Vermont Low-Income Housing Credit Disaster Relief - Notice 2011–74

Part III. Administrative, Procedural, and Miscellaneous
Vermont Low-Income Housing
Credit Disaster Relief
Notice 2011–74
The Internal Revenue Service is suspending certain requirements under § 42 of
the Internal Revenue Code for low-income
housing credit projects to provide emergency housing relief needed as a result of
the devastation caused by Tropical Storm
Irene in Vermont beginning on August 27,
2011. This relief is being granted pursuant
to the Service’s authority under § 42(n) and
§ 1.42–13(a) of the Income Tax Regulations.
BACKGROUND
On September 1, 2011, the President
declared a major disaster for the State
of Vermont. This declaration was made
under the Robert T. Stafford Disaster
Relief and Emergency Assistance Act,
42 U.S.C. 5121 et seq. Subsequently,
the Federal Emergency Management
Agency (FEMA) designated jurisdictions
for Individual Assistance. The State of
Vermont has requested that the Service
allow owners of low-income housing
credit projects to provide temporary
housing in vacant units to individuals
who resided in jurisdictions designated
for Individual Assistance in Vermont and
who have been displaced because their
residences were destroyed or damaged
as a result of the devastation caused by
Tropical Storm Irene. Based upon this
request and because of the widespread
damage to housing caused by Tropical
Storm Irene, the Service has determined
that the Vermont Housing Finance Agency
(Agency) may provide approval to project
owners to provide temporary emergency
housing for displaced individuals in
accordance with this notice.
I. SUSPENSION OF INCOME
LIMITATIONS
The Service has determined that it is
appropriate to temporarily suspend certain
income limitation requirements under § 42
for certain qualified low-income projects.
The suspension will apply to low-income
housing projects approved by the Agency,

October 11, 2011

in which vacant units are rented to displaced individuals. The Agency will determine the appropriate period of temporary housing for each project, not to extend beyond September 30, 2012 (temporary housing period).
II. STATUS OF UNITS
A. Units in the first year of the credit
period
A displaced individual temporarily
occupying a unit during the first year of
the credit period under § 42(f)(1) will be
deemed a qualified low-income tenant
for purposes of determining the project’s
qualified basis under § 42(c)(1), and for
meeting the project’s 20–50 test or 40–60
test as elected by the project owner under
§ 42(g)(1). After the end of the temporary
housing period established by the Agency
(not to extend beyond September 30,
2012), a displaced individual will no
longer be deemed a qualified low-income
tenant.
B. Vacant units after the first year of the
credit period
During the temporary housing period
established by the Agency, the status of a
vacant unit (that is, market-rate or low-income for purposes of § 42 or never previously occupied) after the first year of the
credit period that becomes temporarily occupied by a displaced individual remains
the same as the unit’s status before the
displaced individual moves in. Displaced
individuals temporarily occupying vacant
units will not be treated as low-income
tenants under § 42(i)(3)(A)(ii). However,
even if it houses a displaced individual, a
low-income or market rate unit that was
vacant before the effective date of this notice will continue to be treated as a vacant low-income or market rate unit. Similarly, a unit that was never previously occupied before the effective date of this notice will continue to be treated as a unit
that has never been previously occupied
even if it houses a displaced individual.
Thus, the fact that a vacant unit becomes
occupied by a displaced individual will
not affect the building’s applicable fraction under § 42(c)(1)(B) for purposes of

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determining the building’s qualified basis,
nor will it affect the 20–50 test or 40–60
test of § 42(g)(1). If the income of occupants in low-income units exceeds 140
percent of the applicable income limitation, the temporary occupancy of a unit by
a displaced individual will not cause application of the available unit rule under
§ 42(g)(2)(D)(ii). In addition, the project
owner is not required during the temporary
housing period to make attempts to rent
to low-income individuals the low-income
units that house displaced individuals.
III. SUSPENSION OF
NON-TRANSIENT REQUIREMENTS
The non-transient use requirement of
§ 42(i)(3)(B)(i) shall not apply to any
unit providing temporary housing to a
displaced individual during the temporary
housing period determined by the Agency
in accordance with section I of this notice.
IV. OTHER REQUIREMENTS
All other rules and requirements of
§ 42 will continue to apply during the
temporary housing period established
by the Agency. After the end of the
temporary housing period, the applicable income limitations contained in
§ 42(g)(1), the available unit rule under § 42(g)(2)(D)(ii), the nontransient
requirement of § 42(i)(3)(B)(i), and the
requirement to make reasonable attempts
to rent vacant units to low-income individuals shall resume. If a project owner offers
to rent a unit to a displaced individual after
the end of the temporary housing period,
the displaced individual must be certified
under the requirements of § 42(i)(3)(A)(ii)
and § 1.42–5(b) and (c) to be a qualified
low-income tenant. To qualify for the relief in this notice, the project owner must
additionally meet all of the following requirements:
(1) Major Disaster Area
The displaced individual must have
resided in a Vermont jurisdiction designated for Individual Assistance by FEMA
as a result of the devastation caused by
Tropical Storm Irene in Vermont beginning on August 27, 2011.

