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A LEGAL COMPLIANCE GUIDE FOR THE LOW-INCOME HOUSING TAX CREDIT COMMUNITY
F e b r ua ry 2 013
inside this issue
Model Form: Track Progress of
Open Fraud Investigations . . . . . . . . . . 3
In the News. . . . . . . . . . . . . . . . . . . . . . . 5
➤ Ohio Preserves Lower Real Estate
Taxes for LIHTC Sites
➤ HUD Seeks Comments on LIHTC
Tenant Data Collection
Income Calculations: How to
Treat Trusts When Calculating
Household Income. . . . . . . . . . . . . . . . . 7
American Taxpayer Relief
Act and Housing Tax Credits
On Jan. 2, President Obama signed
H.R. 8, the American Taxpayer Relief
Act of 2012, into law. The bill had been
approved by the Senate by a vote of
89-8 and then by the House of Representatives by a vote of 257-167.
Pertaining to affordable housing, the
new law extends the new markets tax
credit for two years, providing a maximum annual amount of qualified equity investments of $3.5 billion each year.
It also extends and modifies the fixed
9 percent low-income housing tax credit floor for LIHTC allocations made
before Jan. 1, 2014. For federally subsidized 4 percent tax credit projects, no
change was included for them in the legislation, and the monthly rates will continue to fluctuate and be published by
the IRS.
In addition, the package also retroactively extends the provision that the
basic housing allowance of a member
of the military is not considered income
for purposes of calculating whether
that person qualifies as a low-income
tenant from Dec. 31, 2011, through
Dec. 31, 2013.
fe ature
Use Tracking Sheets to Organize
and Guide Fraud Investigations
In these economic times, you may have experienced an uptick in
qualified applicants applying for units at your tax credit site. Unfortunately, a small subset of these applicants is probably reporting
false income in an attempt to take advantage of subsidized rent rates.
Recently, the Worcester Housing Authority (WHA) in Massachusetts
reported nearly $1.6 million in fraud over the past five years. According to the report, from 2008 to 2012, WHA staff and investigators
reviewed 2,000 suspected cases of fraud. And as a result, a total of
$664,775 was recovered, along with agreements for another $428,162
to be paid back. In addition, nine cases were taken to court, where a
total of $62,769 was ordered to be repaid, according to the report.
Most likely, your site has measures in place to deter fraud and verify applicant information. But there may be devious households that
(continued on p. 2)
D e a l i n g w i t h t h e IR S
How to Get a Private Letter Ruling
Like every other tax credit site manager, you may not always be sure
of the right way to handle a situation. And the owner may sometimes
ask you questions that you can’t answer. For example, you may not
know whether the IRS can give the owner more time to elect the site’s
minimum set-aside, or whether the IRS will still consider your site
residential if you offer certain nursing or medical services to residents.
If you don’t do the right thing, your state housing agency may cite you
for noncompliance, putting the owner’s tax credits at risk.
You can get direction from the IRS on how to handle situations
you’re unsure of by applying for a private letter ruling (PLR). PLRs
aren’t law, but rather an interpretation and application of law and regulation that the IRS will follow, within certain conditions and limitations. The PLRs do bind the taxpayers that request them. So if the
owner of your site requests a PLR, it can safely rely on the ruling.
We’ll tell you the steps you must take to help your site’s owner
get a PLR, and what you and the owner should keep in mind when
requesting one.
(continued on p. 5)
2
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
B O A R D O F A D V IS O R S
George Caruso, shcm,
nahp - e
Edgewood Management
Member, NAHMA Board
of Directors
Germantown, MD
Douglas D. Chasick,
cpm ® , caps , cas , adv. ram ,
clp, sle , cdei
The Apartment Doctor
Melbourne Beach, FL
Charles J. Durnin Jr.
Interstate Realty
Management Co.
Marlton, NJ
Karen Graham, cpm, hccp
Karen A. Graham
Consulting, LLC
Cincinnati, OH
Margaret McFarland, Esq.
