Tax Credits: Opportunities to Improve Oversight of the Low-Income Housing Program
GGD/RCED-97-55
Published: Mar 28, 1997. Publicly Released: Apr 09, 1997.
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Highlights
Pursuant to a congressional request, GAO provided information on the low-income housing tax credit program, focusing on the: (1) characteristics of the residents and properties that have benefitted from low-income housing tax credits; and (2) controls the Internal Revenue Service (IRS) and states have to ensure that state priority housing needs are met, housing project costs, including tax credit costs, are reasonable, and states and project owners comply with program requirements.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Internal Revenue Service | The Commissioner of Internal Revenue should amend regulations for the tax credit program to: (1) require that states report sufficient information about monitoring inspections or reviews, including the number and types of inspections made, so that IRS can determine whether states have complied with their monitoring plans; and (2) require that states' monitoring plans include specific steps, such as site visits, that will provide information to permit IRS to more effectively ensure that the Code's habitability requirements are met. |
IRS' January 1999 revision of Form 8823 Low Income Housing Credit Agencies Report of Noncompliance, which states use in monitoring compliance, shows the number and types of inspections made. The final regulations to require specific steps in state monitoring plans that provide information to help IRS monitor the habitability requirements of the Internal Revenue Code were approved on December 27, 1999.
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| Internal Revenue Service | The Commissioner of Internal Revenue should explore alternative ways to obtain better information to verify that states' allocations do not exceed tax credit authorizations and to evaluate compliance with the requirements of the Code by taxpayers and housing projects. |
IRS' revision of Form 8610 Annual Low-Income Housing Credit Agencies Report, which states use to report their credit allocations, contains additional information that IRS can use to determine whether states exceed their credit allocations.
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| Office of Management and Budget | To help ensure appropriate oversight of state allocating agencies' overall compliance with tax credit laws and regulations, the Director, OMB, should incorporate the low-income housing tax credit program in the definition of federal financial assistance included in implementing guidance for the Single Audit Act, as amended, so that the program would be subject to audits conducted under the Single Audit Act. |
OMB stated that including the low-income housing tax credit in the Single Audit Act would require legislation.
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| Internal Revenue Service | To ensure reliable and complete information for making decisions on tax credit awards, the Commissioner of Internal Revenue should amend tax credit regulations to establish clear requirements to ensure independent verification of key information on sources and uses of funds submitted to states by developers. |
IRS' final low income housing tax credit regulations to establish requirements to ensure independent verification of key information on the sources and uses of funds submitted to states by developers were approved on December 27, 1999.
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Topics
Cost controlDisadvantaged personsstate relationsHousing programsLow income housingMonitoringRental housingState-administered programsTax creditTax law