Issues Relating to Amending Tax Returns and Forms 8609

Prior to 2018, Housing Credits earned in a prior year could be claimed by amending a previously filed return upon receipt of the Forms 8609, even if the receipt of the forms was after the extended due date for the partnership return. Due to the new Bipartisan Budget Act regime, returns must be adjusted through an Administrative Adjustment Request (AAR), and investors claim the Housing Credits included in an AAR on the return for the year in which the AAR is filed rather than the year in which the Housing Credits were generated. The new regime could ultimately impact the amount of tax credit equity available for affordable housing properties, at a time when affordable housing is needed more than ever.

Learn more in the resources below.

On January 22, 2021, the AHTCC provided to the IRS comments in response to a comment request for Forms 8609 and 8609-A. While the request was prompted by Paperwork Reduction Act requirements and does not propose changes to existing regulation, the AHTCC used the opportunity to reiterate the need to address issues relating to amending tax returns and Forms 8609. Our comments include a February 2020 AHTCC letter previously sent to the IRS recommending that instructions for the Forms 8609 and 8609-A be changed to provide that Housing Credits may be reported without having filed the Form 8609 if there is a reasonable cause for the Form 8609 delay.

On June 25, 2020, the AHTCC held a webinar featuring leading industry experts to provide an overview of the above issue and an approach to consider.

Webinar Panel:

• Michael Gaber, Executive Vice President, WNC, Inc., and President of the Board of Directors, Affordable Housing Tax Credit Coalition
• Glenn Graff, Attorney, Applegate & Thorne-Thomsen
• Beth Mullen, Partner, Affordable Housing Industry Leader, CohnReznick
• Michael Novogradac, Managing Partner, Novogradac & Co.

View the AHTCC Webinar Recording

Download the AHTCC Webinar Slides

The AHTCC has worked with the IRS and many of our members, including leading affordable housing accounting and law firms, in asking the IRS to allow a partnership to claim Housing Credits prior to the receipt of Forms 8609 based on a “reasonable cause” approach, if the failure to have Forms 8609 is due to reasonable cause and not due to willful neglect consistent with Section 42(l)(1). Learn more about this approach in our memo, AHTCC Considerations for Amending Returns and Forms 8609, published May 12, 2020, and see a summary on our blog.

On April 8, 2020, the IRS released a COVID-19 related 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. The guidance impacted properties that took advantage of the extended filing date for 2018 returns, but did not provide a long-term solution. Learn more on our blog.

On February 28, 2020, the AHTCC provided a letter to the IRS explaining the above issue, expressing concerns about its potential impact on affordable housing equity, and providing potential solutions.