University of Maryland
College Pk., MD
Elizabeth Moreland, ncp -e
Elizabeth Moreland
Consulting, Inc.
Orange City, FL
Denise B. Muha
National Leased
Housing Association
Washington, DC
Ruth Theobold Probst
TheoPro Compliance
Pewaukee, WI
Greg Proctor, shcm,
nahp - e
Windsor Consulting
Lexington, KY
Steven L. Rosenblatt
Sharon Harper Ivey,
Spectrum Seminars, Inc.
hccp, ncp - e , scs , fhc
Concord Management, LTD Cape Elizabeth, ME
Maitland, FL
Johrita Solari, shcm,
nahp - e , hccp
A.J. Johnson, hccp
Solari Enterprises, Inc.
A.J. Johnson Consulting
Orange, CA
Services, Inc.
Williamsburg, VA
Gwen Volk, cpm, shcm,
nahp - e , hccp
Michael Kotin, hccp
LBK Management
Kay-Kay Realty Corp.
Services
Scottsdale, AZ
Irving, TX
Steven M. McDonald, cpm
Westlake Realty Group, Inc.
San Mateo, CA
Editor: Eric Yoo
Executive Editor: Heather Ogilvie
Production Director: Kathryn Homenick
Director of Operations: Michael Koplin
Tax Credit Housing Management Insider [ISSN 15272311 (print), 1938-307X (online)] is published by Vendome
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February 2013
Use Tracking Sheets (continued from p. 1)
may have slipped through the cracks. In one recent case, a Minneapolis woman was sentenced in federal court for using an alternative
identity to fraudulently receive government benefits, including more
than $18,000 in rent benefits. In her plea agreement, she admitted
that she applied for, and received, an alternate Social Security card
under a fake name. She then used both Social Security numbers and
identities to apply for and renew Minnesota identification cards and
driver’s licenses, to seek and obtain employment, and to file federal
and state tax returns. She had also used the false identity to receive a
lower monthly housing rental rate by qualifying for a tax credit unit.
According to reports, her fraud resulted in her underpaying more
than $18,000 in rent since 2004.
Suppose your staff gets an anonymous tip that a household at your
tax credit site has more income or members than the household head
reported. This can mean you certified some of your households as
eligible when, in fact, they weren’t. You’ll need to investigate to discover whether you made compliance mistakes while relying on a tenant’s fraudulent information. But many things can go wrong with an
investigation.
Busy staffers may neglect or forget about an investigation. Or they
may fail to keep good records of the steps they’ve taken and not follow up as needed. Worst of all, a tipster may tell the IRS or your state
housing agency that he alerted you to a fraud but that you did nothing, says tax credit site consultant A.J. Johnson. If your agency uncovers a fraud at your site, mistakes may come back to haunt you and the
owner may lose its credits, he warns.
To ensure that investigations are handled promptly and run
smoothly, we’ll give you a Model Form: Track Progress of Open
Fraud Investigations, that you can use to track each investigation
from the moment you spot an inconsistency in household information
until you take steps to evict the household or you write the memo to
file. Keep all these forms together in one binder so that it’s easier for
a supervisor to oversee investigations. Here’s what you need to know
about investigation tracking sheets.
How Tracking Sheet Helps
An investigation tracking sheet can help organize and streamline your
investigation in four ways:
Allows easy oversight. A tracking sheet shows the status of an
investigation at a glance. A supervisor won’t have to review the entire
file to find out what steps have been taken and what, if any, conclusions have been reached.
Guides investigation. A tracking sheet serves as a handy outline
to help staffers cover all the bases. It asks staffers for all the basic
information right away. Then it leads staffers through the appropriate steps. The tracking sheet is also a useful way for staffers to reori(continued on p. 4)
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February 2013
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
3
Model Form
Track Progress of Open Fraud Investigations
To keep investigations of possible fraud by households on
course, use a tracking sheet like the one below. It’s based
on forms used by the Kentucky Housing Corporation. The
Model Tracking Sheet asks for basic information about
the inconsistency, and it leads your staffers through all the
steps in the investigative process, including the writing of
a final memo.
INVESTIGATION TRACKING SHEET
INSTRUCTIONS: To ensure compliance with the tax credit program, we must investigate any time we learn something that is inconsistent
with prior information on household income or membership. Whenever an inconsistency is discovered, start a new investigation tracking
sheet by filling out the top section of the form. File the form at the back of the first section of the investigations binder.
I. DESCRIPTION OF INCONSISTENCY
II. STATUS OF INVESTIGATION
Site________________________________________________________
Date _______________________________________________________
❏ Spoke to household head: Date ____________________________
❏ Sent verification forms or asked for documentary verification:
Name of Household Head _____________________________________
Date ____________________________________________________
A ddress_ ___________________________________________________
Verification source ________________________________________
Tel. #_______________________________________________________
Date ____________________________________________________
Social Security # ____________________________________________
Verification source ________________________________________
How did you learn of the inconsistency?
❏ By reviewing original application
❏ By reviewing recertification information from household
❏ From verification source
❏ From informant:
Informant’s name _________________________________________
A ddress _________________________________________________
Tel. # ___________________________________________________
How does informant know household or household member?
Keep informant’s name confidential? ❏ Yes ❏ No
❏ Other (explain) ___________________________________________
❏ Took other steps to investigate:
Date ____________________________________________________
Step taken (explain) _ ______________________________________
Date ____________________________________________________
Step taken (explain) _ ______________________________________
❏ Received verification:
Date ____________________________________________________
Verification source ________________________________________
Date ____________________________________________________
Verification source ________________________________________
NOTE: If the investigation shows the household did not, in fact,
provide false information, skip Section III and go directly to Section IV.
III. FOLLOW-UP ACTIVITIES
The inconsistency concerns:
❏ Unreported income
Place of employment or source of income_____________________
❏ Unauthorized household member
Name of unauthorized member, if known ______________________
❏ Other (explain) ___________________________________________
Describe in detail how the inconsistency came to your attention
and identify the information provided by the household that is
being called into question:
❏ Warning letter sent: Date __________________________________
❏ Met at household’s request: Date __________________________
❏ Sent termination notice or met with attorney to discuss
termination for fraud and lawsuit for any savings in rent:
Date ____________________________________________________
IV. DOCUMENTATION OF INVESTIGATION
❏ Placed memo in file on discrepancy, investigation, and
conclusions.
Written by: ______________________________________________
Date ____________________________________________________
This section filled out by: __________________________________
Filled out by: _ ______________________________________________
NOTE: After completing Section IV, make a copy of this form
for the household file. Then place the original at the back of the
investigations binder.
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4
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
Use Tracking Sheets
(continued from p. 2)
ent themselves if they return to
an investigation after attending to
other tasks.
Keeps staff vigilant. Having a
formal investigations binder—and
prepared forms to use—helps to
remind staffers of their ongoing
responsibility to investigate inconsistencies. It’s easy for staffers to
forget about investigations when
the paperwork is informally kept
or filed away out of sight.
Shows your compliance. You
can use tracking sheets and an
investigations binder to show auditors from the IRS, your state housing agency, and others that you
take seriously the possibility of
fraud by households—and that
your staff promptly carries out
investigations.
Set Up Binder
You should gather tracking sheets
in a binder or folder with two sections. In the front section, place
tracking sheets for active investigations in chronological order
(based on the investigation’s starting date).
Completed tracking sheets
can go in the back section, also
in chronological order. When the
binder is opened, the top tracking
sheet will be for the oldest ongoing
investigation. This provides immediate information on how quickly
investigations are going.
What Tracking Sheet
Covers
Your staff should start a tracking sheet any time they hear or
see something that’s inconsistent with the relevant informa-
tion you got from the household.
For example, in the WHA fraud
report, one household member
living in an elderly community
raised suspicions by having a
luxury car. The WHA investigated and found the resident didn’t
report his true income. And the
resident was ordered to pay back
$8,700 to the WHA.
Our tracking sheet is divided into four sections. It assumes
that the staffer who first becomes
aware of the inconsistency fills out
the first section and signs it. It also
assumes that the rest of the tracking sheet is filled out and signed
by the person or persons at your
site responsible for investigating
inconsistent information. But you
may choose to assign these responsibilities differently and modify
the tracking sheet to fit your procedures. At the end of the investigation process, have your staffers
place a copy of the completed
tracking sheet in the household’s
file. Have them refile the original in the back of the binder with
other tracking sheets for completed investigations.
Basic data. The first section
of the tracking sheet asks for basic
data about the inconsistent information. In addition to the name
of the site and the date, this section also asks for the identity of
the household involved, how the
inconsistency was discovered, and
what the inconsistency concerns.
The section includes checklists to
make it easier for the staff member
to provide details about the source
of the inconsistent information
(for example, a verification source)
and the nature of the information
(for example, unreported income);
the staff member simply selects the
appropriate item in the checklist.
February 2013
Status of investigation. The
second section of the tracking
sheet takes the staffer conducting the investigation through the
appropriate steps—for example,
contacting the household and
sending verification forms. The
tracking sheet monitors the progress of the investigation, since the
staffer must fill in the date when
each step is taken and the date
when verification forms or other
kinds of documentary evidence are
received. There’s also space for the
staffer to indicate what additional
investigative steps—for example,
interviewing neighbors—were
taken and when.
Results of investigation. The
third section of the tracking sheet
walks staffers through the steps to
take if the investigation shows that
the household gave false information. These steps include sending
a warning letter to the household,
meeting with the household (if its
members choose to meet with you),
and starting a legal action against
the household. Next to each step
is a space for the date the step was
taken.
Final documentation. In the
last section, there’s a box to check
to indicate that a memo on the discrepancy, the investigation, and
the conclusions drawn was written
and is on file. The staffer filling
out the tracking sheet must check
the box, enter the name of the person writing the memo and the date
it was written, and sign his or her
own name. ♦
Insider Source
A.J. Johnson: President, A.J. Johnson
Consulting Services, Inc., 3521 Frances
Berkeley, Williamsburg, VA 23188; (757)
259-9920.
© 2013 by Vendome Group, LLC. Any reproduction is strictly prohibited. For more information call 1-800-519-3692 or visit www.vendomerealestatemedia.com.
February 2013
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
5
In the News
➤ Ohio Preserves Lower Real Estate
Taxes for LIHTC Sites
On Dec. 20, 2012, Ohio Gov. John Kasich signed a
bill into law that will keep real estate taxes lower for
properties with income restrictions, including lowincome housing tax credit properties. The provision
was added to H.B. 510 during Ohio’s lame duck congressional session in an effort to make law a practice that had been common in the state before a bill
passed earlier in 2012 prohibited it.
In 2009, the Ohio Supreme Court had ruled
that owners of affordable housing sites with income
restrictions could appeal the property taxes assessed
against their properties if a tax appeals board did
not consider how federally imposed restrictions
might affect a site’s valuation [Ivy Glen Ltd. Partnership v. Fayette City Board of Revision, February
2009]. Although this decision applied only during the
appeals process, it still enabled county auditors to
lower the property taxes on income-restricted buildings. However, last year, the Ohio General Assembly
passed a budget bill that required county auditors
to ignore property restrictions when determining a
property’s value.
The Ohio Housing Council then worked with the
Ohio Department of Taxation, the state assembly,
and other stakeholders to restore the auditors’ ability to consider income restrictions when assessing
income-restricted buildings. As a result, legislators
placed an amendment into H.B. 510 that compels
auditors to consider a property’s encumbrances when
determining its valuation for tax purposes. Since the
auditor can now consider a property’s restrictions
during the valuation process, site owners in Ohio
should end up paying lower taxes for their rent- and
income-restricted properties.
