Read 2nd quarter.cdr text version

COMPLIANCE

Second Quarter 2005

the housi

ng

tax credit

CONNECTION

a quarterly publication of mississippi home corporation

Accountant. Q: If my development was in carryover status during the past year, what forms, if any, should be completed for the submission of the AOC Report? A: If your development was in Carryover Status during the past year, then the only form you will need to submit is the OCCPC form (pages 1 and 2 only). Remember, you still must have the OCCPC notarized! Q: What information is included on the Development Physical Condition Report. A: The Development Physical Condition Report, which is still a relatively new addition to the AOC Report, collects information on the physical condition of damages sustained to the development during the past year, particularly damages that take a unit/building out of service. If there are none, then you would put "N/A" where it calls for a description of the damages. Remember, this form must also be notarized. Q: When does an owner submit a copy of the 8609's that were sent to the IRS? A: The 8609 forms, issued to you from our Allocation Department, should be submitted the first year you are required to send in an AOC Report. In years 2-10, copies of the Schedule

continued on page 7

VP Notes

Summer is fast approaching, which means it is time for sun b a t h i n g , Robert D. Collier, swimming, Vice President vacations, Multifamily Programs barbeque parties, and oh yeah, the second issue of the Compliance Connection. Since the publication of the last issue, three compliance briefings have been conducted by staff, two on "HTC Fundamentals, " held on March 10 and June 9th and one on "Leasing a Tax Credit Unit" on April 7, 2005. As you can see, we're busy educating! In this issue, the second of a two part series on Fair Housing compliance and enforcement is featured. See inside for what not to do at your tax credit site. Also, since our last publication, we've added a new feature to the compliance website ~ the ability to calculate the maximum allowable income and rent limit for tax credit households via our online calculator. To utilize this feature, visit our website at www.mshomecorp.com. It's just another way in which we're trying to assist you with compliance. We hope you enjoy it!! Remember the July 1st deadline to submit your Annual Owner Certification Report is right around the corner. Let's get those Reports in on time!!!

THE AOC REPORT: Some Last Minute Questions

by: Deborah Heard

Recently, on May 12, 2005, the Corporation held a training session on the proper preparation of the Annual Owner Certification (AOC) Report, a report required by the IRS of all owners of Housing Tax Credit (HTC) developments. During the training session, questions arose concerning the forms that should be included in this report and the correct way to assemble the submission. This article will attempt to share with you some of the more common questions: Q: Who is responsible for completing and signing these reports? A: The owner and/or his/her registered agent is responsible for completing and signing the AOC Report certifying that all information contained therein is true and correct. The Registered Agent must be listed in the Partnership Agreement. Q: Which of the forms in the AOC Report must be notarized? A: The Owner's Certification of Continued Program Compliance (OCCPC) and Development Physical Condition (DPC) Reports are the only two forms that must be notarized. The Operating Statement should be notarized IF it is NOT generated by a Certified Public

In this issue...

State Audits, 8823s & What Really Matters to the IRS ... .................Page 2 Compliance Updates/Upcoming Events..................... ... .................Page 2 Crossword Puzzle.................... ... ............................... ... .................Page 3 Fair Housing Compliance and Enforcement - Part II . ... .................Page 4 Absent Family Members.......... ... ............................... ... .................Page 5 HTC in the News...................... ... ............................... ... .................Page 5 Straight from the IRS............... ... ............................... ... .................Page 6 Compliance Spot Light............ ... ............................... ... .................Page 6 The Days of Compliance ......... ... ............................... ... .................Page 7 Compliance Q & A ................... ... ............................... ... .................page 8

Ensuring Compliance through Education and Training

Mississippi Home Corporation, PO Box 23369, Jackson, Mississippi, 39225-3369, 601.718.4642, www.mshomecorp.com

page 2

Compliance Updates

The Compliance Division welcomes the participation of March(HTC) the following Housing Tax Credit developments to the 11-12, 2004 Quarterly Briefing Mississippi housing-market:

State Audits, 8823s, & What Really Matters to the IRS?

