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                                                          the housi
COMPLIANCE                                                                                                 CONNECTION
Second Quarter 2005                                                                                         a quarterly publication of mississippi home corporation



     VP Notes                                           THE AOC REPORT:
                                                     Some Last Minute Questions
                                                  by: Deborah Heard                                                         Accountant.

                                                       Recently, on May 12, 2005, the Corporation                           Q: If my development was in carryover status
                                 Summer is fast   held a training session on the proper preparation                         during the past year, what forms, if any,
                               approaching,       of the Annual Owner Certification (AOC) Report,                           should be completed for the submission of
                               which means it     a report required by the IRS of all owners of                             the AOC Report?
                               is time for sun    Housing Tax Credit (HTC) developments.                                    A: If your development was in Carryover Status
                               b a t h i n g ,    During the training session, questions arose                              during the past year, then the only form you will
    Robert D. Collier,         swimming,          concerning the forms that should be included in                           need to submit is the OCCPC form (pages 1 and
    Vice President
    Multifamily Programs       vacations,         this report and the correct way to assemble the                           2 only). Remember, you still must have the
                         barbeque parties, and    submission. This article will attempt to share                            OCCPC notarized!
                         oh yeah, the second      with you some of the more common questions:
       issue of the Compliance Connection.                                                                                  Q: What information is included on the
                                                  Q: Who is responsible for completing and                                  Development Physical Condition Report.
     Since the publication of the last issue,     signing these reports?                                                    A: The Development Physical Condition Report,
     three compliance briefings have been         A: The owner and/or his/her registered agent is                           which is still a relatively new addition to the AOC
     conducted by staff, two on “HTC              responsible for completing and signing the AOC                            Report, collects information on the physical
     Fundamentals, ” held on March 10 and         Report certifying that all information contained                          condition of damages sustained to the
     June 9th and one on “Leasing a Tax           therein is true and correct. The Registered                               development during the past year, particularly
     Credit Unit” on April 7, 2005. As you        Agent must be listed in the Partnership                                   damages that take a unit/building out of service.
     can see, we’re busy educating!               Agreement.                                                                If there are none, then you would put “N/A”
           In this issue, the second of a two                                                                               where it calls for a description of the damages.
     part series on Fair Housing compliance       Q: Which of the forms in the AOC Report                                   Remember, this form must also be notarized.
     and enforcement is featured. See             must be notarized?
     inside for what not to do at your tax        A: The Owner’s Certification of Continued                                 Q: When does an owner submit a copy of the
     credit site. Also, since our last            Program Compliance (OCCPC) and                                            8609’s that were sent to the IRS?
     publication, we’ve added a new feature       Development Physical Condition (DPC) Reports                              A: The 8609 forms, issued to you from our
     to the compliance website ~ the ability      are the only two forms that must be notarized.                            Allocation Department, should be submitted the
     to calculate the maximum allowable           The Operating Statement should be notarized IF                            first year you are required to send in an AOC
     income and rent limit for tax credit         it is NOT generated by a Certified Public                                 Report. In years 2-10, copies of the Schedule
     households via our online calculator. To
     utilize this feature, visit our website at                                                                                                                      continued on page 7
     www.mshomecorp.com. It’s just
     another way in which we’re trying to                                               In this issue...
     assist you with compliance. We hope                                                 State Audits, 8823s & What Really Matters to the IRS ... .................Page 2
     you enjoy it!!                                                                      Compliance Updates/Upcoming Events..................... ... .................Page 2
           Remember the July 1st deadline to                                             Crossword Puzzle.................... ... ............................... ... .................Page 3
                                                                                         Fair Housing Compliance and Enforcement - Part II . ... .................Page 4
