[Congressional Record Volume 146, Number 152 (Monday, December 11, 2000)]
[Extensions of Remarks]
[Page E2171]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 CONCERNING IRS TECHNICAL ADVICE MEMORANDUM RELATED TO THE LOW-INCOME 
                       HOUSING TAX CREDIT PROGRAM

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                         HON. NANCY L. JOHNSON

                             of connecticut

                    in the house of representatives

                       Monday, December 11, 2000

  Mrs. JOHNSON of Connecticut. Mr. Speaker, I am very concerned that 
the Internal Revenue Service is taking a position in audits that has 
the possibility of undercutting all we have been trying to accomplish 
with the low-income housing tax credit program.
  Recently, a series of five IRS technical advice memoranda (TAM) were 
released under the Freedom of Information Act. These TAMs gave IRS 
national office legal advice to revenue agents auditing a particular 
low-income housing developer. The TAMs involved what costs may be 
included in the eligible basis of a property for the purpose of 
determining the amount of low-income housing tax credit that are 
allocated by a state housing finance agency.
  The TAMs are very technical, but they are inconsistent with current 
industry practice and have the potential of retroactively disallowing 
substantial amounts of credits that have already been allocated and 
used to finance affordable housing around the country. I am concerned 
that retroactive tax treatment to investors will have the effect of 
shaking the confidence that has been built up over the years in this 
program. Perhaps equally troubling is that the position the IRS has 
taken in these TAMs could change the economics of future affordable 
housing and could frustrate the goals of the low-income housing tax 
credit program to provide good quality housing to lower-income working 
people and senior citizens at the most reasonable rent possible.
  Since the low-income housing program is essentially a block grant 
program to the states operated through the tax laws and is fully 
subscribed, the position the IRS has taken in the TAMs will not save 
the Treasury any revenues. It simply will force the states to allocate 
the available credits differently and run the risk that the properties 
built in the future will not be able to be rented at rental rates as 
low as they are today.
  It is truly unfortunate that the first guidance from the IRS on these 
issues comes in the form of technical advice memoranda, purportedly 
limited to an individual taxpayer, rather than in the form of 
regulations after full opportunity for review and public comment on how 
the rules for allocating basis will affect the policy goals of the low-
income housing tax credit program.
  I would urge the Treasury Department immediately to announce 
initiation of a regulation project on the subject of eligible basis and 
to give the project expedited treatment. We cannot afford to allow 
allocation of credits and construction of affordable housing to be 
hindered by the cloud of these TAMs.
  I would urge my colleagues to learn more about this issue. It may be 
necessary for us to act quickly in the next Congress to respond to 
these TAMs in order to protect the viability of the low-income housing 
credit.

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