The Internal Revenue Service (IRS) has released a new revenue procedure that allows once again the amending of Bipartisan Budget Act (BBA) partnership tax returns once Form 8609s are received for 2018 tax returns, as long as the partnership files an amended return by September 30, 2020. In February, the AHTCC had provided a letter to the IRS expressing concerns about this issue which previously created discrepancies between when Housing Credits could be claimed and the timing and amount of tax credit equity contributions to Housing Credit partnerships.
Due to recent changes to the partnership audit regime pursuant to the BBA, a new process for amending tax returns had changed when Housing Credits could be claimed. Prior to the change, credits could be claimed by amending a previously filed return upon receipt of the Form 8609, even if the form issuance was delayed. The change no longer allowed partnerships to file amended returns. Instead, a partnership would have been required to file an administrative adjustment request (AAR) and the investor would generally claim the Housing Credits included in an AAR on the tax return for the year in which the AAR is filed. This change could have created delays that ultimately impact the amount of tax credit equity available for properties.
In the AHTCC letter, we explain, “The present value of the ten-year stream of Housing Credits is an essential part of our affordable housing delivery system. It affects not only what investors will contribute, but also impacts the statutory computation of the amount. The changes to the process for filing amended returns will delay the receipt of Housing Credits in a way that impacts the viability of developments and may mean less affordable housing is built. It is also contrary to Congress’ intent.”
The new revenue procedure resolves this issue for 2018. The AHTCC appreciates the IRS’ action and will continue to advocate for a comparable solution for 2019 and future years.