The following is a reprint of an article taken from TheoPRO's Weekly Online Compliance Advisor with the consent of Ruth Theobald of TheoPROs Compliance & Consulting, Inc. by: Ruth Theobald, President Sara Newsome, Vice-President

Housing Tax Credit Fundamentals Mississippi Home Corporation Offices Park Apts, Ph II Bay Bay St. Louis Jackson, Miss - 64 units

Kirby Road Apts II 15 - 17, 2004 - 2004 Mississippi Robinsonville - 62 units SAHMA Conference Housing Tax Credit Compliance Highland Park Apts Sessions Jackson - 152 units Speakers: Robert Collier/Karen Georgetown Park Apts I Chandler Biloxi,Starkville - 98 units Miss ChapelRidge of Richland 25, 2004 - Quarterly Briefing Richland 184 units Annual Owner- Certification (AOC) Prep Class Fox Ridge Estates II Mississippi Home Corporation Tunica - 32 units Offices Jackson, Miss Apts II Shady Lane Tunica - 96 units

Question: We have recently been audited by the state and they have written our property up for the most nitpicky things. Housekeeping, for instance, over which we have no control. In another instance, the annual report we sent to them had a different rent indicated than the one that the file indicated. The rent was well below the maximum limit so why would they write us up? Will they issue 8823s on this? What will the IRS do if it is reported? Answer: Physical property inspections, which have been required for Section 42 since 2001, create some interesting questions, such as the ones you have posed here. When is it truly noncompliance and when is it not? Each state sets the standard by which it audits for physical condition and they have the choice of using local building codes or Uniform Physical Condition Standards (UPCS). In addition to this they are supposed to audit for compliance with fair housing construction standards and a myriad of other details. Under the surface of these requirements lies the purpose for which these physical inspections were created in the first place: keeping low income tax credit units in a condition that provides decent, safe, and sanitary housing. We agree that on the surface, being written up for a family's poor housekeeping seems

April

22, 2004 - Quarterly Briefing Housing Tax Credit Compliance for the Advanced Guest Speaker: Liz Bramlet, Quadel Consulting Location: TBA

Upcoming Events

JUNE Technical Assistance Available Upon Request

May

JULY 2004 - Quarterly Briefing 5, 1 2005 AOC Certification Annual Owner Report due (AOC)

severe. Under the surface, though, the state may be commenting on and alerting the property owner/manager to issues that could suggest the deterioration of the housing. If it were our property, we would simply take what the state reported and tend to correction. In this case, we would notify the household that the state has found their unit to be untidy and suggest ways that they can remedy the situation. This should not be handled in a derogatory manner, but with respect and courtesy. Regarding the differences in facts reported to the state versus what they find in the file, we would suggest the same approach. While it is true that if the family's rent is below the maximum rent there is no violation as far as an 8823 "Low Income Housing Credit Agencies Report of NonCompliance" to the IRS, certainly the state has the right to call this discrepancy to our attention and to ask us to explain it. Again, simply providing them with proof of what the true rent is according to the lease and any other supporting documentation should suffice in remedying the situation. In some cases, the state will not report all of their findings to the IRS on Form 8823 unless it is in fact a violation of federal regulations. In other cases, they may report this on an 8823, but if it has been corrected, that result will also be stated on the report. Responding to their findings whether or not they carry the import of an 8823 violation is simply a good practice and will enhance your relationship with the state. While we realize that it might feel absurd, you could always thank the state for bringing these matters to your attention. Overall it will help you maintain your tax credit property to a higher standard! - Good luck!

Prep Class (Encore Presentation) Mississippi Home Corporation AUGUST Technical Offices Assistance Available Upon Request Jackson, Miss

Things are getting easier

In the world of HTC where things seem to continually get more and more complicated, isn't it nice to find something designed to simply make your life easier. MHC's new Compliance Calculator is such an item. Calculations of maximum allowable income and rent limits will now be a breeze with MHC's online calculator. To add a little simplicity to your life, visit the compliance section of our website at www.mshomecorp.com

Tip Us

If you are currently a participant in the Mississippi HTC program and would like to share a compliance success tip, please let us know. We may feature your tip in an upcoming issue. Email tips to [email protected]

page 3

Compliance Crossword

1 5 7 8 9 2 6 3 4

10

11 12 14 13 15 16 17

Across

1. 3. 7. 8. 10. 11. 14. 17. 18. 20. Antique Car Daffiney or Teri Discharge resident Pre-Compliance Out-of-date Approved Written on paper 20% requirement Student Exception (Abbr.) Grant to stop verifications

18 19 20

Down

1. 2. 4. 5. 6. 9. 12. 13. 15. 16. 19. Future income Program benefit (2 words) Unknown family member Documentation Site Verification method Promise to State (abbr.) AOC month Proved Never Qualified TC Unit Not market, not low-income Rent Mate (abbr.)