     submit your Annual Owner Certification                                              Absent Family Members.......... ... ............................... ... .................Page 5
     Report is right around the corner. Let’s                                            HTC in the News...................... ... ............................... ... .................Page 5
     get those Reports in on time!!!                                                     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                               State Audits, 8823s, & What
       Updates
 The Compliance Division welcomes the
                                                Really Matters to the IRS?
 participation of
 March(HTC) the following Housing Tax
 Credit           developments to the
                                              The following is a reprint of an article taken from TheoPRO’s
                                              Weekly Online Compliance Advisor with the consent of Ruth
                                                                                                                  severe. Under the surface, though, the state
      11-12, 2004 Quarterly Briefing                                                                              may be commenting on and alerting the property
 Mississippi housing-market:                  Theobald of TheoPROs Compliance & Consulting, Inc.
                                                                                                                  owner/manager to issues that could suggest the
      Housing Tax Credit Fundamentals
                                              by:   Ruth Theobald, President                                      deterioration of the housing.
      Mississippi Home Corporation                  Sara Newsome, Vice-President                                        If it were our property, we would simply take
      Offices Park Apts, Ph II
           Bay                                                                                                    what the state reported and tend to correction. In
          Bay St. Louis
      Jackson, Miss - 64 units                Question:                                                           this case, we would notify the household that the
                                              We have recently been audited by the state and                      state has found their unit to be untidy and
      15 - 17, 2004 - 2004 Mississippi
            Kirby Road Apts II                they have written our property up for the most nit-                 suggest ways that they can remedy the situation.
          Robinsonville - 62 units
      SAHMA Conference                        picky things. Housekeeping, for instance, over                      This should not be handled in a derogatory
      Housing Tax Credit Compliance           which we have no control. In another instance,                      manner, but with respect and courtesy.
           Highland Park Apts                 the annual report we sent to them had a different                         Regarding the differences in facts reported
      Sessions
             Jackson - 152 units
      Speakers: Robert Collier/Karen          rent indicated than the one that the file indicated.                to the state versus what they find in the file, we
                                              The rent was well below the maximum limit so                        would suggest the same approach. While it is
      Georgetown Park Apts I
           Chandler                           why would they write us up? Will they issue                         true that if the family’s rent is below the maximum
              Miss
      Biloxi,Starkville - 98 units            8823s on this? What will the IRS do if it is                        rent there is no violation as far as an 8823 “Low
                                              reported?                                                           Income Housing Credit Agencies Report of Non-
      25, 2004 - Quarterly Briefing
        ChapelRidge of Richland                                                                                   Compliance” to the IRS, certainly the state has
            Richland 184 units
      Annual Owner- Certification (AOC)       Answer:                                                             the right to call this discrepancy to our attention
      Prep Class                                    Physical property inspections, which have                     and to ask us to explain it. Again, simply
           Fox Ridge Estates II
      Mississippi Home Corporation            been required for Section 42 since 2001, create                     providing them with proof of what the true rent is
             Tunica - 32 units                some interesting questions, such as the ones                        according to the lease and any other supporting
      Offices
      Jackson, Miss Apts II                   you have posed here. When is it truly non-                          documentation should suffice in remedying the
            Shady Lane                        compliance and when is it not?                                      situation.
             Tunica - 96 units                      Each state sets the standard by which it                            In some cases, the state will not report all of
 April                                        audits for physical condition and they have the                     their findings to the IRS on Form 8823 unless it is
      22, 2004 - Quarterly Briefing           choice of using local building codes or Uniform                     in fact a violation of federal regulations. In other
         Upcoming
      Housing Tax Credit Compliance
      for the Advanced
                                              Physical Condition Standards (UPCS). In
                                              addition to this they are supposed to audit for
                                                                                                                  cases, they may report this on an 8823, but if it
                                                                                                                  has been corrected, that result will also be stated