2011–41 I.R.B.

(2) Approval of the Vermont Housing
Finance Agency
The project owner must obtain approval
from the Agency for the relief described
in this notice. The Agency will determine
the appropriate period of temporary housing for each project, not to extend beyond
September 30, 2012.
(3) Certifications and Recordkeeping
To comply with the requirements of
§ 1.42–5, project owners are required to
maintain and certify certain information
concerning each displaced individual temporarily housed in the project, specifically
the following: name, address of damaged
residence, social security number, and a
statement signed under penalties of perjury
by the displaced individual that, because
of damage to the individual’s residence in
a Vermont jurisdiction designated for Individual Assistance by FEMA as a result of
the devastation caused by Tropical Storm
Irene in Vermont beginning on August 27,
2011, the individual requires temporary
housing. The owner must notify the
Agency that vacant units are available for
rent to displaced individuals.
The owner must also certify the date the
displaced individual began temporary occupancy and the date the project will discontinue providing temporary housing as
established by the Agency. The certifications and recordkeeping for displaced individuals must be maintained as part of
the annual compliance monitoring process
with the Agency.
(4) Rent Restrictions
Rents for the low-income units that
house displaced individuals must not exceed the existing rent-restricted rates for
the low-income units established under
§ 42(g)(2).
(5) Protection of Existing Tenants
Existing tenants in occupied low-income units cannot be evicted or have their
tenancy terminated as a result of efforts to
provide temporary housing for displaced
individuals.

aster declaration as a result of the devastation caused by Tropical Storm Irene in Vermont beginning on August 27, 2011).
PAPERWORK REDUCTION ACT
The collection of information contained
in this notice has been reviewed and approved by the Office of Management and
Budget in accordance with the Paperwork
Reduction Act (44 U.S.C. 3507) under
control number 1545–2217.
An Agency may not conduct or sponsor,
and a person is not required to respond
to, a collection of information unless the
collection of information displays a valid
OMB control number.
The collection of information in this notice is in the section titled “OTHER REQUIREMENTS” under “(3) Certifications
and Recordkeeping.” This information is
required to enable the Service to verify
whether individuals are displaced as a result of the devastation caused by Tropical Storm Irene in Vermont beginning on
August 27, 2011, and thus warrant temporary housing in vacant low-income housing units. The collection of information is
required to obtain a benefit. The likely respondents are individuals and businesses.
The estimated total annual recordkeeping burden is 150 hours.
The estimated annual burden per
recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is
600.
Books or records relating to a collection
of information must be retained as long
as their contents may become material to
the administration of the internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
DRAFTING INFORMATION
The principal author of this notice is
David Selig of the Office of Associate
Chief Counsel (Passthroughs & Special
Industries).
For further information
regarding this notice, contact Mr. Selig at
(202) 622–3040 (not a toll-free call).

Notice 2011–78
PURPOSE AND BACKGROUND
Section 6050W of the Internal Revenue Code requires information returns to
be made for each calendar year by merchant acquiring entities and third party
settlement organizations with respect to
payments made in settlement of payment
card transactions and third party network
transactions occurring in that calendar
year. The requirement to make information returns applies to returns for calendar
years beginning after December 31, 2010.
In August 2010, the Treasury Department and the Internal Revenue Service
published final regulations providing guidance to assist persons required to report
payment card and third party network
transactions to payees of those transactions. T.D. 9496, 2010–43 I.R.B. 484,
75 F.R. 49821 (August 16, 2010). Under
the final regulations, a healthcare network
generally is outside the scope of section
6050W because a healthcare network
does not enable the transfer of funds
from buyers to sellers. §1.6050W–1(e)
(Example 17). The preamble to the final
regulations acknowledges a comment
to the effect that a self-insurance
arrangement likewise should be treated
as outside the scope of section 6050W.
75 F.R. at 49823; 2010–43 I.R.B. at
486.
Although the final regulations
do not address this issue directly, the
preamble states that the suggestion was
not adopted “because this arrangement
could create a third party payment network
of which the health insurance entity is
the third party settlement organization
to the extent that the health insurance
entity effectively enables buyers (the
self-insuring companies) to transfer funds
to sellers of healthcare goods or services.”
DISCUSSION
Upon further consideration, the Treasury Department and the Internal Revenue
Service have decided to amend the existing regulations under section 6050W to

EFFECTIVE DATE
This notice is effective September 1,
2011 (the date of the President’s major dis-

2011–41 I.R.B.

Nonapplication of Section
6050W to Insurance
Companies that Administer
Certain Insurance
Arrangements

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October 11, 2011