ACROSS - 1.ASSET 3.AUDITOR 7.EVICT 8.ALLOCATION 10.EXPIRED 11.ELIGIBLE 14.DOCUMENTED 17. TIPS 18. TANF 20.WAIVER DOWN - 1.ANTICIPATED 2.TAXCREDIT 4.UNBORNCHILD 5. FILE 6.ORAL 9.LURA12.JULY 13.VERIFIED 15.EMPTY 16. STAFF 19.UA

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Fair Housing Compliance & Enforcement - Part II

by: Robert D. Collier

Compliance Photo Poll

If you could make one wish for the tax credit program, what would it be?

This is the second of a two-part series on compliance and enforcement of the Fair Housing Act. In the last issue of the Compliance Connection, Part I dealt with the type of housing covered under the Act, what is prohibited in the sale and rental of housing, protections for people with disabilities and requirements for new buildings with four or more units built after March 13, 1991. In this issue, I will focus on how fair housing violations/noncompliance are reported and enforced by state and federal agencies and the significant consequences that can result from failure to comply. The Fair HousingAct (theAct), which was first passed in 1968 shortly after the assassination of Dr. Martin Luther King, prohibits discrimination based on race, color, religion, sex, familial status and national origin. It is enforced administratively by the U.S. Department of Housing and Urban Development (HUD). People who believe that they have been harmed by a violation of the Act may file administrative complaints with HUD, and HUD conducts an impartial investigation of the claims. The Act also authorizes federal lawsuits by the U.S. Department of Justice (DOJ) and private lawsuits that can be filed in federal or state courts by individuals. Many state and local fair housing enforcement agencies also have authority to investigate violations and bring enforcement actions. Where violations of the law are established, remedies under the Act may include the award of compensatory damages to victims of discrimination, sometimes numbering in the hundreds of thousands of dollars, orders for comprehensive corrective action, and awards of punitive damages to victims or civil penalties to the government. In design and construction cases, remedies may also require retrofitting housing that has already been constructed to make it comply with the Act's design and construction requirements. Fair Housing Discrimination ­ National Trends According to the National Fair Housing Alliance (NFHA), at least 3.7 million fair housing violations still occur annually more than 35 years after the passage of the Act. Recent research has documented significant levels of discrimination against African Americans, Latinos, Native Americans, Asian Americans and Pacific Islanders. A recent study commissioned by the NFHA found that race discrimination against African Americans in the housing market occur more than an estimated 1.7 million times a

year. These totals do not include discrimination based on disability and familial status (two of the most common types of discrimination), religion or sex. Additionally, there is no comparable data for persons with disabilities, yet this group continuously files the highest number of complaints with HUD each year. Rental Market Discrimination The majority of complaints in the rental market are filed against apartment owners and managers for discriminating on the basis of race (29% in 2003), disability (27% in 2003), family status (13% in 2003) and national origin. The private fair housing movement reported 12,091 complaints of housing discrimination in the rental market. The discrimination may take the form of landlords denying that units are available, refusing to make reasonable accommodation for a person with a disability, quoting higher rents or security deposits, segregating African Americans, Latinos, Asian Americans, or families with children in one part of building or complex, restricting access to rental property amenities such as swimming pools or community rooms, or initiating eviction proceedings against white tenants who have visitors who are African American, Latino orAsianAmerican. Federal Enforcement

United States v. JDL Management Co. (N.D. Ill.) In this case, the United States filed a complaint claiming that the architect and developer engaged in a pattern or practice of discrimination against persons with disabilities. The United States settled this case with a consent decree. Pursuant to the decree, $92,000 will be used to retrofit non-compliant units at Acorn Glen over a 10-year period. The remaining money will go towards retrofitting the public use and common areas ofAcorn Glen.

