Iowa disaster notice

Part III. Administrative, Procedural, and Miscellaneous
Iowa Low-Income Housing
Credit Disaster Relief
Notice 2012–7
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 in Iowa caused by flooding
during the period of May 25, 2011, to August 1, 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 June 27, 2011, the President declared a major disaster for the State of
Iowa. This declaration was made under
the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, 42 U.S.C.
5121 et seq. On October 18, 2011, the
Federal Emergency Management Agency
(FEMA) designated jurisdictions for Individual Assistance resulting from the
flooding during the period of May 25,
2011, to August 1, 2011. The State of
Iowa 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 Iowa and who have been
displaced because their residences were
destroyed or damaged as a result of the
devastation caused by the flooding. Based
upon this request and because of the widespread damage to housing caused by the
flooding, the Service has determined that
the Iowa Finance Authority (Authority)
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 housing
projects. The suspension will apply to

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low-income housing projects approved by
the Authority, in which vacant units are
rented to displaced individuals. The Authority will determine the appropriate period of temporary housing for each project,
not to extend beyond December 31, 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 Authority (not to extend beyond December 31,
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 Authority, 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 Authority 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 Authority. 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 an Iowa jurisdiction designated
for Individual Assistance by FEMA as a
result of the devastation in Iowa caused
by flooding during the period of May 25,
2011, to August 1, 2011.

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(2) Approval of the Authority
The project owner must obtain approval
from the Authority for the relief described
in this notice. The Authority will determine the appropriate period of temporary
housing for each project, not to extend beyond December 31, 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 an Iowa jurisdiction designated for Individual Assistance by FEMA as a result
of the devastation caused in Iowa caused
by flooding during the period of May 25,
2011, to August 1, 2011, the individual
requires temporary housing. The owner
must notify the Authority 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 Authority. The certifications and recordkeeping for displaced
individuals must be maintained as part of
the annual compliance monitoring process
with the Authority.
(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.

ter declaration for devastation caused by
flooding during the period of May 25,
2011, to August 1, 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 1545–2223.
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 in Iowa caused
by flooding during the period of May 25,
2011, to August 1, 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 125 hours.
The estimated annual burden per
recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is
500.
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).

EFFECTIVE DATES
This notice is effective June 27, 2011
(the date of the President’s major disas-

2012–4 I.R.B.

309

26 CFR 601.105: Examination of returns and claims
for refund, credit, or abatement; determination of
correct liability.
(Also: Part I, sections 66, 6015.)

Notice 2012–8
This notice provides a proposed revenue procedure that would update Rev.
Proc. 2003–61, 2003–2 C.B. 296, which
provides guidance regarding equitable relief from income tax liability under section
66(c) and section 6015(f) of the Internal
Revenue Code. Since the issuance of Rev.
Proc. 2003–61 in August 2003, the Internal Revenue Service’s experience in working section 6015(f) equitable relief cases
has grown significantly. This proposed update to Rev. Proc. 2003–61 addresses the
criteria used in making innocent spouse relief determinations for section 6015(f) equitable relief cases and revises the factors
for granting equitable relief. The factors
have been revised to ensure that requests
for innocent spouse relief are granted under section 6015(f) when the facts and circumstances warrant and that, when appropriate, requests are granted in the initial
stage of the administrative process.
Significantly, this proposed revenue
procedure expands how the IRS will take
into account abuse and financial control
by the nonrequesting spouse in determining whether equitable relief is warranted.
Review of the innocent spouse program
demonstrated that when a requesting
spouse has been abused by the nonrequesting spouse, the requesting spouse
may not have been able to challenge the
treatment of any items on the joint return,
question the payment of the taxes reported
as due on the joint return, or challenge
the nonrequesting spouse’s assurance regarding the payment of the taxes. Review
of the program also highlighted that lack
of financial control may have a similar
impact on the requesting spouse’s ability
to satisfy joint tax liabilities. As a result,
this proposed revenue procedure provides
that abuse or lack of financial control may
mitigate other factors that might otherwise
weigh against granting equitable relief
under section 6015(f).
The proposed revenue procedure also
provides for certain streamlined case determinations; new guidance on the potential impact of economic hardship; and the
weight to be accorded to certain factual

January 23, 2012