Notice 2013-40 - Low-Income Housing Credit Disaster Relief for Oklahoma Severe Storms and Tornadoes

to enable the Service to verify whether individuals are displaced as a result of the
devastation caused by the Tornadoes and
thus warrant temporary housing in vacant
units in certain Projects. The collection of
information is required to obtain a benefit.
The likely respondents are individuals and
businesses.
The estimated total annual recordkeeping burden is 25 hours.
The estimated annual burden per
recordkeeper is approximately 30 minutes.
The estimated number of recordkeepers is
50.
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 section 6103.
SECTION 7. DRAFTING
INFORMATION
The principal authors of this notice are
Timothy L. Jones and Spence Hanemann
of the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this notice,
contact Mr. Hanemann at (202) 622–3980
(not a toll-free call).

Low-Income Housing Credit
Disaster Relief for Oklahoma
Severe Storms and Tornadoes
Notice 2013–40
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 severe
storms and tornadoes in the State of Oklahoma that occurred between May 18,
2013, and May 27, 2013 (hereafter, the
Tornadoes). This relief is being granted
pursuant to the Service’s authority under
§ 42(n) and § 1.42–13(a) of the Income
Tax Regulations. This notice should be
read with Notice 2013–39, I.R.B. 2013–25
(June 17, 2013), which suspends certain
requirements under § 142(d) for qualified
residential rental projects financed with

June 17, 2013

exempt facility bonds under § 142 to provide emergency housing relief due to the
Tornadoes.
BACKGROUND
On May 20, 2013, the President issued a major disaster declaration for the
State of Oklahoma because of the devastation caused by the Tornadoes. The
President issued the declaration 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. Because of the damage to
housing caused by the Tornadoes, the
Service has determined that state housing
agencies (Agencies) may provide approval
to project owners in their respective states
to provide temporary emergency housing
for displaced individuals in accordance
with this notice. For purposes of this
notice, the term “displaced individual”
means an individual who resided in a
jurisdiction designated for Individual
Assistance and who has been displaced
because his or her residence was destroyed
or damaged as a result of the Tornadoes.
The Service has also determined that
the projects to which this approval may
be given may be located in any state,
regardless of whether a major disaster
declaration with Individual Assistance has
been issued for that state.
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
low-income housing projects which are
approved by the Agency with jurisdiction
over the project (the applicable Agency)
and in which vacant units are rented to
displaced individuals. The applicable
Agency will determine the appropriate period of temporary housing for each project,
not to extend beyond May 31, 2014 (temporary housing period).

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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 applicable Agency, 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 applicable 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 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

2013–25 I.R.B.

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.

described in this notice. The applicable
Agency will determine the appropriate period of temporary housing for each project,
not to extend beyond May 31, 2014.

III. SUSPENSION OF
NON-TRANSIENT REQUIREMENTS

(3) Certifications and Recordkeeping

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 applicable Agency.
IV. OTHER REQUIREMENTS
All other rules and requirements of
§ 42 will continue to apply during the
temporary housing period established by
the applicable 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
In the case of an individual displaced
by the Tornadoes, the displaced individual
must have resided in a jurisdiction designated for Individual Assistance by FEMA
as a result of the devastation caused by the
Tornadoes.
(2) Agency Approval
The project owner must obtain approval
from the applicable Agency for the relief

2013–25 I.R.B.

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 jurisdiction designated for Individual
Assistance by FEMA as a result of the
Tornadoes, the individual requires temporary housing. The owner must notify the
applicable 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 applicable 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.

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 1545–2244.
A Federal 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 Tornadoes 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 300 hours.
The estimated annual burden per
recordkeeper is approximately 15 minutes.
The estimated number of recordkeepers is
1200.
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 May 20, 2013.

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June 17, 2013