To have the ability to enter tenant data online at the end of each month. Francine Spann Site Manager Morrow Realty Not to be tested at every training. Scott Hendrix General Manager Hughes Management

To eliminate the recertification process for the elderly. Ruth Martin Owner/ Manager New Albany Elderly

In 2003, private fair housing organizations with membership in NFHA investigated more than 17,000 complaints of housing discrimination. Approximately 27 percent of those complaints involved race discrimination. There were 2,745 complaints filed with HUD's Office of Fair Housing and Equal Opportunity. Of those complaints, 32 percent involved race discrimination in housing. Despite these statistics, last year HUD records show the law was violated in only four cases; ten when adding cases filed by the DOJ. Fair Housing Discrimination ­ Tax Credit Housing Since August 2000, the issue of fair housing, particularly in tax credit developments, has garnered increased attention nationally when the IRS, DOJ, and HUD entered into a Memorandum of Understanding (MOU) to promote enhanced

compliance with the Act. The MOU spells out the steps that would be taken and the responsibilities of housing credit agencies when instances of fair housing have been identified. Specifically, the MOU states that the DOJ and HUD will provide notice to the IRS and state housing finance agencies of any enforcement actions brought under the Fair Housing Act involving tax credit

United States v. City of Johnstown, Pa. (W.D. Pa.) On June 16, 2004, the Court entered a consent order in United States v. City of Johnstown (W.D. Pa.). The complaint alleged the City denied the American Legion's application for a conditional use permit to operate a transitional housing facility for homeless veterans at an old school building because the prospective occupants were disabled. There was strong neighborhood opposition to the proposed facility. The consent order enjoins the city from discriminating on the basis of disability in housing. In addition, the city will pay $82,500 in damages to the American Legion and a $15,000 civil penalty to the United States. Certain city employees will also receive training on the provisions of the Fair HousingAct. The case was originally referred to the Division by the Department of VeteransAffairs.

development owners. The IRS, in turn, will notify involved development owners that a finding of discrimination could result in the loss of tax credits.

continued on page 7

page 5

Absent Family Members

by: Teri Nguyen

Knowing the members of your immediate family is generally a cinch. You could probably rattle off all the names of your family in the amount of time it takes to say "Bless you." However, deciding who is part of your household is another matter entirely. Often, in the tax credit program, the terms family and household are used interchangeably in error. The Housing Tax Credit program is concerned about the members of your household, but does not dictate who may or may not be a part of your household. As we should all know by now, household size may be THE most important factor in determining tax credit eligibility. It determines the applicable income limit for the household, which is a pass or fail test. Thus, knowing who is actually part of the household is vital to compliance. One problem in making this determination is knowing which household member is to be counted. The problem does not rest with the obvious members (i.e. those physically residing in the unit, although some of these individuals may be excludable) but with the not so obvious members - those temporarily absent.

A temporarily absent family member (TAFM) generally tend to be spouses, adult students living away from home, children temporarily placed in foster care, adults away for active military duty, and/or family members currently in a hospital or rehabilitation center. When dealing with a TAFM or making a decision as to the occupancy status of a TAFM, one should take great care. One "slip-up" could cost you a lot in terms of noncompliance. The key to handling these cases is asking the right questions. Here, we try to offer a "three-question quiz" to ask households with a TAFM that should assist you in making the best decision upfront: 1) Is there a possibility that the absent family member may return to the household? 2) If the absent family member was not obliged elsewhere (e.g., school, military duty, etc.) would she/he be at home? 3) Can you reasonably determine a date of return? If you have answered "yes" to any of these questions, you should count the TAFM as part of the household. If you have answered "no" to all these questions, then the family member should be considered permanently absent, and thus, does not have to be counted. However, in the latter scenario if the TAFM is a spouse, the head of the household may choose at his/her discretion to include or exclude the member. Over the past few years, MHC has received a series of questions regarding how to handle TAFMs. The questions posed generally fell into

