Chapter 2 Instructions for Completing Form 8823
State agencies use Form 8823 to notify the IRS of noncompliance with the requirements of IRC §42 or fulfill other reporting requirements. This chapter includes instructions for completing Form 8823.
After Building is Approved
Form 8823 should be used to report noncompliance after Form 8609, Low Income Housing Credit Allocation Certification, has been signed by the state agency and issued to the owner.
Before Building is Approved
There may be instances where noncompliance is identified before the issuance of Form 8609. *If, at the time the Forms 8823 is submitted to the IRS, the owner has not received completed/signed Forms 8609 from the state agency, the* Forms 8823 should be completed, but sent directly to the IRS Headquarter analyst responsible for the Low- Income Housing Credit program, rather than filing the form with the Philadelphia Service Center. *Line 5, Total credit allocated to this BIN, should be zero.* The IRS will consider these Forms 8823 timely filed.
The correction period is the period of time during which the owner of an LIHC property must correct any noncompliance identified by the state agency. The correction period begins with the date the state agency provides written notification to the owner that the building is not in compliance.1 Under Treas. Reg. §1.42-5(e)(2), state agencies must provide prompt written notice to the owner.
Generally, the correction period may not exceed 90 days from the date of the owner’s notification; there is no minimum correction period. However, the correction period can be extended for up to a total of 6 months if there is a good cause for granting the extension.
Form 8823 must be filed with the IRS within 45 days following the end of the correction period, whether or not the noncompliance has been corrected.
Example 1: Annual Certification Under Treas. Reg. §1.42-5(c)(1)
An owner failed to submit the annual certification that the building was in compliance with IRC §42 requirements; e.g., that annual income certifications had been received from each low-income tenant and that the units were rent-restricted, etc. The certification was due March 1, 2005 and the state agency notified the owner in writing on April 1, 2005 that the certification had not been received.
The correction period began on April 1st and ended on June 29th. The owner had 90 days, until June 29, 2005, to provide the annual certification. The Form 8823, noting noncompliance with category 11d, Owner failed to provide annual certification or provided incomplete or inaccurate
See Treas. Reg. §§1.42-5(e)(4) and 1.42-5(a)(2).
Revised October 2009