Introduction to Compliance

In order to know how to comply, one must first understand the meaning of compliance. Let us look at the definition of compliance. Compliance is the act of yielding to a wish, request, or demand; acquiescence. In other words, to do as you are directed, to follow the rules or demands of another.

Background Info

The Low Income Housing Tax Credit Program (LIHTC) was created under the Tax Reform Act of 1986. The Program provides federal tax credits to owners and investors of qualified low- income housing properties that have been acquired constructed or rehabilitated since 1986. In exchange for these tax credits, the owners, investors and developers agree to adhere to the LIHTC Program's policies and regulations that entail strict eligibility guidelines. The compliance period lasts a minimum of 15 years, but may be extended by agreement. Some properties may be restricted indefinitely.

How Does COMPLIANCE Pertain to You?

Some of the communities that your company manages participate in a federal income tax credit and other programs instituted by Congress, to provide eligible households quality and affordable home living. To insure the integrity of the programs, the IRS and HUD have state and local agencies oversee compliance with their regulations.

How Does This Affect Your Community?

Whenever you have a valuable item such as tax credits and other affordable housing programs the demand is usually greater than the supply. Whoever meets and maintains compliance (adheres to the requirements of the IRS, HUD and the state) may utilize the assistance; whoever does not comply, (ignores these requirements) will be found to be in NON-COMPLIANCE and could be eliminated from using the programs. Our business is based on managing communities that have secured these tax credits. If we do not adhere to the rules, and are found to be in NON-COMPLIANCE, the community could lose the assistance, and subsequently we could lose the management. The bright side is, if you follow the guidelines,compliance is easy!

This introduction outlines the compliance issues relevant to the Low Income Housing Tax Credit Program (LIHTC), Bonds, and HOME as set forth in Section 42 of the Internal Revenue Code, HUD Handbook 4350.3 and state Compliance Guidebook. State agencies administer the Programs and conduct routine audits of the resident files by visiting the communities on a regular basis. This is to insure that the community and owners adhere to the program rules. They also require submission of reports on a regular basis, documenting the demographics and income of our residents. All of the units at your community are regulated by the Internal Revenue Service and monitored by your particular state agency.