PLR 201138016: IRS grants extra time to elect the 60 percent low-income housing set-aside

Plain-English summary

A taxpayer failed to make the intended IRC § 42(g)(1)(B) election for a low-income housing project. The election uses a 40 percent minimum set-aside for units occupied by residents whose income is no more than 60 percent of area median gross income. The IRS granted 120 days from the ruling date to file amended Forms 8609 containing the intended election. The ruling did not decide whether the taxpayer otherwise qualified for the low-income housing credit.

Ruling snapshot

• Question: Whether the taxpayer could receive extra time to make the IRC § 42(g)(1)(B) election for its low-income housing project.
• Outcome: Approved, with 120 days to file amended Forms 8609.
• Key authorities: IRC § 42(g); Treas. Reg. §§ 301.9100-1, 301.9100-2, and 301.9100-3.

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201138016
Third Party Communication: None
Release Date: 9/23/2011
Date of Communication: Not Applicable
Index Number: 42.00-00
Person To Contact:
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Refer Reply To:
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CC:PSI:B05
PLR-141753-10
In Re: Ruling Request
Date:
June 07, 2011

Taxpayer = ----------------------------------
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Project = --------------------------

Address = -------------------------
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Date 1 = --------------------------

Dear -----------------:

This letter responds to your authorized representative's letter dated September 29, 2010, and subsequent correspondence submitted on behalf of Taxpayer, requesting an extension of time to make an election under § 42(g)(1) pursuant to § 301.9100-3 of the Procedure and Administration Regulations.

Project is located at Address. According to information submitted, Taxpayer failed to make effective elections under § 42(g)(1)(B) for the taxable year ending on Date 1 consistent with Taxpayer’s intent, as evidenced by the Taxpayer's contemporaneous documentation, and its return filing consistent with this intent.

Section 42(g)(1) defines the term “qualified low-income housing project” as any project for residential rental property if the project meets the requirements of § 42(g)(1)(A) or (B), whichever is elected by the taxpayer. The project meets the requirements of § 42(g)(1)(A) if 20 percent or more of the residential units in such project are both rent-restricted and occupied by individuals whose income is 50 percent or less of area median gross income. The project meets the requirements of
PLR-141753-10
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§ 42(g)(1)(B) if 40 percent or more of the residential units are both rent-restricted and occupied by individuals whose income is 60 percent or less of area median gross income.

Section 42(l)(1)(D) provides that following the close of the first taxable year in the credit period with respect to any qualified low-income building, the taxpayer shall certify to the Secretary (at such time and in such form and in such manner as the Secretary prescribes) the election made under § 42(g) with respect to the qualified low-income housing project of which such building is a part. In the case of a failure to make the certification required by the preceding sentence on the date prescribed therefore, unless it is shown that such failure is due to reasonable cause and not to willful neglect, no credit shall be allowable by reason of § 42(a) with respect to such building for any taxable year ending before such certification is made.

Section 301.9100-7T(b) of the temporary Procedure and Administration Regulations provides that for elections under the Tax Reform Act of 1986, the election under § 42(g)(1) must be made for the taxable year in which the project is placed in service and shall be made in the certification required to be filed pursuant to § 42(l)(1). Form 8609 serves the purpose of the certification required to be filed pursuant to § 42(l)(1) and includes the election under § 42(g)(1). Section 301.9100-7T(a)(4)(i) provides that the election under § 42(g)(1) is irrevocable.

Section 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use to determine whether to grant an extension of time to make an election.

Section 301.9100-1(b) defines the term “regulatory election” as including an election whose due date is prescribed by a regulation, revenue ruling, revenue procedure, notice, or announcement published in the Internal Revenue Bulletin.

Under § 301.9100-1(c), the Commissioner has discretion to grant a reasonable extension of time under the rules set forth in §§301.9100-2 and 301.9100-3 to make a regulatory election, or a statutory election (but no more than six months except in the case of a taxpayer who is abroad), under all subtitles of the Code, except subtitles E, G, H, and I.

Section 301.9100-2 provides automatic extensions of time for making certain elections. Section 301.9100-3 provides extensions of time for making elections that do not meet the requirements of § 301.9100-2.

Requests for relief under § 301.9100-3(a) will be granted when the taxpayer provides evidence (including affidavits described in § 301.9100-3(e)) to establish that the taxpayer acted reasonably and in good faith, and that granting relief will not prejudice the interests of the government.
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In the instant case, based solely on the facts submitted and the representations made, we conclude the requirements of §§ 301.9100-1 and 301.9100-3 have been met. Accordingly, Taxpayer is granted an extension of time to make the election under § 42(g)(1)(B) with respect to Project. The election must be made by filing within 120 days from the date of this letter amended Forms 8609 that include this intended election. The amended Forms 8609 (along with a copy of this letter) are to be sent to the following address:

Department of the Treasury
Internal Revenue Service Center
Philadelphia, PA 19255-0549

A copy of this letter is enclosed for this purpose.

No opinion is expressed or implied regarding the application of any other provisions of the Code or regulations. Specifically, we express no opinion on whether Taxpayer otherwise qualifies for credit under § 42.

This ruling is directed only at the taxpayer who requested it. Section 6110(k)(3) provides that it may not be used or cited as precedent.

In accordance with the power of attorney on file, a copy of this letter is being sent to Taxpayer’s authorized representative.

Sincerely,

Associate Chief Counsel
(Passthroughs & Special Industries)

By: _Christopher J. Wilson_
CHRISTOPHER J. WILSON
Senior Counsel, Branch 5
Office of Associate Chief Counsel
(Passthroughs & Special Industries)

Enclosures (2): Copy of this letter Copy for § 6110 purposes

cc: