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Guide for Completing Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition

The scope of this guide is limited to guidelines for preparing Form 8823 for submission to the IRS. Taxpayers are responsible for evaluating the tax consequences of noncompliance with IRC 42.

Table of Contents

Explanations of Revisions

  1. Asterisks used to identify revisions in the October 2009 version of the guide have been removed and now reflect significant changes made for the January 2011 version of the guide.
  2. Changes have been made through the text to correct typing and formatting errors. These changes, which do not impact the meaning of the text, are not identified.
  3. Chapter 1, Exhibit 1, Step 4: The text was updated to explain that a Form 8823 must be filed with the IRS to report the correction of previously reported noncompliance (back in compliance) if corrected within three years after the end of the correction period.
  4. Chapter 4:
  5. Chapter 6: CCA 201042025 was added to the list of references.
  6. Chapter 7: a note has been added to item #4 on the list to explain that for tax years ending after July 30, 2008, if all the low-income buildings in the project are 100% low-income buildings, owners are not required to complete annual tenant income recertifications.
  7. Chapter 11: The second of three equations included in Example 1 has been corrected and now reads, “$35,430 x .30 = $10,629.00” instead of “$31,430 x .30 = $10,629.00.”
  8. Chapter 12: The first sentence of the second paragraph of Example 1 has been revised to read, “Although each unit fell out of compliance….” to reflect Treas. Reg.§1.42-9(c); i.e., the unit is treated as a residential rental unit that is not a low-income unit.
  9. Chapter 18: The “Out of Compliance” and “Back in Compliance” sections have been significantly expanded to provide additional discussion and examples. The text clarifies that determinations of noncompliance are made when gross rent exceeds the maximum gross rent limit as the result of computational or procedural errors.  
Page Last Reviewed or Updated: 17-Jan-2014