f)(1) is irrevocable.

Specifically, the election under § 42(f)(1) is made pursuant to the certification
requirement of § 42(l)(1)(E), which provides that following the close of the first taxable
year in the credit period with respect to any qualified low-income building, the taxpayer
shall certify to the Secretary (at such time and in such form and in such manner as the
Secretary prescribes) such other information as the Secretary may require.

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.

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.
PLR-108105-22                                3


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 subtitles 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 file an amended Form 8609 for the building
identified by BIN for the sole purpose of checking the box on line 10a of the form to
begin the credit period the first year after the building is placed in service. The
amended Form 8609 must be filed within 120 days from the date of this letter. 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

No opinion is expressed or implied regarding the application of any other provisions of
the Code or regulations. In particular, we express no opinion on whether the building
identified by BIN is a qualified low-income housing project or whether the building
identified by BIN otherwise qualifies for the low-income housing credit under § 42.

This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.

The ruling contained in this letter is based upon information and representations
submitted by Taxpayer and accompanied by a penalty of perjury statement executed by
PLR-108105-22                                   4

an appropriate party. While this office has not verified any of the material submitted in
support of the request for rulings, it is subject to verification on examination.



                                   Sincerely,

                                   Associate Chief Counsel
                                   (Passthroughs and Special Industries)


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

Enclosure:
Copy for § 6110 purposes


cc:
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