          Events
      Guest Speaker: Liz Bramlet,
      Quadel Consulting
                                              compliance with fair housing construction
                                              standards and a myriad of other details.
                                                                                                                  on the report. Responding to their findings
                                                                                                                  whether or not they carry the import of an 8823
                                                    Under the surface of these requirements                       violation is simply a good practice and will
      Location: TBA
 JUNE                                         lies the purpose for which these physical                           enhance your relationship with the state.
    Technical Assistance Available            inspections were created in the first place:                              While we realize that it might feel absurd,
    Upon Request                              keeping low income tax credit units in a condition                  you could always thank the state for bringing
 May                                          that provides decent, safe, and sanitary housing.                   these matters to your attention. Overall it will
 JULY 2004 - Quarterly Briefing
     5,                                             We agree that on the surface, being written                   help you maintain your tax credit property to a
     1 2005 AOC Certification
     Annual Owner Report due (AOC)            up for a family’s poor housekeeping seems                           higher standard! - Good luck!
      Prep Class (Encore Presentation)
    Mississippi Home Corporation
 AUGUST
    Offices Assistance Available
    Technical
    Upon Request
    Jackson, Miss
                                                    Things are getting easier
                                                                                                              In the world of HTC where things seem to

           Tip Us                                                                                             continually get more and more complicated, isn’t
                                                                                                              it nice to find something designed to simply make
  If you are currently a participant in the                                                                   your life easier. MHC’s new Compliance
 Mississippi HTC program and would like                                                                       Calculator is such an item.
to share a compliance success tip, please                                                                     Calculations of maximum allowable income and
 let us know. We may feature your tip in                                                                      rent limits will now be a breeze with MHC’s online
                                                                                                              calculator. To add a little simplicity to your life,
     an upcoming issue. Email tips to
                                                                                                              visit the compliance section of our website at
            kgtown@mshc.com.
                                                                                                              www.mshomecorp.com
                                                                                                                                  page 3


      Compliance Crossword
                                    1                   2                  3        4

                     5                                           6

      7

                                                                 8

                                              9




                     10




                                                                     11

                                                   12       13

                                    14                                     15                        16

                                                                                                     17
Across
1.        Antique Car
3.        Daffiney or Teri
7.        Discharge resident                                               18
8.        Pre-Compliance
10.       Out-of-date                         19
11.       Approved
14.       Written on paper
                                         20
17.       20% requirement
18.       Student Exception (Abbr.)
20.       Grant to stop verifications



Down
1.        Future income
2.        Program benefit (2 words)
4.        Unknown family member
5.        Documentation Site
6.        Verification method
9.        Promise to State (abbr.)
12.       AOC month
13.       Proved
15.       Never Qualified TC Unit
16.       Not market, not low-income
19.       Rent Mate (abbr.)                                               4.UNBORNCHILD 5. FILE 6.ORAL 9.LURA12.JULY 13.VERIFIED 15.EMPTY 16. STAFF 19.UA
                                                                          14.DOCUMENTED 17. TIPS 18. TANF 20.WAIVER DOWN - 1.ANTICIPATED 2.TAXCREDIT
                                                                          ACROSS - 1.ASSET 3.AUDITOR 7.EVICT 8.ALLOCATION 10.EXPIRED 11.ELIGIBLE
 page 4

