Late average-income housing election allowed

Plain-English summary

An owner placed a low-income housing project in service but failed to make the correct irrevocable minimum set-aside election on Form 8609. Contemporaneous documents showed that the owner intended to elect the average-income test under section 42(g)(1)(C). The IRS found that the owner satisfied the discretionary filing-relief standards. It granted 120 days to file an amended Form 8609 making the intended election. The IRS did not decide whether the original Form 8609 was timely or correct for other purposes or whether the project and building otherwise qualify for the low-income housing credit.

Ruling snapshot

• Question: May the building owner make a late section 42(g)(1)(C) average-income election on an amended Form 8609?
• Outcome: Approved, with 120 days to file the amended form
• Key authorities: IRC §§ 42(g)(1), 42(l); Treas. Reg. §§ 1.42-1(h), 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: 202432002 Third Party Communication: None
Release Date: 8/9/2024 Date of Communication: Not Applicable
Index Number: 42.00-00, 9100.00-00,
9100.01-00 Person To Contact:
---------------------, ID No. -----------------
-------------------- Telephone Number:
------------------------------------------ --------------------
------------------------------------- Refer Reply To:
------------------------------ CC:PSI:B05
PLR-104256-24
In Re: ------------------------------------------ Date:
May 13, 2024

LEGEND

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

Year = -------

BIN = -----------------

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

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

    This letter responds to your authorized representative’s letter dated March 1,

2024, 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 an amended Form 8609, Low-Income Housing Credit
Allocation and Certification, with respect to the election related to § 42(g)(1) of the
Internal Revenue Code (Code).

    According to the information submitted, Taxpayer placed building (Project) in

service in Year. The building identification number assigned to the building is BIN. The
building is located at Address. Taxpayer inadvertently failed to make a timely, correct
election for the building under § 42(g)(1), consistent with Taxpayer’s intent, as
evidenced by Taxpayer’s contemporaneous documents.

    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 §
PLR-104256-24 2

42(g)(1)(A), (B), or (C), 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 the 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 § 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 § 42(g)(1)(C) if 40 percent or
more (25 percent or more in the case of a project described in § 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 § 42(g)(1), once made,
is irrevocable.

     Section 301.9100-7T(b) of the temporary Procedures and Administration

Regulations provides, in part, that the election under § 42(g)(1) is to be made in the
certification required to be filed pursuant to § 42(l)(1).

      Section 42(l)(2) 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 allowed by reason of § 42(a) for the building for any
taxable year ending before the certification is made.

     Section 1.42-1(h) of the Income Tax Regulations provides, in part, that, unless

otherwise provided in forms or instructions, a completed Form 8609 (or any successor
form), which contains the first-year certifications, must be filed by the building owner
with the IRS. The instructions to Form 8609 states, in relevant part, that a building
owner must make a one-time submission of Form 8609 to the Low-Income Housing
Credit (LIHC) Unit at the IRS Philadelphia campus (Service Center) no later than the
due date (including extensions) of the first tax return with which the building owner is
filing Form 8609-A, Annual Statement for Low-Income Housing Credit.

    Sections 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 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
PLR-104256-24 3

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.

    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.

    Based solely on the facts submitted and the representations made, we conclude

that the requirements of §§ 301.9100-1 through 301.9100-3 have been met.
Accordingly, Taxpayer is granted an extension of time to make the election under §
42(g)(1)(C) for the Project by filing within 120 days from the date of this letter an
amended Form 8609 that includes the intended election. The amended Form 8609
(along with a copy of this letter) is 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 provisions of the
Code or regulations. In particular, we express or imply no opinion on whether the Form
8609 for the Project was timely or correctly filed for purposes other than the intended
election under § 42(g)(1), or whether the Project is a qualified low-income housing
project and the building qualifies for the low-income housing credit under § 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.
PLR-104256-24 4

     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: