Treasury and IRS Plan Guidance on Income Averaging, Other Housing Credit- and Bond-Related Issues

On November 8, the Treasury Department (Treasury) and Internal Revenue Service (IRS) issued their 2018–2019 Priority Guidance Plan (PGP) which lists guidance projects on which Treasury and IRS will focus during the 12-month period from July 1, 2018, to June 30, 2019. The PGP prioritizes implementation of the Tax Cuts and Jobs Act (the 2017 tax reform legislation) and includes several projects related to HFA priorities, such as the Housing Credit and Housing Bonds.

First on the PGP project list are regulations related to the new Housing Credit income averaging minimum set-aside, which NCSHA encouraged in a letter to IRS earlier this year. Treasury and IRS also plan to address final regulations related to Housing Credit compliance monitoring and utility allowance issues. In 2016, IRS published proposed and temporary regulations for both compliance monitoring and utility allowances but has not yet finalized them.

The PGP includes planned guidance on private activity bonds (PABs) under Section 142 of the Internal Revenue Code, which focuses on exempt facility bonds including multifamily Housing Bonds. IRS indicated that it hopes to finalize a proposed rule to simplify the public approval requirements that apply to Mortgage Revenue Bonds (MRBs) and certain other PABs. NCSHA previously commented in support of these changes.

Finally, the PGP notes that IRS published Opportunity Zone (OZ) guidance earlier this year. NCSHA sent IRS comments requesting the OZ guidance and will review whether to recommend additional guidance.

In addition to the individual issue-related letters to IRS linked above, NCSHA sent comprehensive comments to Treasury and IRS last June when feedback was initially requested on which guidance projects Treasury and IRS should address in 2018–2019, including issues related to the Housing Credit and Housing Bonds, such as income averaging and the proposed streamlined public approval requirements for MRBs.

Contact NCSHA’s Jennifer Schwartz with questions.