➤ HUD Seeks Comments on
LIHTC Tenant Data Collection
HUD recently released a request for comments on the
statutorily mandated collection of information for
tenants of low-income housing tax credit (LIHTC)funded properties. The Housing and Economic
Recovery Act (HERA) required that each state agency administering tax credits annually furnish HUD
with information concerning the race, ethnicity, family composition, age, income, use of rental assistance
under Section 8(o) of the U.S. Housing Act of 1937 or
other similar assistance, disability status, and monthly rental payments of households residing in each
property receiving tax credits through the agency.
HUD established standards and definitions for
the information to be collected and provided states
with technical assistance in establishing systems to
compile and submit the information, and, in coordination with other federal agencies administering
housing programs, established procedures to minimize duplicative reporting requirements for sites
assisted under multiple housing programs. And in
2010, HUD’s Office of Management and Budget
approved the first collection form (HUD form 52697)
used for the collection of LIHTC household information (OMB Approval No. 2528–0165; expiration
date 05/31/2013). Renewal of this form is required for
HUD to remain in compliance with HERA. HUD is
accepting comments until Feb. 26, 2013. ♦
Dealing with the IRS (continued from p. 1)
Take Five Steps to Get PLR
Here are the steps involved in getting a PLR:
Step #1: Get advice from a tax
credit attorney. Before moving
ahead with the request for a PLR,
advise the owner to consult a tax
credit attorney. An attorney can
determine whether it’s wise or even
necessary to request a PLR. The
attorney can confirm that there’s
a need for a ruling. The IRS ordinarily won’t issue “comfort” letter
rulings on matters that are already
squarely addressed by statute, regulation, court decision, revenue ruling, revenue procedure, or notice.
And because the IRS revenue procedure that explains how
to request a PLR is complex, the
attorney can help the owner write
the PLR request in the form the
IRS requires. The current procedures are in Revenue Procedure
2012-01, which can be found in
Internal Revenue Bulletin 2012-1 or
at www.irs.gov/pub/irs-irbs/irb12-01.
pdf. A sample letter ruling request
is included in the appendix.
(continued on p. 6)
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6
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
Dealing with the IRS
(continued from p. 5)
You may also seek advice directly from the IRS. Before applying
for a ruling, in addition to doing
research to convince the IRS to rule
favorably, you should call an IRS
employee who deals in your subject
matter to discuss your proposed
ruling request. Most published rulings include a name and phone
number of the person involved with
the ruling who can direct you to
someone with whom to informally
discuss your proposed request. Revenue Procedure 2012-1 includes a
list of phone numbers to request a
pre-submission conference in person or by telephone.
Step #2: Prepare request. The
next step is to prepare a written
statement that includes the information the IRS needs to consider
the request. Even if an attorney
prepares the actual statement,
you may need to help the attorney
by supplying some information.
Although some PLR requests
require additional information,
all requests must include the
following:
■ A complete statement of facts
and other related information;
■ An analysis of material facts;
■ A statement indicating
whether the issue affects any tax
returns the owner already filed;
■ A statement indicating
whether a ruling on the same or a
similar matter has been issued or
requested, or is pending;
■ A list of authorities that support the request;
■ A list of authorities that
appear to run contrary to the
request;
■ A statement identifying any
pending legislation that would
affect the request;
■ A statement identifying
information to be deleted from the
copy of the PLR the IRS will make
available for public inspection;
■ The owner’s signature or
the signature of its authorized
representative;
■ A list of authorized
representatives;
■ A power of attorney and
declaration of representative from
each authorized representative;
■ A statement attesting to the
accuracy of the request under penalties of perjury (using language
provided in the revenue procedure)
[Rev. Proc. §7.01(15)]; and
■ The number of copies of the
request the owner is submitting. A
taxpayer generally needs to submit
only one copy of a PLR request.