    Fair Housing Compliance &                                                                                                           Compliance
     Enforcement - Part II                                                                                                              Photo Poll
by: Robert D. Collier                                   year.
                                                            These totals do not include discrimination
     This is the second of a two-part series on         based on disability and familial status (two of the                          If you could make one wish
compliance and enforcement of the Fair Housing          most common types of discrimination), religion or                            for the tax credit program,
Act. In the last issue of the Compliance                sex. Additionally, there is no comparable data for
Connection, Part I dealt with the type of housing       persons with disabilities, yet this group                                    what would it be?
covered under the Act, what is prohibited in the        continuously files the highest number of
sale and rental of housing, protections for people      complaints with HUD each year.
with disabilities and requirements for new
buildings with four or more units built after March     Rental Market Discrimination                                                                            To have the ability to
13, 1991. In this issue, I will focus on how fair            The majority of complaints in the rental                                                           enter tenant data online
housing violations/noncompliance are reported           market are filed against apartment owners and                                                           at the end of each month.
and enforced by state and federal agencies and          managers for discriminating on the basis of race                                                        Francine Spann
the significant consequences that can result from       (29% in 2003), disability (27% in 2003), family                                                         Site Manager
failure to comply.                                      status (13% in 2003) and national origin. The                                                           Morrow Realty
     The Fair HousingAct (theAct), which was first      private fair housing movement reported 12,091
passed in 1968 shortly after the assassination of       complaints of housing discrimination in the rental
Dr. Martin Luther King, prohibits discrimination        market. The discrimination may take the form of
based on race, color, religion, sex, familial status                                                                                Not to be tested at every
                                                        landlords denying that units are available,
and national origin. It is enforced administratively                                                                                training.
                                                        refusing to make reasonable accommodation for
by the U.S. Department of Housing and Urban                                                                                         Scott Hendrix
                                                        a person with a disability, quoting higher rents or
Development (HUD). People who believe that              security deposits, segregating African                                      General Manager
they have been harmed by a violation of the Act         Americans, Latinos, Asian Americans, or families                            Hughes Management
may file administrative complaints with HUD, and        with children in one part of building or complex,
HUD conducts an impartial investigation of the          restricting access to rental property amenities
claims.                                                 such as swimming pools or community rooms, or
     The Act also authorizes federal lawsuits by        initiating eviction proceedings against white                                                           To eliminate the
the U.S. Department of Justice (DOJ) and private        tenants who have visitors who are African                                                               recertification process for
lawsuits that can be filed in federal or state courts   American, Latino orAsianAmerican.                                                                       the elderly.
by individuals. Many state and local fair housing                                                                                                               Ruth Martin
enforcement agencies also have authority to             Federal Enforcement                                                                                     Owner/ Manager
investigate violations and bring enforcement                                                                                                                    New Albany Elderly
actions.                                                           United States v. JDL Management Co. (N.D. Ill.)
     Where violations of the law are established,         In this case, the United States filed a complaint claiming that the
                                                          architect and developer engaged in a pattern or practice of
remedies under the Act may include the award of           discrimination against persons with disabilities. The United States
compensatory damages to victims of                        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
                                                                                                                                    compliance with the Act. The MOU spells out the
discrimination, sometimes numbering in the                a 10-year period. The remaining money will go towards retrofitting the    steps that would be taken and the responsibilities
                                                          public use and common areas ofAcorn Glen.
hundreds of thousands of dollars, orders for                                                                                        of housing credit agencies when instances of fair
comprehensive corrective action, and awards of                                                                                      housing have been identified. Specifically, the
punitive damages to victims or civil penalties to            In 2003, private fair housing organizations                            MOU states that the DOJ and HUD will provide
the government. In design and construction              with membership in NFHA investigated more                                   notice to the IRS and state housing finance
cases, remedies may also require retrofitting           than 17,000 complaints of housing                                           agencies of any enforcement actions brought
housing that has already been constructed to            discrimination. Approximately 27 percent of                                 under the Fair Housing Act involving tax credit
make it comply with the Act’s design and                those complaints involved race discrimination.
construction requirements.                              There were 2,745 complaints filed with HUD’s
                                                                                                                                              United States v. City of Johnstown, Pa. (W.D. Pa.)
                                                        Office of Fair Housing and Equal Opportunity. Of                             On June 16, 2004, the Court entered a consent order in United States
Fair Housing Discrimination – National                  those complaints, 32 percent involved race                                   v. City of Johnstown (W.D. Pa.). The complaint alleged the City denied
                                                                                                                                     the American Legion's application for a conditional use permit to
Trends                                                  discrimination in housing. Despite these                                     operate a transitional housing facility for homeless veterans at an old
                                                                                                                                     school building because the prospective occupants were disabled.
     According to the National Fair Housing             statistics, last year HUD records show the law                               There was strong neighborhood opposition to the proposed facility.
