On December 2, the AHTCC and 30 of our leading affordable housing industry partners sent a letter to the IRS and the Treasury Department urging the agencies to issue a final rule on the Housing Credit Average Income Test (AIT) minimum set-aside with significant modifications from the proposed rule previously issued in October 2020.
While intended to provide clarity around the ‘income averaging’ flexibility enacted in 2018, the proposed rule has severely limited utilization of the income averaging option. In response to the proposed regulations, the AHTCC submitted comments last year suggesting mitigation remedies to ensure that income averaging remains a viable option, and testified in a hearing with the IRS to further urge these changes.
The recommendations outlined in the new industry letter are intended to demonstrate consensus for modifications that would set a more appropriate level of risk for utilizing income averaging, allow modifications to unit designations, and allow exceptions and/or flexibilities when noncompliance results from casualty loss.
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