But if the request covers more than
one issue, the IRS encourages taxpayers to submit multiple copies.
Also, under certain circumstances
outlined in the revenue procedure,
taxpayers must submit two copies
of their PLR requests [Rev. Proc.
§7.01(16)].
Step #3: Assemble required documents and attach them to request.
The IRS requires the owner to
attach the following documents to
the PLR request:
■ Copies of all relevant documents, such as the owner’s tax
credit application and the site’s
extended use agreement; and
■ A checklist covering all items
included in the request. (You can
get a blank checklist from Appendix C of the revenue procedure.)
Step #4: Submit request to IRS
with required fee. The owner must
submit the PLR request to the
IRS’s national office. The address
to use depends on how the owner
delivers the request. For more
information, check the revenue
procedure [Rev. Proc. §7.03(1)].
In some cases, the national office
may refer the request to a local
IRS field office [Rev. Proc. §14.03].
February 2013
If you’re helping with the submission, make sure the owner
includes a check or money order
to cover the fee for filing a PLR
request. Read the fee schedule in
Appendix A of the revenue procedure to determine the correct fee.
Fees range from $625 to $11,500.
Step #5: Respond to any issues
IRS rep raises. In most cases, an
IRS representative must contact
the owner within 21 days after the
IRS gets the PLR request to discuss procedural matters. The representative must tell the owner
whether he’ll recommend to the
IRS that it issue a PLR and what
the PLR should say. And the representative may ask the owner to
send more information to help the
IRS properly consider the request
[Rev. Proc. §10.02].
Also, be sure to maintain contact with the IRS while your ruling
is pending. Obtaining a complex
PLR generally takes months.
Keeping in touch with the person
listed in the IRS acknowledgment
of receipt of your ruling application can speed up the process.
Issues IRS Won’t Consider
The IRS won’t consider all issues
presented in a PLR. It won’t
respond to:
Issues that arise only in hypothetical or alternative situations.
The IRS may issue a PLR in
response to owners’ questions
“about their status for tax purposes” and the “tax effects of their
acts or transactions…” [Rev. Proc.
§3]. But the IRS won’t issue a PLR
that would bind an owner in a situation that very well may not occur
[Rev. Proc. §6.02].
Frivolous issues. The IRS warns
against requesting PLRs for frivolous issues. A “frivolous issue” is
“one without basis in fact or law”
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February 2013
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
or that supports “a position that
courts have held groundless” [Rev.
Proc. §6.10]. The revenue procedure gives examples, such as
claiming that filing a tax return
violates constitutional claims such
as due process, involuntary servi-
tude, or that your situation somehow constitutes an unreasonable
search.
Requests to change the law. If
you or the owner disagree with
part of the tax credit law, don’t try
7
to change it by requesting a PLR.
Only Congress can amend the tax
credit law. The IRS is limited to
applying the law to an owner’s particular situation. ♦
Income Calculations
How to Treat Trusts When Calculating Household Income
When certifying or recertifying
households at your tax credit site,
it’s not uncommon to discover that
a household member is the creator or beneficiary of a trust. If so,
you’ll need to account for the trust
when calculating the household’s
income. If you don’t know how to
treat trusts, you’ll make mistakes
when trying to determine a household’s eligibility to occupy a lowincome unit.
The HUD Handbook sets
out rules for treating trusts when
certifying and recertifying your
low-income households [HUD
Handbook 4350.3, par. 5-7(G)(1)].
We’ll explain what a trust is so you
can identify trusts that your applicants or households have. And
we’ll tell you what the Handbook
says to do if you discover that a
member of one of your low-income
households is the creator or the
beneficiary of a trust.
What’s a Trust?
The Handbook defines a trust as
“a legal arrangement generally
regulated by state law in which
one party (the creator or grantor)
transfers property to a second
party (the trustee) who holds the
property for the benefit of one
or more third parties (the beneficiaries)” [Handbook 4350.3, par.
5-7(G)(1)(a)(1)].