three categories: separation, incarceration and military duty. Below is a summary of how we have answered the questions posed. Separation Whether an absent spouse is temporarily or permanently absent may have a big impact on the household size and consequently, the applicable income limit. To avoid incorrect inclusions or omissions have the applicant/resident answer the "three-question quiz" and acquire an affidavit from the applicant/resident as to the circumstances regarding the separation. In an omission case, it is strongly suggested that management acquire secondhand documentation, relating to the separation (i.e. documentation of domestic violence, restraining order, legal separation agreement, letter from attorney, etc.), to support the affidavit and the occupancy decision. Incarceration Unfortunately, people make mistakes - big legal mistakes. However, those family members are still a part of your family. The question is "are they a part of your household?" Should you add them? Unfortunately, the HUD Handbook does not specifically address this issue. Thus, in an effort to make a decision based on your knowledge of the full situation, have the tenant answer the "three-question quiz." Once given the circumstances, use your best judgment. Again, acquiring secondhand verifications, if possible, such as a news article noting the sentencing, would only strengthen your case if the decision

continued on page 6

HTC in the News

by: Robert L. Lee

- Utility Allowance

According to an article published in Affordable Housing Finance magazine written by John Zipperer, efforts for new utility cost adjustments by the IRS were set for early 2005. With this, owners of low-income housing tax credit (LIHTC) developments are hoping the IRS will adopt policy changes that will allow utility allowance estimates to be generated in a manner consistent or comparable to actual utility consumption. This policy change, according to Zipperer, will allow for more accurate cash flow projections and therefore greater feasibility for affordable housing developers. Currently, IRS regulations require that owners of LIHTC developments (specifically those who do not furnish utilities such as light, water, gas, etc.) deduct estimated utility costs from the gross rent of household's occupying low-income units in order to establish the net rent they will charge these households. According to Zipperer, many owners feel they are overestimating utility cost due to out-dated methods for retrieving utility information and estimates based on old properties with less efficient construction and appliances. "Higher utility costs translate into actual reduced cash flows the net rents, leaving the owner with less money available to service the mortgage and cover operating and

maintenance costs," added Zipperer. So, what does the IRS need to do to fix this problem? According to a coalition of multifamily organizations in a December 2004 proposal to the IRS, the IRS must implement policy changes addressing problems found in two main, contributing factors: limited utility allowance sources and the deregulation of utility services. The coalition proposed that having more options, such as "allowing the use of a software model of utility service consumption, a state certified professional engineer, the state housing finance agency, or, for existing buildings, the actual utility data based on occupied units in the same property," as well as eliminating deregulation whereby allowing utility charges from multiple sources to be combine into one single bill, would bring utility allowance estimates in line with the average utility cost. Finding a viable solution, one that works for all parties involved, may not be an easy task. Proposals, such as the one recapped above, may be just the answer for some and only half the answer for others. Just think about the several other dozen proposals that may have been submitted for consideration. Will any of them work? Was there a "catch one, catch all" proposal submitted? Will the problem with utility allowance estimates be put to rest once and for all? The answer to these questions is ~ no one currently knows. But one thing is certain; something must be done and soon. Who knows? A viable solution may be lying restlessly on the desks of IRS officials awaiting final approval!

page 6

Straight from the IRS...

The Internal Revenue Service (IRS) published Revenue Procedures 2005-30, which provides guidance regarding an extension of time for private activity bond issuing authorities that fail to make a timely carry forward election. The relief provided under Rev. Proc. 2005-30 is in lieu of the letter ruling procedure that is used to request an extension of time under Internal Revenue Code § 301.9100-3. Representative William Jefferson of Louisiana (D) has proposed legislation in Congress that would double the current low-income housing tax credit of $1.85 per capita to $3.70 in FY 2006. Additionally, Jefferson joined Representatives Jim Ramstad of Minnesota (R) and Ben Cardin of Maryland (D), in introducing legislation they championed in the last Congress to reform the "exit tax" imposed on developers of affordable housing. The proposed legislation would waive the exit tax for owners who sell their properties to buyers who agree to keep the properties affordable for no less than 30 years. The IRS recently invited comments on Treasury Decision 8801, the arbitrage restrictions on taxexempt bonds issued by state and local governments and rules regarding the use of proceeds of state and local bonds to acquire higher yielding investments under Section 148 of the Internal Revenue Code. There are no changes being made to the regulations at this time. This review is part of a continuing effort to reduce paperwork and respondent burden as required by the Paperwork Reduction Act of 1995. Details are available in the Federal Register dated May 13, 2005. Written comments will be accepted.

