Missouri Storm and Flood Victims May Qualify for IRS Disaster Relief
Implementation Instructions
In reaction to the devastation to victims housing caused by the recent storms and flooding in specific counties in Missouri, the Internal Revenue Service has issued Notice 2008-66 temporarily suspending certain requirements under the Internal Revenue Code Section 42.
Following severe storms and flooding beginning on June 1, the federal government declared Andrew, Clark, Cass, Gentry, Greene, Holt, Johnson, Lewis, Lincoln, Linn, Livingston, Marion, Nodaway, Pike, Ralls, St. Charles, Stone, Taney, Vernon, and Webster counties presidential disaster areas qualifying for Individual Assistance.
Important brief highlights of the Internal Revenue Service Notice 2008-66 are the following:
1. Provide temporary housing in vacant units
2. Suspend certain income limits
3. Temporary housing not to extend beyond July 31, 2009
4. Units in the first year of the credit period- displaced households will be considered a qualified tenant until July 31, 2009.
5. The displaced individual must have resided in a county designated for Individual Assistance by FEMA.
6. Vacant units after the first year of the credit period- a vacant unit occupied by a displaced household will not affect the building’s applicable fraction for determining the building’s qualified basis, not minimum set aside.
7. The available unit rule does not apply to buildings housing displaced households.
8. The non-transient use requirement shall not apply.
9. Rents for the low income units occupied by displaced households must not exceed the rent-restricted rates established for each property by MHDC.
10. The displaced households must complete and provide the state required forms necessary to confirm the qualification of Individual Assistance by FEMA in a designated county in which the household lived.
11. The temporary suspension for displaced households applies ONLY to Low Income Housing Tax Credits issued under Section 42 of the IRC. All other program requirements or conditions set by local government or jurisdiction must be completed or release must be approved by the appropriate program manager.
12. Full time Student household exemptions must be met, Section 42 requirements not mentioned within the IRS Notice 2008-66 and any other required application processing must be completed.
At the end of the temporary housing period or as of July 31, 2009, the displaced households whose income exceeds the applicable income limits must vacate the low-income units, unless the household qualifies under the Section 42 requirements of the IRS code and will enter into a new lease. Any displaced household that does not meet the program requirements and does not vacate by July 31, 2009 will cause the Owner to be reported to the IRS.
STEP 1: Owners that would like to apply to provide temporary housing should complete and submit Owners Request for Approval (Exhibit DV-1) with an attached vacant units list for each property.
STEP 2: Owners approved to provide temporary housing must have the displaced household complete the following forms. The forms must be submitted to MHDC upon request and with the property’s Annual Reporting requirements for 2008 and 2009. All forms must be kept in the household file and available for review upon request. All forms are available on the MHDC website, http://www.mhdc.com/program_compliance/LIHTC/forms-documents.htm
1. Executed Lease Agreement, including the Temporary Housing Lease Addendum (Exhibit DV-3)
2. The Displacement Affidavit (Exhibit DV-2)
3. Temporary Housing Self-Certification of Income or income verification
4. “Award letter” or other documentation from the FEMA, Red Cross or another disaster relief agency
5. The Temporary LIHTC Annual Occupancy Report (Exhibit H-DV)
MHDC will review the Owners Request for Approval (Exhibit DV-1) and respond to the owner in writing and/or by email
(if available). Once approval has been received, the owner may begin leasing vacant units to displaced households by completing the required forms listed above. Please send all Owners Requests to: MHDC-Asset Management, 3435 Broadway, Kansas City, MO 64111 (Attn. Brenda York-Keegan) OR by email at .