Alliance (NFHA), at least 3.7 million fair housing      was violated in only four cases; ten when adding                                      The consent order enjoins the city from discriminating on the
                                                                                                                                     basis of disability in housing. In addition, the city will pay $82,500 in
violations still occur annually more than 35 years      cases filed by the DOJ.                                                      damages to the American Legion and a $15,000 civil penalty to the
                                                                                                                                     United States. Certain city employees will also receive training on the
after the passage of the Act. Recent research                                                                                        provisions of the Fair HousingAct.
has documented significant levels of                    Fair Housing Discrimination – Tax Credit                                     The case was originally referred to the Division by the Department of
                                                                                                                                     VeteransAffairs.
discrimination against African Americans,               Housing
Latinos, Native Americans, Asian Americans and              Since August 2000, the issue of fair housing,
                                                        particularly in tax credit developments, has                                development owners. The IRS, in turn, will notify
Pacific Islanders. A recent study commissioned
                                                        garnered increased attention nationally when the                            involved development owners that a finding of
by the NFHA found that race discrimination
                                                        IRS, DOJ, and HUD entered into a Memorandum                                 discrimination could result in the loss of tax
against African Americans in the housing market
                                                        of Understanding (MOU) to promote enhanced                                  credits.
occur more than an estimated 1.7 million times a                                                                                                                             continued on page 7
                                                                                                                                                page 5
                                                             A temporarily absent family member (TAFM)           three categories: separation, incarceration and
 Absent Family                                          generally tend to be spouses, adult students
                                                        living away from home, children temporarily
                                                                                                                 military duty. Below is a summary of how we have
                                                                                                                 answered the questions posed.
                                                        placed in foster care, adults away for active
   Members                                              military duty, and/or family members currently in a
                                                        hospital or rehabilitation center. When dealing
                                                                                                                 Separation
                                                                                                                     Whether an absent spouse is temporarily or
                                                        with a TAFM or making a decision as to the               permanently absent may have a big impact on the
                                                        occupancy status of a TAFM, one should take              household size and consequently, the applicable
by: Teri Nguyen
                                                        great care. One “slip-up” could cost you a lot in        income limit. To avoid incorrect inclusions or
                                                        terms of noncompliance. The key to handling              omissions have the applicant/resident answer
     Knowing the members of your immediate
                                                        these cases is asking the right questions. Here,         the “three-question quiz” and acquire an affidavit
family is generally a cinch. You could probably
                                                        we try to offer a “three-question quiz” to ask           from the applicant/resident as to the
rattle off all the names of your family in the
                                                        households with a TAFM that should assist you in         circumstances regarding the separation. In an
amount of time it takes to say “Bless you.”
                                                        making the best decision upfront:                        omission case, it is strongly suggested that
However, deciding who is part of your household
is another matter entirely. Often, in the tax credit                                                             management acquire secondhand
program, the terms family and household are                   1) Is there a possibility that the absent family   documentation, relating to the separation (i.e.
used interchangeably in error. The Housing Tax                member may return to the household?                documentation of domestic violence, restraining
Credit program is concerned about the members                 2) If the absent family member was not             order, legal separation agreement, letter from
of your household, but does not dictate who may               obliged elsewhere (e.g., school, military          attorney, etc.), to support the affidavit and the
or may not be a part of your household.                       duty, etc.) would she/he be at home?               occupancy decision.
     As we should all know by now, household                  3) Can you reasonably determine a date of
size may be THE most important factor in                      return?                                            Incarceration
determining tax credit eligibility. It determines the                                                                Unfortunately, people make mistakes - big
applicable income limit for the household, which             If you have answered “yes” to any of these          legal mistakes. However, those family members
is a pass or fail test. Thus, knowing who is            questions, you should count the TAFM as part of          are still a part of your family. The question is “are
actually part of the household is vital to              the household. If you have answered “no” to all          they a part of your household?” Should you add
compliance. One problem in making this                  these questions, then the family member should           them? Unfortunately, the HUD Handbook does
determination is knowing which household                be considered permanently absent, and thus,              not specifically address this issue. Thus, in an
member is to be counted. The problem does not           does not have to be counted. However, in the             effort to make a decision based on your
rest with the obvious members (i.e. those               latter scenario if the TAFM is a spouse, the head        knowledge of the full situation, have the tenant
physically residing in the unit, although some of       of the household may choose at his/her discretion        answer the “three-question quiz.” Once given the
these individuals may be excludable) but with the       to include or exclude the member.                        circumstances, use your best judgment. Again,
not so obvious members - those temporarily                   Over the past few years, MHC has received a         acquiring secondhand verifications, if possible,
absent.                                                 series of questions regarding how to handle              such as a news article noting the sentencing,
                                                        TAFMs. The questions posed generally fell into           would only strengthen your case if the decision
                                                                                                                                              continued on page 6