Compliance SpotLight

Southwind Apartments Durant, MS

Mississippi Home Corporation (MHC) recognizes Southwind Apartments for its outstanding compliance monitoring practices. Southwind Apartments met the challenge of the Housing Tax Credit (HTC) program (affordable units with restricted rents) as reflected in the latest compliance monitoring review performed by our agency. NO FINDINGS! WOW, what a way to GO! Keep up the good work!! Southwind Apartments offers 31 affordable housing units (24 one-bedrooms and 7 two-bedroom) spread throughout four residential buildings. Southwind Apartments reserves 100% of its units for families with income and rents at or below 60 percent of the area median income. Southwind Apartments is currently owned by Southwind Housing L.P., Paul A. Carpenter, and is under the management of Carpenter Management. Deana Gray, site manager of 7 years, is responsible for the day-to-day operations of the development. According to Gray, "reading compliance manuals & updates and attending as many MHC compliance training seminars as possible" has helped me maintain compliance with the tax credit program. Southwind Apartments has been in operation as a HTC development since September of 1993.

Developments featured have an overall favorable compliance status according to the latest monitoring visit performed by MHC's Compliance Division.

Absent Family Members continued from page 5

you made is ever questioned. Military Duty TAFMs of this type can be quite confusing, especially if the person is not related to the head of household but to another household member. What do I mean? Well, according to the HUD handbook 4350.3 Rev 1, in determining the occupancy status of military personnel away on active duty, you must count members that are the head, co-head or spouse OR if they have left a spouse or dependent children. Thus, if a person away on active military duty has left any

dependents (i.e. a spouse or children), that person and his/her income must be counted. When faced with this scenario, in addition to asking the "three-question quiz," you must also consider any dependents left in your household. Now that you have made your decisions on the occupancy status of TAFMs, I am sure you are going to ask "How do I document this and how do I get their signatures if they are considered adult TAFMs?" First, we strongly suggest you have a note to the file regarding the circumstances of the absence. Second, in acquiring the signatures of TAFMs, consider an alternative method of obtaining information (via fax, certified mail,

overnight delivery, etc.). Third, check to see if a present household member has the power of attorney to sign on behalf of the TAFM. Life is constantly changing as will households. That is part of life. Make sure you are aware of these changes and fully document the circumstances. If you do not address the questions now, your auditor may ask you later. The best thing to do is to document and attempt to settle the questions before they arise OR WORSE before a certification error is made that could jeopardize your tax credits.

page 7

AOC Report continued from page 1

A's you receive each credit year along with the IRS Form 8586 are the only forms required. Q: When a household transfers from one unit to another unit in the building, what move-in date should be listed on the rent roll report and what is the next certification of the unit? A: This is generally called an Intra-Building Transfer. The move-in date that should be listed is the move-in date into the "new" unit. It should not be the old move-in date or the development move-in date. In a transfer such as this, generally, the household would continue on its recertification schedule from the previous unit. In most cases this will be the anniversary date of the "old" unit' s move-in date. For example, the Roberts moved into Unit #1 on June 13, 2002. On February 5, 2003, they transferred to Unit # 2 (also in the same building). The tenant's move-out date for Unit #1 is February 5, 2003. The move-in date for Unit #2 is also February 5, 2003. The recertification, if done on time, would be June 13, 2003. As you can see from these questions, the

Fair Housing continued from page 4

attendees asked some very important and necessary questions about the proper completion of the AOC Report. The questions above are important to the site manager, as well as the owner and the management company. This report provides to the Corporation and the Internal Revenue Service (IRS) a "snapshot" of how the development has complied with the program rules and regulations during the past year. Submitting an incomplete and/or inaccurate report constitutes noncompliance reportable to the IRS. In saying that, please take note that information given in the Report should be as accurate as possible. The AOC Report may be used as a reference for an audit by the Corporation and/or the IRS. Any discrepancy in the information reviewed on-site and what was given in the AOC Report may lead to noncompliance. Remember, your AOC Report is due by July 1 at 5:00 pm. We hope that by sharing these questions (and our answers), we can help you alleviate some common errors thus allowing you to submit a deficiency-free report.

