B. General Guidelines for Completing Form 8823

• (1) Select all applicable categories of noncompliance.

  • Example 1: The state agency determined that 1 out of 10 low-income units in a building had been rented to a household with incomes that did not meet the income eligibility restrictions. Category 11a, Household income above income limit upon initial occupancy, should be selected.

  • Example 2: The state agency determined that 7 out of 10 low-income units in a one- building project were rented to households with incomes that did not meet the income eligibility restrictions. As a result, the owner did not meet the 40/60 minimum set-aside for that year. Category 11a, Household income above income limit upon initial occupancy, should be selected, and category 11f, Project failed to meet minimum set-aside requirement, should be selected.

• (2) A separate Form 8823 must be filed for each BIN. The form must be prepared using the fillable PDF file as revised November 2009 (or later) with the bar codes.

• (3) When filing a “back in compliance” Form 8823, all the instances of noncompliance for a specific category must be remedied before the building is considered “back in compliance” for that category. For example, if four units are cited for violations of the UPCS inspection standards, all four units must be repaired before the building is considered back in compliance for that issue.

• (4) All categories of noncompliance must be resolved before filing a “back in compliance” Form 8823. Be sure to mark the “noncompliance corrected” boxes for each of the resolved issues. If more than one “noncompliance corrected” box is marked, enter the date of the most recent correction on line 9 of Form 8823.

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• (5) An amended Form 8823 is identified by checking the box at the top of the form under the title. An amended Form 8823 should be filed with the IRS only if it is necessary to correct an error on a Form 8823 that was previously filed with the Service. For example, the wrong category is selected, or an address is incorrect. A copy of the amended Form 8823 should be sent to the owner concurrent with filing the form with the IRS.

• (6) Descriptions of noncompliance or additional information are not required, but if submitted with the Form 8823, descriptions should be concise; however, avoid the use of canned or repetitive statements. It is helpful to identify the unit number, the date out of compliance and the date corrected, and summarize the problems with a brief description. Copies of reports and notification letters sent to the owner describing the noncompliance, electronic pictures, and newspaper articles are also helpful.

• (7) Concisely describe the content of any additional information maintained by the state agency, e.g., physical inspection reports, photographs, written statements from tenants, etc. Do not send photocopies of pictures; they are not useful.

• (8) State agencies should also include explanations when they suspect owners, managing agents, or other parties may have misrepresented factual information such as falsifying income verifications or altering tenant files.

• (9) State agencies should report all noncompliance of which they are aware as a result of the annual certification or periodic review of tenant files and physical inspection of the property, without regard to whether the initially outstanding noncompliance is subsequently corrected. See chapter 3 for additional discussion.

• (10) Independently, state agencies must also report any change in the applicable fraction (such as converting LIHC units to market rate units) or eligible basis (such as converting common area to commercial space) that results in a decrease in the qualified basis as noncompliance.

• (11) There is no “noncompliance corrected” block available for category 11p, Project is no longer in compliance nor participating in the program. Should the state agency decide to reinstate the property, the state agency should contact the IRS Low-Income Housing Credit program analyst.