Housing project received 120 days to make average-income elections

Plain-English summary

The owner of a multi-building low-income housing project intended to elect the average-income minimum set-aside under Section 42(g)(1)(C), as shown by contemporaneous records, but inadvertently omitted the elections from its Forms 8609. Based on the submitted facts and representations, the IRS found that the requirements for regulatory-election relief were met. It granted 120 days from the ruling date to file amended Forms 8609 making the intended elections, along with a copy of the ruling. The IRS did not decide whether the project's forms were otherwise timely or correct, or whether the project and its buildings qualified for the low-income housing credit.

Ruling snapshot

• Question: May the project owner receive additional time to make the average-income minimum set-aside elections on Forms 8609?
• Outcome: Approved for 120 days from the ruling date
• Key authorities: IRC § 42(g)(1) and (l)(1); Treas. Reg. §§ 301.9100-1 and 301.9100-3; Temp. Treas. Reg. § 301.9100-7T(b)

Full text (IRS public release)

Internal Revenue Service
Department of the Treasury
Washington, DC 20224

Number: 202409014
Third Party Communication: None
Release Date: 3/1/2024
Date of Communication: Not Applicable
Index Number: 42.00-00, 9100.00-00,
9100.01-00
Person To Contact:
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Telephone Number:
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Refer Reply To:
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CC:PSI:B05
PLR-115776-23
In Re: -------------------------------------------- Date:
December 06, 2023

LEGEND

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

Year = -------

BINs = -------------------
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Address = ------------------------------------------------------

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

This letter responds to your authorized representative’s letter dated August 2, 2023, and subsequent correspondence, submitted on behalf of Taxpayer, requesting an extension of time, pursuant to §§ 301.9100-1 and 301.9100-3 of the Procedure and Administration Regulations, to file amended Forms 8609, Low-Income Housing Credit Allocation and Certification, with respect to the elections related to section 42(g)(1) of the Internal Revenue Code (Code).

According to the information submitted, Taxpayer owns and operates a multi- building housing project (Project) that was placed in service in Year. The building identification numbers associated with the Project are BINs. The Project is located at Address.
PLR-115776-23
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Taxpayer intended, as evidenced by Taxpayer’s contemporaneous documents, to make the average income minimum set-aside election for the Project. However, on the Forms 8609 that Taxpayer submitted to the Internal Revenue Service (IRS), Taxpayer inadvertently failed to make such elections.

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 section 42(g)(1)(A), (B), or (C), whichever is elected by the taxpayer. The project meets the requirements of section 42(g)(1)(A) if 20 percent or more of the residential units in the project are both rent-restricted and occupied by individuals whose income is 50 percent or less of the area median gross income. The project meets the requirements of section 42(g)(1)(B) if 40 percent or more of the residential units in the project are both rent- restricted and occupied by individuals whose income is 60 percent or less of area median gross income. The project generally meets the requirements of section 42(g)(1)(C) if 40 percent or more (25 percent or more in the case of a project described in section 142(d)(6)) of the residential units in the project are both rent-restricted and occupied by individuals whose income does not exceed the imputed income limitation designated by the taxpayer with respect to the respective unit. Any election under section 42(g)(1), once made, is irrevocable.

Section 301-9100-7T(b) of the temporary Procedure and Administration Regulations provides, in part, that the election under section 42(g)(1) is to be made in the certification required to be filed pursuant to section 42(l)(1).

Section 42(l)(1) describes the requisite certifications with respect to any qualified low-income building for the first taxable year of the credit period (first-year certifications). In the case of a failure to make the required certification on the date prescribed for it, unless it is shown that the failure is due to reasonable cause and not to willful neglect, no credit is to be allowable by reason of section 42(a) for the building for any taxable year ending before the certification is made.

Sections 301.9100-1 through 301.9100-3 provide the standards the Commissioner will use 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 published in the Federal Register, or a 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 E, G, H, and I.
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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 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.

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 section 42(g)(1)(C) for the Project by filing within 120 days from the date of this letter amended Forms 8609 that includes the intended elections. The amended Forms 8609 (along with a copy of this letter) are to be filed with the Philadelphia campus at the address provided in the instructions to Form 8609. A copy of this letter is enclosed for this purpose.

Except as specifically set forth above, we express or imply no opinion concerning the federal tax consequences of the facts described above under any provision of the Code or regulations. In particular, we express or imply no opinion on whether the Forms 8609 for the Project were timely or correctly filed for purposes other than the intended election under section 42(g)(1), or whether the Project is a qualified low- income housing project and the buildings in the Project qualify for the low-income credit under section 42.

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

The ruling contained in this letter is based on the information submitted and representations made by Taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party. While this office has not verified any of the material submitted in support of this request for ruling, it is subject to verification on examination.
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In accordance with the Power of Attorney on file with this office, copies of this letter are being sent to your authorized representatives.

Sincerely,

Holly Porter
Associate Chief Counsel
(Passthroughs and Special Industries)

By: ______
Dillon Taylor
Senior Technician Reviewer, Branch 5
Office of Associate Chief Counsel
(Passthroughs and Special Industries)

Enclosure:
Copy of this letter
Copy of section 6110 purposes

Cc:
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