NAHMA LIHTC Update: IRS Issues LIHTC Pandemic Relief Extensions, Including Compliance Monitoring Notifications and Deadlines

January 11, 2022

Dear NAHMA Members,

In response to the continuing impact of COVID-19 and precautions necessitated by new disease variants such as Delta and Omicron, the IRS today has issued Notice 2022-05, extending widespread temporary relief from certain requirements for low-income housing tax credit (LIHTC)-financed and private activity bond (PAB)-financed properties. 

With regards to tenant file reviews, Notice 2022-05 states (pg. 9):



For purposes of § 1.42-5, an Agency is not required to review tenant files in the period beginning on April 1, 2020 and ending on December 31, 2021. The Agency must have resumed tenant-file review as due under § 1.42-5 as of January 1, 2022.

For purposes of § 1.42-5(c)(2)(iii)(C)(3), between April 1, 2020, and the end of 2022, when the Agency gives an Owner reasonable notice that it will review low-income certifications of not-yet-identified low-income units, it may treat reasonable notice as being up to 30 days. Beginning on January 1, 2023, for this purpose reasonable notice again is generally no more than 15 days.”

Addressing physical inspections, Notice 2022-05 states (pg. 9):



For purposes of § 1.42-5, an Agency is not required to conduct compliance-monitoring physical inspections in the period beginning on April 1, 2020, and ending on June 30, 2022. Because of high State-to-State and intra-State variability of COVID-19 transmission, an Agency, in consultation with public health experts, may extend the waiver in the preceding sentence if the level of transmission makes such an extension  appropriate. Depending on varying rates of transmission, the extension may be State-wide, may be limited to specific locales, or may be on a project-by-project basis. No such extension may go beyond December 31, 2022. The Agency must resume compliance-monitoring reviews as due under § 1.42-5 once the waiver expires.”

Notice 2022-05 also extends previous relief for the 10% test for carryover allocations, the 24-month minimum rehabilitation period, the placed-in-service deadline, the reasonable period for restoration or replacement in the event of casualty loss, and agency correction periods. The notice also provides an extension to satisfy occupancy obligations and the closure of amenities or common areas in LIHTC properties due to COVID-19 will not result in a reduction of eligible basis and essential workers may be provided emergency housing in LIHTC properties.

To view IRS Notice 2022-05 (also attached), click here.