Verification

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As a LIHTC site owner or manager, it’s important to be aware of Housing Opportunity Through Modernization Act (HOTMA) provisions since the legislation deals with reforms to the Section 8 Housing Choice Voucher program. And although the HOTMA legislative text or HUD regulations concerning HOTMA don’t mention LIHTC, the rules still affect LIHTC properties.

In dealing with the constraints imposed by the pandemic, many state housing agencies have successfully transitioned to virtual household file reviews. The IRS’ recent notice reflects this reality in splitting compliance-monitoring requirements for household file reviews from the requirements for physical inspection. Household file reviews must still be completed this year. But the required 15-day notice in advance of household file audits have been loosened to 30 days until the end of this calendar year.

An applicant or household isn’t qualified for a low-income unit at your site unless you have the verifications to prove it. Owners and managers must make sure that every source of income that a household reports is verified. If you accept a household without verifying all its income, the owner won’t be able to claim tax credits for the household’s unit. And if the owner needs to count the unit to meet the minimum set-aside, the owner won’t be able to claim credits.

Explosive growth in ride-hailing services such as Uber and Lyft are attracting more and more drivers. These drivers earn extra income with the benefit of working flexible hours. According to recent research by JPMorgan Chase Institute, from late 2013 to this spring, the number of households earning income from transportation-related apps has grown 20 times. And a separate study Uber released in late 2016 showed that while the number of drivers on the app had grown, average hourly earnings remained fairly stable at about $20 an hour from mid-2014 to the end of 2015.

Many household members get Social Security, Supplemental Security Income (SSI), or other government benefits. To certify and recertify households correctly, you must count these benefits as part of a household’s income and verify the amounts with the appropriate government agency [HUD Handbook 4350.3, par. 5-12(A)(1). Your state housing agency might let you accept the “award letter” the household gets from the government agency as proof of the household member’s benefits.

Last month, the Insider discussed how to determine whether an absentee's confinement in a hospital or nursing home is temporary or permanent. Problems with noncompliance can arise if you don't count the income of an absentee who should be considered a member of the household. Because of this, you may treat the household as being within the income limits when it's not.

Sometimes verification sources don't return the forms that you send them to verify certain information such as a household member's income or student status. In these situations, you must try to verify the information by telephoning the sources. To stay in tax credit compliance, you're required to keep a written record of these telephone calls, the people to whom you spoke, and the information obtained during the calls [HUD Handbook 4350.3, par. 5-19].

Many managers assume that applicants with Section 8 vouchers are automatically eligible for tax credit housing. Unfortunately, this is not always the case. Households that are eligible for Section 8 assistance may not be eligible for tax credit housing. Or, if eligible, they may not be able to afford your rent. And household income information from the local public housing authority (PHA) may not satisfy tax credit certification requirements.

Underdocumenting income is one of the most common errors site managers can make when certifying or recertifying households, according to Barbara Crook, compliance director for Affordable Housing Support Services, an affordable housing compliance consulting firm in Littleton, Colo.