Notice 2012-68 Hurricane Sandy Relief

Part III - Administrative, Procedural, and Miscellaneous

Low-Income Housing Credit Disaster Relief for Hurricane Sandy

Notice 2012-68

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 Hurricane Sandy and
associated storms (hereafter Hurricane Sandy). 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
The President issued major disaster declarations for several states because of
the devastation caused by Hurricane Sandy. The President issued the declarations
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 in several states for Individual Assistance. Because of the
widespread damage to housing caused by Hurricane Sandy, 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

2
Individual Assistance and who has been displaced because his or her residence was
destroyed or damaged as a result of the devastation caused by Hurricane Sandy. 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
November 30, 2013 (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 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

3
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 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.

4
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 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 devastation caused by Hurricane
Sandy, the displaced individual must have resided in a jurisdiction designated for
Individual Assistance by FEMA as a result of the devastation caused by Hurricane
Sandy.

5
(2) Agency Approval
The project owner must obtain approval from the applicable Agency for the relief
described in this notice. The applicable Agency will determine the appropriate period of
temporary housing for each project, not to extend beyond November 30, 2013.
(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
jurisdiction designated for Individual Assistance by FEMA as a result of the devastation
caused by Hurricane Sandy, 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).

6
(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.
EFFECTIVE DATES
This notice is effective October 22, 2012.
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 1545-2237.
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 devastation caused by Hurricane Sandy 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 1750 hours.
The estimated annual burden per recordkeeper is approximately 30 minutes. The
estimated number of recordkeepers is 3500.

7
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).