IRS Extends Low-Income Housing Deadlines

The IRS released Notice 2022-52 on October 7 in response to ongoing supply chain and labor disruptions, modifying Notice 2022-05 to provide additional temporary relief for qualified low-income housing projects under Section 42 of the Internal Revenue Code (the “Code”) by extending (1) certain placed-in-service deadlines, (2) state or local housing credit agency (“Agency”)-set reasonable restoration periods, (3) Agency-set correction periods, and (4) waivers of compliance-monitoring physical inspections. Notably, there were no extensions granted for meeting the 10 percent test.

Also of note, the IRS issued final and temporary regulations on the average-income minimum set-aside test on October 7. Stay tuned for more information on these new regulations.

(1) Extension of Placed-in-Service Deadlines

(2) Extension of Agency-Set Reasonable Restoration Periods

For purposes of Code 42(j)(4)(e), the Agency-set reasonable restoration period for a casualty loss ending on or after April 1, 2020, is extended from an additional 18 months, not to extend beyond December 31, 2022, in Notice 2022-05, to an additional 24 months, not to extend beyond December 31, 2023.

(3) Extension of Agency-Set Correction Periods

For purposes of Treasury Regulations Section 1.42-5, Agency-set correction periods for compliance monitoring procedures that end from April 1, 2020, through December 31, 2022, are extended by a year, not to extend beyond December 31, 2023, and Agency-set correction periods that end during 2023 are extended to December 31, 2023.

(4) Extension of Waivers of Compliance Monitoring

For purposes of Treasury Regulations Section 1.42-5, Agencies may extend waivers to conduct compliance-monitoring physical inspections if the level of COVID-19 transmission makes such extension appropriate, consistent with the recommendation of a state or local public health authority; the extension may not go beyond December 31, 2023.