On November 27, 2013 HUD issued a revised transmittal for Change 4 to the 4350.3 Handbook. They originally issued Change 4 back in August and its effective date remains August 7, 2013. In the revised transmittal, however, HUD gave owners longer to implement Change 4. Specifically, HUD extended the deadline to March 1, 2014 to implement those changes that require a modification to their TRACS software.
Since the LIHTC program does not require owners to transmit information on their residents through TRACS, there is no reason to not implement Change 4 when processing initial certifications and recertifications for LIHTC residents. In fact, in her most recent LIHTC Newsletter, Grace Robertson of the IRS explains the impact on the LIHTC program resulting from the changes found in Chapter 5 of the handbook. Of particular interest, Grace describes how the IRS views the information found in Paragraph 5-6 on deferred disability payments received from the Veterans Administration. Grace provides us guidance through a helpful Q & A format.
“Q3: Paragraph 5-6, Q-3, has been added to the Handbook (page 5-20) and specifies that for section 8 tenants only, any deferred disability benefits from the Department of Veterans Affairs (VA) that are received in a lump sum or in prospective monthly amounts are excluded from annual income. Should deferred disability benefits from the VA be excluded for all households for IRC §42 purposes, or just households receiving section 8 assistance?
A3: The exception applies only to tenants receiving section 8 assistance. If the exception does not apply, the lump sum deferred payments are counted as an asset. If the lump sum payment was caused by delays in processing periodic payments, then the lump sum payment is included in income.”
The IRS approach is comparable to that applied to student financial assistance. Since the handbook states that student financial assistance a resident receives in excess of what they need to pay tuition is included, but only for residents who receive Section 8 rental assistance, the financial aid is included in the annual income for LIHTC residents only if they also participate in the Section 8 program.
You can read all of Grace’s guidance by clicking on LIHTC Newsletter.
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