May 14, 2020
LIHTC Carryover Allocation Relief
The State of Iowa received a Major Disaster Declaration in response to the COVID-19 pandemic on March 23, 2020 ( DR-4483 ).

While guidance related to Low-Income Housing Tax Credits and other sources of funding continues to be released by the federal government, the Internal Revenue Service (IRS) has indicated that Housing Credit agencies in states with a federal Major Disaster declaration can rely on relief measures provided in  Revenue Procedure 2014-49  (Rev. Proc. 2014-49).

What does the Revenue Procedure allow? 
Under Sections 6 and 7 of Rev. Proc. 2014-49, Agencies may grant extensions to both the 10% test requirement deadline (up to 6 months) and the placed in service deadline (up to 12 months) for projects whose owners cannot reasonably satisfy the deadlines of § 42(h)(1)(E) because of a Major Disaster. 

Will the Iowa Finance Authority (IFA) offer the carryover allocation relief?
Yes, IFA will grant Carryover Allocation relief to eligible projects on a case-by-case basis.  

Who is eligible?
To be eligible, projects must have a  demonstrated and documented need  and must meet the requirements outlined in Rev. Proc. 2014-49 and described below:
  • Owner has a carryover allocation for a building located in a Major Disaster Area.
  • Owner cannot reasonably satisfy the deadlines of § 42(h)(1)(E) because of a Major Disaster. 
  • For 10% test relief, the project has a 10% test deadline of January 20, 2020 or later as indicated in the carryover allocation agreement. 
  • For placed in service relief, the project has an Allocation Date of March 31, 2020 or earlier as indicated in the carryover allocation agreement.  
 How do I apply for an extension?
  1. Download the Letter Template for Carryover Relief located on the Housing Tax Credit Program Resource web page. 
  2. Complete the template with information specific to the eligible project to demonstrate the need for Covid-19 Carryover Relief. (Each project requires a separate letter)
  3. Sign the letter.
  4. Submit the request in the online application through the ‘Request Extension Tab’ along with an uploaded copy of the signed Letter Template for Carryover Relief.
  5. The extension request must be submitted to IFA by June 1, 2020 at 4:30 pm.
  6. There will not be a late submission fee for this Carryover Relief extension request, nor will it affect scoring under the 2020/2021 9% QAP section
  7. The LIHTC Manager will review the request and provide an approval email.

Is this different than the extensions provided for in IRS Notice 2020-23 that was published on April 10? 
Yes, the extensions described above are permitted under Rev. Proc. 2014-49 and must be approved by the Housing Credit Agency. 

Notice 2020-23  provides an automatic extension until July 15, 2020 for taxpayers to perform any time-sensitive actions as defined in  Rev. Proc. 2018-58 . The automatic extension is  only for those actions that were originally due to be performed on or after April 1, 2020 and before July 15, 2020 . An extension to July 15 for any of the specified items is not required to be approved by the Housing Credit Agency. 

These time-sensitive actions that pertain to the Housing Credit program include: 
  • The 10 percent test requirement
  • The 24-month period in which the requisite amount of rehabilitation expenditures has to be incurred
  • The annual owner certification of compliance
  • The annual tenant income certification requirement
  • The requirement to notarize a binding agreement by the fifth day following the end of the month in which the binding agreement was made
  • The requirement to notarize a binding agreement by the fifth day following the end of the month in which the tax-exempt bonds are issued
  • The 10-year rule for claiming credits on an existing building
  • The minimum set-aside requirement
  • The requirement that a low-income housing commitment must be in effect as of the beginning of the year for a building to receive credit

For additional information on Notice 2020-23 and how it impacts Housing Credit as well as Housing Bond deadlines, please refer to  NCSHA's post on the topic .  

Please contact Dave Vaske or Katie Kulisky with questions.