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IRS Notice 2014-15 extends time period for alternative method for inspection and certification reviews

Notice 2012-18, published in the Internal Revenue Bulletin on March 5, 2012, provided state housing finance agencies that participated in the Physical Inspections Pilot Program a temporary alternative method to satisfy the physical inspection and certification review requirements of § 1.42-5(c)(2) of the Income Tax Regulations. The availability of this alternative method ended on December 31, 2012.  IRS Notice 2014-15 extends the provisions of Notice 2012-18 through December 31, 2014. Notice 2014-15 will be published in Internal Revenue Bulletin 2014-12 on March 17, 2014.

By way of background, Notice 2012-18 provided that if a state housing finance agency participated in the Physical

Inspections Pilot Program, then for the year of participation:

(1) The inspections under the program were deemed to satisfy the requirements of § 1.42-5(c)(2)(ii) regarding on-site physical inspections of at least 20 percent of the low-income units and of all buildings in a project; and

(2) The state housing finance agency was able to satisfy the certification review requirements of § 1.42-5(c)(2)(ii) by reviewing the appropriate records for 20 percent of the low-income units in the project regardless of whether any of the units whose files were reviewed were among the units that were physically inspected.

These provisions of Notice 2012-18 applied from November 7, 2011, through December 31, 2012.

Notice 2014-15 extends the provisions of Notice 2012-18 through December 31, 2014. Thus, if a state housing finance agency participated and/or participates in the Physical Inspections Pilot Program in 2013 and/or 2014, then the provisions of Notice 2012-18 that are described above apply to the agency’s satisfaction of the physical inspection and certification review requirements of § 1.42-5(c)(2)(ii) for the year or years in which the agency participated and/or participates in the program.

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