Down Payment Assistance Programs: IRS Compliance Program


What is the IRS doing to stop abuses involving down payment assistance programs sponsored by exempt organizations?

On May 4, 2006, the IRS issued Revenue Ruling 2006-27, which details the criteria under which organizations providing down payment assistance qualify for tax exemption under section 501(c)(3) of the Internal Revenue Code, and explains why seller-financed down payment assistance will have a negative effect on tax-exempt status. In addition, we are examining down payment assistance organizations, and we are scrutinizing applications for tax-exempt status to ensure that applicants are not operating seller-funded programs.