The Internal Revenue Service released a revenue procedure Wednesday offering guidance on the use of tax-exempt bonds to provide housing for military veterans, farm workers and other groups.
Revenue Procedure 2019-17 provides guidance about the general public use requirements for qualified residential rental projects financed with tax-exempt bonds under section 142(d) of tax code. The guidance aligns these requirements with the provisions in another section of the tax code, 42(g)(9), so a project won’t violate the general public use requirement as a result of specified occupancy restrictions or preferences, such as housing preferences for veterans and farm workers.
House Ways and Means Select Revenue Measures Subcommittee chairman Mike Thompson, D-Calif., praised the guidance Wednesday, pointing out it clarifies that tax-exempt private activity bonds, or PABs, can be used to help finance housing projects for veterans, farm workers and other populations.
He noted that the clarification was needed after reports at the end of last year found that the IRS had reinterpreted PABs to prevent them from being used alongside Low Income Housing Tax Credits. That stopped a number of affordable housing projects for veterans from moving forward. He wrote to IRS commissioner Chuck Rettig last November, raising the issue, and submitted questions to Treasury Secretary Steven Mnuchin last week asking for the IRS to issue clarification. Thompson noted that his congressional district in the northern Bay Area of California suffers from a severe housing shortage, only worsened by the October 2017 fires, and the fix would allow for development of new and more affordable housing.
“Our district was facing a housing crisis even before the tragic 2017 fires and that crisis has only worsened in the months since,” he said in a statement. “There is no reason why these tax credits shouldn’t be used to finance housing development projects for veterans, farm workers, and other populations I represent who desperately need access to affordable housing. That’s why I wrote to the IRS and asked Secretary Mnuchin to make this simple, no-cost fix to help alleviate our housing shortage. This was the original intent of these bonds and I am glad the IRS issued this clarification. I will keep pushing to bring every federal dollar and resource to bear on addressing our housing and all recovery needs.”
Senate Finance Committee Chairman Chuck Grassley, R-Iowa, also praised the IRS’s move. “I appreciate IRS providing guidance that clarifies the use of public financing for housing for tenants with special needs and military veterans,” he said in a statement. “The clarification resolves questions about the financing of affordable housing that threatened to delay projects intended to benefit military veterans. I’ve been in contact with the Treasury Department about this for some time and I’m glad Secretary Mnuchin and IRS Commissioner Rettig have been so responsive to the concerns of Congress.”
Original Article Posted at : http://www.accountingtoday.com/news/irs-issues-guidance-on-private-activity-bonds-for-veteran-and-farm-worker-housing