In response to the new surge in COVID-19 infections and the presence of new disease variants, the Internal Revenue Service (IRS) released Notice 2022-05 (Notice), which was published in the Internal Revenue Bulletin dated January 18, 2022. The Notice extends previous relief under Notice 2021-12, as clarified by Notice 2021-17, that extended deadlines related to projects with low-income housing tax credits under Section 42 (LIHTC). The Notice also grants state housing agencies certain operational waivers for LIHTC projects. You can access the Notice here.

Operational Waivers for LIHTC Projects:

Compliance Monitoring. State housing agencies are required to resume tenant file review as of January 1, 2022. However, during calendar year 2022, agencies may give up to 30 days prior notice to owners of such review. Beginning January 1, 2023, such prior notice will again be limited to up to 15 days. The Notice allows state housing agencies to defer compliance-monitoring physical inspections of LIHTC projects through June 30, 2022. The Notice allows further deferrals through the end of 2022 if, in consultation with local public health experts, an agency determines that the level of transmission makes continued deferral appropriate. Depending on rates of transmission, inspections may be deferred statewide, by locality, or on a project-by-project basis.

Closure of Common Areas and Amenities. A state housing agency may grant full, partial, or conditional waivers of the condition for access to common areas and amenities without triggering a reduction in eligible basis. A waiver must be based on conditions arising from the COVID-19 pandemic.

Emergency Housing for Medical Personnel and Other Essential Workers. LIHTC projects may be used to provide emergency housing to medical personnel and other essential workers during the period of April 1, 2020, to December 31, 2022, in accordance with Revenue Procedure 2014-49 or Revenue Procedure 2014-50.

Extended Deadlines for Bond-financed Projects:

Transition Period for Acquiring Existing Projects. The last day of the 12-month transition period for meeting the income set-aside for acquisition of existing projects is postponed to December 31, 2022, if the last day of the transition period was originally on or after April 1, 2020, and before December 31, 2022.

Two-Year Rehabilitation Expenditure Period. If the last day of the two-year rehabilitation period for a project was originally on or after April 1, 2020, and before December 31, 2023, then the last day of the two-year period is postponed to the earlier of 18 months from the original due date or December 31, 2023.

Extended Deadline for LIHTC Projects: