Housing project receives extra time to start its credit period

Plain-English summary

The owner of a single-building housing project intended to begin its low-income housing credit period in the year the building was placed in service, but it failed to make the required election on time. The IRS found that the taxpayer met the standards for discretionary filing relief because it acted reasonably and in good faith and relief would not prejudice the government. The taxpayer received 120 days to file an amended Form 8609 making the section 42(f)(1) election. It also had to file the affected returns, Forms 8609-A, and Schedules K-1 consistently with a credit period beginning in the intended year.

Ruling snapshot

• Question: May the project owner file a late section 42(f)(1) election to begin the low-income housing credit period in the year the building was placed in service?
• Outcome: Approved, with 120 days to file an amended Form 8609
• Key authorities: IRC § 42(f)(1), (l); Treas. Reg. §§ 1.42-1(h), 301.9100-1, 301.9100-3, 301.9100-8

Full text (IRS public release)

 Internal Revenue Service                                      Department of the Treasury
                                                               Washington, DC 20224

 Number: 202346007                                             Third Party Communication: None
 Release Date: 11/17/2023                                      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-112151-23
 In Re: ---------------------------------------------------- Date:
 -----------------------------------------------------       August 18, 2023




LEGEND

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

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

BIN              =        --------

Year 1           =        -------



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

       This letter responds to your authorized representative’s letter dated May 31,
2023, 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 related to § 42(f)(1) of the
Internal Revenue Code (Code).

       According to the information submitted, Taxpayer owns and operates a single-
building housing project. The project is located at Address. The building identification
number associated with the project is BIN. Taxpayer placed the project in service in
Year 1. Taxpayer intended to start the credit period in Year 1 but inadvertently failed to
make a timely election under § 42(f)(1) to begin the credit period in Year 1.
PLR-112151-23                                  2



        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 taxpayer’s irrevocable election, 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 the
credit 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 project 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, Low-Income Housing Credit Allocation and Certification, 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. Completion of the relevant portions of Form
8609 satisfy the certification requirement of § 42(l)(1) and (2).

       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, 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 subtitles E, G,
H, and I.
PLR-112151-23                                  3



       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
the grant of relief will not prejudice the interests of the government.

        In the instant case, 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 under
§ 42(f)(1) for the building identified by BIN 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) is to be filed with the Philadelphia campus at the
address provided in the instructions to Form 8609. A copy of this letter is enclosed for
this purpose.

        By making the election under § 42(f)(1) for the building identified by BIN,
Taxpayer is electing to begin the credit period for the building identified by BIN in Year

1. Accordingly, Taxpayer must file its Federal income tax returns, including the Form
8609-A and the Schedules K-1, for Year 1 and all subsequent years as is necessary to
reflect the proper amount of § 42 credits.

       No opinion is expressed or implied regarding the application of any other
provisions of the Code or regulations. Specifically, we express no opinion on 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.
PLR-112151-23                                            4

      In accordance with a power of attorney on file with this office, we are sending a
copy of this letter to Taxpayer’s authorized representative.


                                                      Sincerely,


                                                      Holly Porter
                                                      Associate Chief Counsel
                                                      (Passthroughs and Special Industries)



                                              By:
                                                      Dillon Taylor
                                                      Senior Technician Reviewer, Branch 5
                                                      Office of Associate Chief Counsel
                                                      (Passthroughs and Special Industries)

Enclosure:
      Copy of this letter
      Copy for section 6110 purposes


Cc:
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