 HTC in the News                                                                                       - Utility Allowance
                                          by: Robert L. Lee                           maintenance costs,” added Zipperer.
                                                                                      So, what does the IRS need to do to fix this problem?
                                         According to an article published in              According to a coalition of multifamily organizations in a December
                                     Affordable Housing Finance magazine              2004 proposal to the IRS, the IRS must implement policy changes
                                 written by John Zipperer, efforts for new            addressing problems found in two main, contributing factors: limited utility
                             utility cost adjustments by the IRS were set for         allowance sources and the deregulation of utility services. The coalition
                           early 2005. With this, owners of low-income                proposed that having more options, such as “allowing the use of a
                        housing tax credit (LIHTC) developments are hoping            software model of utility service consumption, a state certified
                     the IRS will adopt policy changes that will allow utility        professional engineer, the state housing finance agency, or, for existing
                 allowance estimates to be generated in a manner                      buildings, the actual utility data based on occupied units in the same
consistent or comparable to actual utility consumption. This policy                   property,” as well as eliminating deregulation whereby allowing utility
change, according to Zipperer, will allow for more accurate cash flow                 charges from multiple sources to be combine into one single bill, would
projections and therefore greater feasibility for affordable housing                  bring utility allowance estimates in line with the average utility cost.
developers.                                                                                Finding a viable solution, one that works for all parties involved, may
      Currently, IRS regulations require that owners of LIHTC                         not be an easy task. Proposals, such as the one recapped above, may
developments (specifically those who do not furnish utilities such as light,          be just the answer for some and only half the answer for others. Just
water, gas, etc.) deduct estimated utility costs from the gross rent of               think about the several other dozen proposals that may have been
household’s occupying low-income units in order to establish the net rent             submitted for consideration. Will any of them work? Was there a “catch
they will charge these households. According to Zipperer, many owners                 one, catch all” proposal submitted? Will the problem with utility
feel they are overestimating utility cost due to out-dated methods for                allowance estimates be put to rest once and for all? The answer to
retrieving utility information and estimates based on old properties with             these questions is ~ no one currently knows. But one thing is certain;
less efficient construction and appliances. “Higher utility costs translate           something must be done and soon. Who knows? A viable solution may
into actual reduced cash flows the net rents, leaving the owner with less             be lying restlessly on the desks of IRS officials awaiting final approval!
money available to service the mortgage and cover operating and
 page 6

