The Government Accountability Office (GAO) is recommending that the Department of Housing and Urban Development (HUD) join the Internal Revenue Service (IRS) in administering the federal Low-Income Housing Tax Credit (LIHTC)program.
In a report released July 23 — the first of three scheduled for the LIHTC program between now and the spring of 2016 — GAO found that IRS oversight of state housing finance agencies has been “minimal, partly because LIHTC is viewed as a peripheral program in IRS in terms of its mission and priorities for resources and staffing.”
Joint administration of the LIHTC program, the GAO said, could “more efficiently address existing oversight challenges.”
NAHB believes this recommendation reflects a fundamental misunderstanding of why the LIHTC was created as part of the Tax Reform Act of 1986 and ignores the widespread success of the program due to its inclusion in the tax code. The IRS has also responded to the report:
“As the report states, after reviewing the results of hundreds of audits, the IRS determined there was not widespread noncompliance with the program,” the IRS said in a written statement.
While it is unlikely that Congress would consider giving HUD oversight over a tax program, we will continue to closely follow this and work with our coalition partners to address any concerns by legislators.