Housing credit agency may correct two Forms 8609

Plain-English summary

A taxpayer gave a housing credit agency incorrect applicable fractions for two buildings in a low-income housing project. The mistake caused the agency's Forms 8609 to show incorrect housing-credit and maximum-qualified-basis amounts. The agency discovered the error quickly, but correction after the calendar year required prior IRS approval because it involved numerical changes to allocated credit amounts. The IRS found that the request was made within a reasonable period and approved amended Forms 8609 with the corrected figures. The ruling did not decide whether the buildings otherwise qualified for the credit or whether other information on the forms was correct.

Ruling snapshot

• Question: Whether the housing credit agency could correct numerical errors on two Forms 8609
• Outcome: Approved
• Key authorities: I.R.C. § 42(n)(4); Treas. Reg. § 1.42-13(b)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 201539020
Third Party Communication: None
Release Date: 9/25/2015
Date of Communication: Not Applicable
Index number: 42.00-00
Person To Contact:
------------------------------
-----------------------------, ID No. -------------
-------------------------
------------------
----------------------------------------------------- Telephone Number:
----------------------------------
----------------------
------------------------------------------------- Refer Reply To:
In Re: CC:PSI:B05
------------ PLR-114625-15
----------------------------------------------------- Date:
June 16, 2015

LEGEND:

Agency = -------------------------------------------------------
------------------------------------------------------

Taxpayer = -------------------------------------------------------
------------------------------------------------------

BINs = ----------------------------------------------------------------

BIN 1 = ------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------

BIN 2 = ------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------

Year 1 = ------------------------------------------------------

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

Date 2 = ------------------------

a = --------------

b = ----------------

c = --------------

d = ----------------
PLR-114625-15
2

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

This letter responds to a letter dated April 21, 2015, and subsequent correspondence, submitted on behalf of Agency by its authorized representative, requesting permission under § 42(n)(4) of the Internal Revenue Code and § 1.42-13(b) of the Income Tax Regulations to correct an administrative error or omission.

The low-income housing project consists of buildings identified by BINs. All the buildings in the project were placed in service and began their credit period in Year 1.
Taxpayer represents that it presently owns and has continuously owned all the buildings in the project from the beginning of each building’s credit period. On Date 1, Taxpayer submitted the Final Cost Certification for the buildings in the project to Agency.
Taxpayer provided erroneous applicable fractions for the buildings identified by BIN 1 and BIN 2. This error resulted in an incorrect allowable credit dollar amount on line 1b and maximum qualified basis amount on line 3a of the Forms 8609 issued to the buildings identified by BIN 1 and BIN 2. Agency quickly discovered the error on Date 2.

Section 42(n)(4) provides that the Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of § 42, including regulations providing the opportunity for housing credit agencies to correct administrative errors and omissions with respect to allocations and record keeping within a reasonable period after their discovery, taking into account the availability of regulations and other administrative guidance from the Secretary.

Section 1.42-13(b)(1) provides that an Agency may correct an administrative error or omission with respect to allocations and recordkeeping, as described in § 1.42-13(b)(2), within a reasonable period after the Agency discovers the administrative error or omission. Whether a correction is made within a reasonable period depends on the facts and circumstances of each situation. Section 1.42-13(b)(2) provides that an administrative error or omission is a mistake that results in a document that inaccurately reflects the intent of the Agency at the time the document is originally completed or, if the mistake affects a taxpayer, a document that inaccurately reflects the intent of the Agency and the affected taxpayer at the time the document is originally completed.

Under § 1.42-13(b)(3)(iii), an Agency must obtain the Secretary's prior approval to correct an administrative error or omission, as described in § 1.42-13(b)(2), if the correction is not made before the close of the calendar year of the error or omission and the correction—(A) is a numerical change to the housing credit dollar amount allocated for the building or project; (B) affects the determination of any component of the State's
PLR-114625-15
3
housing credit ceiling under § 42(h)(3)(C); or (C) affects the State's unused housing credit carryover that is assigned to the Secretary under § 42(h)(3)(D).

Based solely on the representations and the relevant law and regulations set forth above, we conclude that an administrative error occurred and that this error resulted in documents that inaccurately reflect the intent of the Agency and the Taxpayer at the time the documents were originally completed. The correction was not made before the close of the calendar year of the error, and the correction results in a numerical change to the housing credit dollar amount allocated to the buildings identified by BIN 1 and BIN 2. We further conclude that the request to correct the administrative error was made within a reasonable period of time after the error was discovered.

We approve of Agency correcting this administrative error.

To correct this administrative error, Agency should amend the Form 8609 for the building identified by BIN 1 so that the amount on line 1b of that form is a, and the amount on line 3a of that form is b. Also, Agency should amend the Form 8609 for the building identified by BIN 2 so that the amount on line 1b of that form is c, and the amount on line 3a of that form is d. When making the corrections, Agency should check the “Amended Form” box on the Forms 8609 for each of the buildings and indicate (in the margin of the forms) that it is making the corrections under § 1.42-13(b).

Except as expressly provided herein, no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter. Specifically, we express no opinion on whether any of the Forms 8609 issued for the buildings in the project were timely or correctly filed or reflect the correct applicable percentage, or whether the buildings in the project otherwise qualify for credit under § 42.

This ruling is directed only to the Agency. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

The rulings contained in this letter are based upon information and representations submitted by Agency and accompanied by penalty of perjury statements executed by the appropriate parties. While this office has not verified any of the material submitted in support of the request for rulings, it is subject to verification on examination.
PLR-114625-15
4

In accordance with the Power of Attorney on file with this office, a copy of this letter is being sent to Agency’s authorized representative.

Sincerely,

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