                                                                        Compliance SpotLight
  Straight
  from the                                                                                Southwind Apartments
    IRS...                                                                                     Durant, MS

                                                                     Mississippi Home Corporation (MHC) recognizes Southwind
        The Internal Revenue Service (IRS) published              Apartments for its outstanding compliance monitoring practices.
   Revenue Procedures 2005-30, which provides                     Southwind Apartments met the challenge of the Housing Tax
   guidance regarding an extension of time for private
   activity bond issuing authorities that fail to make a          Credit (HTC) program (affordable units with restricted rents) as
   timely carry forward election. The relief provided             reflected in the latest compliance monitoring review performed by
   under Rev. Proc. 2005-30 is in lieu of the letter ruling
   procedure that is used to request an extension of time         our agency. NO FINDINGS! WOW, what a way to GO! Keep up
   under Internal Revenue Code § 301.9100-3.                      the good work!!
        Representative William Jefferson of Louisiana                Southwind Apartments offers 31 affordable housing units (24
   (D) has proposed legislation in Congress that would
   double the current low-income housing tax credit of            one-bedrooms and 7 two-bedroom) spread throughout four
   $1.85 per capita to $3.70 in FY 2006. Additionally,            residential buildings. Southwind Apartments reserves 100% of its
   Jefferson joined Representatives Jim Ramstad of
   Minnesota (R) and Ben Cardin of Maryland (D), in               units for families with income and rents at or below 60 percent of
   introducing legislation they championed in the last            the area median income.
   Congress to reform the "exit tax" imposed on                      Southwind Apartments is currently owned by Southwind
   developers of affordable housing. The proposed
   legislation would waive the exit tax for owners who            Housing L.P., Paul A. Carpenter, and is under the management of
   sell their properties to buyers who agree to keep the          Carpenter Management. Deana Gray, site manager of 7 years, is
   properties affordable for no less than 30 years.
        The IRS recently invited comments on Treasury             responsible for the day-to-day operations of the development.
   Decision 8801, the arbitrage restrictions on tax-              According to Gray, “reading compliance manuals & updates and
   exempt bonds issued by state and local governments             attending as many MHC compliance training seminars as
   and rules regarding the use of proceeds of state and
   local bonds to acquire higher yielding investments             possible” has helped me maintain compliance with the tax credit
   under Section 148 of the Internal Revenue Code.                program.
   There are no changes being made to the regulations
   at this time. This review is part of a continuing effort to       Southwind Apartments has been in operation as a HTC
   reduce paperwork and respondent burden as                      development since September of 1993.
   required by the Paperwork Reduction Act of 1995.
   Details are available in the Federal Register dated
   May 13, 2005. Written comments will be accepted.
                                                                    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.                              dependents (i.e. a spouse or children), that                                   overnight delivery, etc.). Third, check to see if a
                                                          person and his/her income must be counted.                                     present household member has the power of
Military Duty                                             When faced with this scenario, in addition to                                  attorney to sign on behalf of the TAFM.
    TAFMs of this type can be quite confusing,            asking the “three-question quiz,” you must also                                     Life is constantly changing as will
especially if the person is not related to the head       consider any dependents left in your household.                                households. That is part of life. Make sure you
of household but to another household member.                 Now that you have made your decisions on                                   are aware of these changes and fully document
What do I mean? Well, according to the HUD                the occupancy status of TAFMs, I am sure you are                               the circumstances. If you do not address the
handbook 4350.3 Rev 1, in determining the                 going to ask “How do I document this and how do I                              questions now, your auditor may ask you later.
occupancy status of military personnel away on            get their signatures if they are considered adult                              The best thing to do is to document and attempt to
active duty, you must count members that are the          TAFMs?” First, we strongly suggest you have a                                  settle the questions before they arise OR
head, co-head or spouse OR if they have left a            note to the file regarding the circumstances of the                            WORSE before a certification error is made that
spouse or dependent children. Thus, if a person           absence. Second, in acquiring the signatures of                                could jeopardize your tax credits.
away on active military duty has left any                 TAFMs, consider an alternative method of
                                                          obtaining information (via fax, certified mail,
                                                                                                                                                                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.
                                                                 attendees asked some very important and
                                                                 necessary questions about the proper completion                  compliance tip
Q: When a household transfers from one unit
                                                                 of the AOC Report. The questions above are
                                                                 important to the site manager, as well as the
                                                                                                                                           of the quarter
to another unit in the building, what move-in                    owner and the management company. This
date should be listed on the rent roll report and                report provides to the Corporation and the Internal
what is the next certification of the unit?                      Revenue Service (IRS) a “snapshot” of how the                     “At recertification, always re-verify
A: This is generally called an Intra-Building                    development has complied with the program rules                   income from a previously
Transfer. The move-in date that should be listed                 and regulations during the past year. Submitting                  documented source even if the
is the move-in date into the “new” unit. It should               an incomplete and/or inaccurate report
not be the old move-in date or the development                   constitutes noncompliance reportable to the IRS.                  tenant notes income is no longer
move-in date. In a transfer such as this, generally,             In saying that, please take note that information                 being received from that source.
the household would continue on its recertification              given in the Report should be as accurate as                      Doing so will allow you to properly
schedule from the previous unit. In most cases                   possible. The AOC Report may be used as a                         calculate the portion of the rent due
this will be the anniversary date of the “old” unit’ s           reference for an audit by the Corporation and/or                  from tenant.”*
move-in date.                                                    the IRS. Any discrepancy in the information
                                                                 reviewed on-site and what was given in the AOC
    For example, the Roberts moved into Unit #1                  Report may lead to noncompliance.                                 *Particularly beneficial when tenant
on June 13, 2002. On February 5, 2003, they                          Remember, your AOC Report is due by July 1                    rent is subsidized by HUD or RHS.”
transferred to Unit # 2 (also in the same building).             at 5:00 pm. We hope that by sharing these
The tenant’s move-out date for Unit #1 is February               questions (and our answers), we can help you                                           Sylvester Pomerlee
5, 2003. The move-in date for Unit #2 is also                    alleviate some common errors thus allowing you
February 5, 2003. The recertification, if done on                to submit a deficiency-free report.                                                         Area Manager
time, would be June 13, 2003.
    As you can see from these questions, the