compliance tip

of the quarter

"At recertification, always re-verify income from a previously documented source even if the tenant notes income is no longer being received from that source. Doing so will allow you to properly calculate the portion of the rent due from tenant."* *Particularly beneficial when tenant rent is subsidized by HUD or RHS." Sylvester Pomerlee Area Manager

In an effort to more widely educate housing credit agencies, owners and other parties about the Act and federal accessibility guidelines, the IRS, DOJ and HUD, since the inception of the MOU, have spoken to various groups and at various events regarding Fair Housing compliance, its relationship to tax credit developments and the responsibilities of various parties. Under Internal Revenue Service Reg. 1.42-9 (general public use requirement), the specific tax regulation requiring compliance with the Act, an owner of a low-income housing tax credit development is required to annually certify to the housing credit agency (through its Annual Owner Certification (AOC) Report, a report summarizing an owner 's compliance with program requirements,) that all low-income units in the

The Days of Compliance

Thank you for calling Shady Acres Apartments, you have reached the automated answering service. If you know the extension of your party please dial it now, if not, please hold for a list of dialing options...

development are available for use by the general public, as required by federal regulations. The regulation further provides that a unit is deemed available for "use by the general public" if it is rented "in a manner consistent with housing policy governing nondiscrimination, as evidenced by rules or regulations of HUD." In 2001, the AOC Report was amended to require owners to certify that no finding of discrimination under the Act has occurred for the development. This would include reporting violations such as: ¨An adverse final decision by HUD - An adverse final decision by a substantially equivalent state or local fair housing agency, and/or ¨An adverse judgment from a Federal court The Mississippi Home Corporation, the housing credit allocating agency for the State of

Mississippi, reports all violations of the Act on IRS Form 8823 (Report of Noncompliance) under line item 10(d) which states "Owner failed to provide annual certifications or provided incomplete or inaccurate certifications." In accordance with Section 42 of the IRC and the Income Tax Regulations, a report of noncompliance indicating an owner of a low-income housing tax credit development unlawfully discriminated against a current or prospective tenant(s) could result in the loss of tax credits on this development. For more information on Fair Housing compliance, contact the Atlanta Regional Office of FHEO at 1.800.440.8091. To report housing discrimination, contact the Housing Discrimination Hotline at 1.800.669.9777.

...if this is a rent related question please press 6, if you'd like to leave a message please press 7, for more options please press 8, if you would like to speak with a real live person please press 9 for an extension list

please press 1 to speak with Ann, please 2 to speak with Bob, please press 3 to speak with Carol, press 4 to speak with Dan, please press 5 to ...

&

Q: I have received a Social Security verification for a child in

one of my tax credit units. However, I have noticed that the verification notes, "Jane Doe for Sarah Doe." Sarah is the child. I have no idea who Jane Doe is. Should I question the relationship of this person to the child?

COMPLIANCE MONITORING STAFF

Robert D. Collier Vice President Multifamily Programs Karen C. Georgetown Assistant Vice President Compliance Monitoring Daffiney House Compliance Officer Teri Nguyen Compliance Officer Deborah Heard Compliance Assistant Rob Stevens Building Inspection Administrator Robert L. "Derrick" Lee Intern Melody Barnett Intern

A: Yes, we strongly suggest you inquire and document the

relationship of Jane Doe. Although it is rare, it may be that Jane is simply a financial guardian of Sarah's benefits. However, leaving the question of who Jane is may give rise to other compliance questions, such as "Should Jane Doe be considered a household member? Should her income also be counted?" Thus, it's always a good idea to document the situation to be certain.

Q: Who should witness a mark of a tenant who is unable to sign his/her name? A: The person witnessing the signature "mark" of a tenant must be a person other than

management and/or the owner and of legal age and sound mind to do so.

Please contact us at 601.718.4622 if you would like to be removed from the Compliance Connection mailing list.

This newsletter is designed to convey Mississippi's current HTC compliance monitoring policies, procedures, updates and changes AND is not intended to be a legal interpretation of the Internal Revenue Code (IRC).

COMPLIANCE

PO Box 23369 Jackson, MS 38225-3369

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