For owners to receive the full Low Income Housing Tax Credits (LIHTC) which a development may generate, the development must satisfy all low income requirements for a compliance period of 15 consecutive taxable years. NIFA is responsible for monitoring compliance with the requirements of Internal Revenue Code (IRC) §42 for LIHTC developments in Nebraska. NIFA performs desk audits, inspects housing, and reviews tenant files. When noncompliance is identified or we become aware of a disposition of a building, NIFA is required to notify the Internal Revenue Service using Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition.
NIFA or NIFA's agent will perform a desk audit, conduct a site visit or review the owner's tenant files and provide the owner with a summary report of the findings. If the report indicates noncompliance, the owner is expected to respond to NIFA within 60 days from the date of NIFA's letter to provide clarification or document that the issues of noncompliance have been addressed and corrected.
If the owner is reported as out of compliance, the IRS sends a notification letter to the owner identifying the type of noncompliance reported on Form 8823. The notification letter also states that the owner should not include any nonqualified low-income housing units when computing the LIHTC under IRC §42 and that the noncompliance may result in the recapture of previously claimed credits. The notification letter also instructs the owner to contact the state agency to resolve the issue.
Once the noncompliance is resolved, NIFA will file a corrected (back in compliance) Form 8823.