 Fair Housing continued from page 4
     In an effort to more widely educate housing                 development are available for use by the general              Mississippi, reports all violations of the Act on IRS
 credit agencies, owners and other parties about                 public, as required by federal regulations. The               Form 8823 (Report of Noncompliance) under line
 the Act and federal accessibility guidelines, the               regulation further provides that a unit is deemed             item 10(d) which states “Owner failed to provide
 IRS, DOJ and HUD, since the inception of the                    available for “use by the general public” if it is            annual certifications or provided incomplete or
 MOU, have spoken to various groups and at                       rented “in a manner consistent with housing policy            inaccurate certifications.” In accordance with
 various events regarding Fair Housing                           governing nondiscrimination, as evidenced by                  Section 42 of the IRC and the Income Tax
 compliance, its relationship to tax credit                      rules or regulations of HUD.”                                 Regulations, a report of noncompliance indicating
 developments and the responsibilities of various                     In 2001, the AOC Report was amended to                   an owner of a low-income housing tax credit
 parties.                                                        require owners to certify that no finding of                  development unlawfully discriminated against a
     Under Internal Revenue Service Reg. 1.42-9                  discrimination under the Act has occurred for the             current or prospective tenant(s) could result in the
 (general public use requirement), the specific tax              development. This would include reporting                     loss of tax credits on this development.
 regulation requiring compliance with the Act, an                violations such as:                                               For more information on Fair Housing
 owner of a low-income housing tax credit                        ¨An adverse final decision by HUD - An adverse                compliance, contact the Atlanta Regional Office of
 development is required to annually certify to the              final decision by a substantially equivalent state or         FHEO at 1.800.440.8091. To report housing
 housing credit agency (through its Annual Owner                 local fair housing agency, and/or                             discrimination, contact the Housing
 Certification (AOC) Report, a report summarizing                ¨An adverse judgment from a Federal court                     Discrimination Hotline at 1.800.669.9777.
 an owner ’s compliance with program                                  The Mississippi Home Corporation, the
 requirements,) that all low-income units in the                 housing credit allocating agency for the State of

The Days of Compliance

                                                                                                ...if this is a                    please press 1 to speak with Ann, please 2 to speak
                                 Thank you
                                                                                  rent related question please press            with Bob, please press 3 to speak with Carol, press 4 to
                        for calling Shady Acres
                                                                           6, if you’d like to leave a message please press                speak with Dan, please press 5 to ...
            Apartments, you have reached the automated
           answering service. If you know the extension of                7, for more options please press 8, if you would
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                              for a list of                                               9 for an extension list
                             dialing options...
                                                                                                                                                                           Jackson, MS 38225-3369
                                                                                                                                                                           PO Box 23369

                                                                                                                                                      CONNECTION                                                      COMPLIANCE




                                                                                                                                                                                                          the housi
                                                                                                                                                                                                     ng
                                                                                                                                                                                        tax credit




                                                                                                                                                            COMPLIANCE
                                       Q: I have received a Social Security verification for a child in
              &
                                                                                                                                                          MONITORING STAFF
                                       one of my tax credit units. However, I have noticed that the
                                       verification notes, “Jane Doe for Sarah Doe.” Sarah is the child. I                                                                Robert D. Collier
                                       have no idea who Jane Doe is. Should I question the relationship of                                                       Vice President Multifamily Programs
                                       this person to the child?                                                                                                      Karen C. Georgetown
                                                                                                                                                         Assistant Vice President Compliance Monitoring

                                       A: Yes, we strongly suggest you inquire and document the                                                                             Daffiney House
                                                                                                                                                                           Compliance Officer
relationship of Jane Doe. Although it is rare, it may be that Jane is simply a financial guardian of                                                                         Teri Nguyen
Sarah’s benefits. However, leaving the question of who Jane is may give rise to other                                                                                      Compliance Officer
compliance questions, such as “Should Jane Doe be considered a household member? Should                                                                                     Deborah Heard
her income also be counted?” Thus, it’s always a good idea to document the situation to be                                                                                Compliance Assistant
certain.                                                                                                                                                                     Rob Stevens
                                                                                                                                                                   Building Inspection Administrator

Q: Who should witness a mark of a tenant who is unable to sign his/her name?                                                                                            Robert L. “Derrick” Lee
                                                                                                                                                                                 Intern
                                                                                                                                                                             Melody Barnett
A: The person witnessing the signature “mark” of a tenant must be a person other than                                                                                            Intern

management and/or the owner and of legal age and sound mind to do so.
                                                                                                                                                         Please contact us at 601.718.4622 if you
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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).

				
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