Housing project receives 120 days to correct low-income elections

Plain-English summary

A taxpayer that owned a multiple-building low-income housing project intended to elect the 40-60 minimum set-aside under section 42(g)(1)(B). Its Forms 8609 did not make timely, correct elections for the project buildings, despite contemporaneous documentation of that intent. The IRS concluded that the taxpayer acted reasonably and in good faith and that granting relief would not prejudice the government. It gave the taxpayer 120 days to file amended Forms 8609 making the intended elections. The ruling did not decide whether the buildings otherwise qualified for the low-income housing credit.

Ruling snapshot

• Question: May the taxpayer receive extra time to make the section 42(g)(1)(B) elections for its project buildings?
• Outcome: approved
• Key authorities: IRC §§ 42(g)(1)(B), 42(l)(1), 6110(k)(3); Treas. Reg. §§ 301.9100-1, 301.9100-3, 301.9100-7T

Full text (IRS public release)

Internal Revenue Service                                      Department of the Treasury
                                                              Washington, DC 20224

Number: 201742020                                             Third Party Communication: None
Release Date: 10/20/2017                                      Date of Communication: Not Applicable
Index Number: 9100.01-00, 42.00-00
                                                              Person To Contact:
------------------------                                      -----------------------------, ID No. -------------
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---------------------------------------------                 Telephone Number:
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                                                              Refer Reply To:
In Re:                                                        CC:PSI:B05
         -----------------                                    PLR-121049-17
                                                              Date:
                                                              July 25, 2017




LEGEND:

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

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

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

Address           = -----------------------------------------------------------------------------------------------
                    ------------------------------


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

       This letter responds to a letter dated June 30, 2017, submitted on behalf of
Taxpayer, requesting an extension of time to make the election under § 42(g)(1)(B) of
the Internal Revenue Code pursuant to §§ 301.9100-1 and 301.9100-3 of the Procedure
and Administration Regulations.

       According to the information submitted, Taxpayer owns a multiple building project
located at Address. The building identification numbers assigned to the project
buildings are BINs. Taxpayer elected on Forms 8609, Low-Income Housing Credit
Allocation and Certification, to begin the credit period for the project buildings in Year 1.
Taxpayer inadvertently failed to make timely, correct elections for the project buildings
PLR-121049-17                                  2

under § 42(g)(1)(B), consistent with Taxpayer’s intent, as evidenced by Taxpayer’s
contemporaneous documentation.

       Section 42(g)(1) defines 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 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 § 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) provides, in part, 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) (D) the election made under § 42(g) with respect to the qualified
low-income housing project of which such building is a part, and (E) such other
information as the Secretary may require. In the case of a failure to make the
certification required by the preceding sentence on the date prescribed therefor, 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.

       Sections 301.9100-1 through 301.9100-3 provide the standards the
Commissioner of Internal Revenue 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.
PLR-121049-17                               3


       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 to establish that the taxpayer acted reasonably and in good faith, and
that granting relief will not prejudice the interests of the government.

        In the instant case, based solely on the facts submitted and the representations
made, we conclude that the requirements of §§ 301.9100-1 and 301.9100-3 have been
met. Accordingly, Taxpayer is granted an extension of time to make the elections under
§ 42(g)(1)(B) for the project buildings identified by BINS by filing within 120 days from
the date of this letter amended Forms 8609 that include the intended elections. The
amended Forms 8609 (along with a copy of this letter, enclosed herein) are to be sent
to the following address:

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

       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
project buildings otherwise qualify for credit under § 42, including whether project
buildings qualify for credit prior to issuance of the Forms 8609.

      This ruling is directed only to the taxpayer who requested it. Section 6110(k)(3)
provides that it may not be used or cited as precedent.
PLR-121049-17                                4

      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
                                              Senior Counsel, Branch 5
                                              Office of Associate Chief Counsel
                                              (Passthroughs & Special Industries)

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