A trust can contain cash or
property that could be converted
to cash. Generally the assets are
invested by the creator for the benefit of the beneficiaries. You must
account for a trust when calculating a household’s income if a
household member is either the creator of the trust or its beneficiary.
When Household Member
Is Creator of Trust
How you must treat a trust that
a household member has created
depends on whether the member
has access to the income or principal from the trust. Here’s a rundown on what the Handbook says
you must do:
Revocable trusts. A revocable
trust is a trust that the creator
of the trust may amend or end
(revoke). When there is a revocable trust, the creator has access to
the funds in the trust account. In
other words, a household member
who’s the creator of a revocable
trust may amend or revoke (that
is, end) the trust and has access to
the trust funds. Because of this,
you must treat revocable trusts as
assets. To do this, add the trust’s
“cash value” (that is, the amount
the household member would get
if he withdrew all the funds) to the
household’s total net assets. Also,
add any interest income from the
trust to the household’s actual
income from assets.
Nonrevocable trusts. A household member who’s the creator of
a nonrevocable trust can’t revoke
it once it’s set up. And the member
can’t access the trust funds.
Because a household member
who’s the creator of a nonrevocable trust doesn’t have access to
the principal, the Handbook says
that you generally must treat this
type of trust as an asset disposed
of for less than fair market value
[Handbook 4350.3, par. 5-7(G)
(1)(b)(4)]. This means you must
count the principal as part of your
asset calculations—but only if the
trust was created within two years
before the household’s certification or recertification date. After
the two-year period is over, don’t
include the principal of the trust in
your asset calculations.
However, you mustn’t consider a nonrevocable trust as an
asset disposed of for less than fair
market value if the trust was created using funds received through
a settlement or judgment [Handbook 4350.3, par. 5-7(G)(8)(e)]. In
any case, if the household member
gets interest from the nonrevocable
trust, treat this amount as part of
the household income (just as you
would if it were a revocable trust).
(continued on p. 8)
© 2013 by Vendome Group, LLC. Any reproduction is strictly prohibited. For more information call 1-800-519-3692 or visit www.vendomerealestatemedia.com.
8
T A X C R E D I T H O U S I N G M A N A G E M E N T I N S I D E R
Income Calculations
hold member who’s the beneficiary
of a trust gets all the trust funds
in one payment, it’s a lump-sum
receipt and must be treated as an
asset.
(continued from p. 7)
When Household Member
Is Beneficiary of Trust
If a member of one of your lowincome households is the beneficiary of a trust, how you account
for the trust depends on whether
the beneficiary gets the funds
at once or in periodic payments
[Handbook 4350.3, par. 5-7(G)(1)
(b)(5)]. Here’s how to handle each
situation:
Household member gets periodic
income from trust. If the household
member gets payments of interest or principal from the trust, you
must consider these payments as
regular income or gifts and count
them as part of the household
income.
Household member gets full
value of trust at once. If the house-
A household member may be
the beneficiary of a “special needs
February 2013
trust,” which is a trust that’s often
created for the benefit of a person who’s disabled and can’t make
financial decisions for himself. If
that’s the case, the household member probably won’t have access to
the funds, which means you can
disregard the trust when certifying or recertifying the household.
However, if the household member gets any income payments,
you must count them as part of
the household income, just as you
would with any other trust [Handbook 4350.3, par. 5-7(G)(1)(c)]. ♦
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dealing WiTh
The r ise in
MulTi
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exam nes
This month s lesson
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the a r housing imp
the rapid
of he atest t end
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increase n mult generat
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➤ Let’s Begin!
atng mp ic tions of the
to ook at he air hous
This month we e o ng
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ly a qua ter of the poputhey accounted for nea
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Meanwhi e the nat
✦ What Is a Family? Complying with the Law in
Light of Changing Family Structures
✦ Documenting Disability-Related Accommodation
and Modification Requests
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✦ Trend Watch: Dealing with the Rise in
Multigenerational Households
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