In response to a request by Sen. Chuck Grassley of Iowa, the Government Accountability Office (GAO) has released its second of three reports that review various aspects of the Low-Income Housing Tax Credit program, including federal oversight of the program, to see whether the program is working as intended to help develop affordable rental housing.  Last year, the GAO found that the IRS conducted “minimal” oversight of the state housing finance agencies that award the tax credits to developers. In a new report, “Low-Income Housing Tax Credit: Some Agency Practices Raise Concerns and IRS Could Improve Noncompliance Reporting and Data Collection,” the GAO concluded that the IRS doesn’t give state and local agencies clear guidance on how to report program noncompliance and doesn’t organize or track information from noncompliance reports.  Grassley made the following comment on the GAO report.

“The taxpayers forgo $8 billion a year through this program to help ensure the development of affordable rental housing.  The IRS is responsible for making sure the tax credit is administered properly so the program achieves what it’s meant to do -- provide safe, affordable housing for those in need.  The report finds that the IRS isn’t doing nearly enough to help state and local agencies properly allocate the tax credit, and the IRS doesn’t track problems when they’re reported.  The IRS should follow the GAO’s recommendations to improve oversight of the tax credit.  Affordable rental housing is a critical need, and the IRS needs to make sure the tax credit is administered right.” 

The report is available here.