IRS Extends Housing Credit Placed-In-Service and Other Deadlines at NCSHA’s Request

Today, the Internal Revenue Service released Notice 2022-52, which builds on previous notices related to COVID-19 relief the IRS has provided to Housing Credit agencies and their industry partners, most recently Notice 2022-05. The notice’s publication was announced earlier this morning by the Biden-Harris Administration in a statement on its progress meeting goals set forth in the administration’s Housing Supply Action Plan, which we wrote about in a separate blog post issued earlier today.

The new notice responds to a letter NCSHA sent IRS and Treasury in early July outlining our concern that, due to delays related to the pandemic’s economic fallout, many projects are not on track to meet their placed-in-service (PIS) deadlines and other projects may need more time to restore a project after suffering a casualty or make repairs to correct noncompliance. NCSHA also encouraged IRS/Treasury to allow Housing Credit agencies, in consultation with public health experts, to extend the physical inspection waiver scheduled to end on December 31, 2022, until December 31, 2023.

NCSHA greatly appreciates IRS/Treasury’s swift action to implement all our requests. Specifically, Notice 2022-52 amends Notice 2022-05 by taking the following actions:

1. Extends the PIS deadline until December 31, 2022, for projects that received an allocation of Credits in 2018 and thus had an original PIS deadline of December 31, 2020. The previous notice (Notice 2022-05) provided the same extension, which is repeated in Notice 2022-52.
2. Extends the PIS deadline until December 31, 2023, for all projects that received an allocation of Credits in 2019 and thus had an original PIS deadline of December 31, 2021. The previous notice provided developments that had an original 10 percent test deadline in the first quarter of 2020 only until December 31, 2022, while developments that had a 10 percent deadline in the second, third, or fourth quarter of 2020 had until December 31, 2023, to place in service.
3. Extends the PIS deadline until December 31, 2024, for all projects that received an allocation of Credits in 2020 and had an original PIS deadline of December 31, 2022. The previous notice provided these projects a one-year extension until December 31, 2023.
4. Extends the PIS deadline until December 31, 2024, for all projects that received an allocation of Credits in 2021 and had an original PIS deadline of December 31, 2023. The previous notice did not provide relief to these projects.
5. Extends by up to 24 months the deadline for restoration after a low-income building suffers a casualty loss for any reason (including casualties related to Major Disasters, but also any other casualty) if the original restoration deadline ended on or after April 1, 2020. However, the extended deadline may be no later than December 31, 2023. The previous version of the notice provided this extension for up to 12 months and not beyond December 31, 2022.
6. Extends by up to 12 months the period for correcting noncompliance if the original correction period ended between April 1, 2020, and before December 31, 2022. However, the correction period may go no further than December 31, 2023, and agencies may require a shorter extension or no extension at all. The previous notice also provided up to a 12-month extension but not beyond December 31, 2022.
7. Allows Housing Credit agencies the flexibility to extend until December 31, 2023, a waiver of compliance monitoring physical inspections. The previous notice provided this flexibility to states through December 31, 2022.

NCSHA’s matrix provides more detail on the current state of COVID-19 relief provided by IRS for the Housing Credit program, including all the updates in Notice 2022-52 and, where applicable, relief provided by Notice 2022-05 that is still in effect and is not superseded by Notice 2022-52.

NCSHA and its HFA members have been particularly concerned about projects that were not on track to meet their PIS deadlines due to supply chain shortages, challenges getting to closing, and workforce challenges. Without this action from Treasury and IRS, many states would have been forced to undertake “Credit swaps,” in which a developer returns Credits from a previous year in exchange for new Credits so that they may push back their deadlines. However, this process is costly and time consuming for both developers and agencies. Moreover, some agencies do not have the regulatory framework to allow them to provide Credit swaps, thus developments in those states were in even more significant jeopardy before the publication of this notice. NCSHA applauds IRS and Treasury for their responsiveness to NCSHA and the industry.