IRS Form 8823: Noncompliance Categories and How to Respond
What IRS Form 8823 is, the Part II noncompliance categories, how the correction period works, and the six-step response process for LIHTC owners.
Altus Compliance is an independent affordable housing compliance firm providing file reviews, audit preparation, lease-up support, ongoing monitoring, and compliance oversight for LIHTC, HUD, HOME, RD, Bond, PBV, and RAD properties nationwide.
Focus areas: form 8823, irs form 8823, 8823 noncompliance categories, lihtc 8823 response, 8823 correction period, lihtc recapture.
Frequently asked questions
What is IRS Form 8823?
Form 8823 is the Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition. State allocating agencies file it with the IRS to report noncompliance at a LIHTC property, or the disposition of a building.
Does an 8823 automatically mean credit recapture?
No. Consequences depend on the category cited, whether the noncompliance is corrected within the correction period, and how long the condition existed. Many findings are closed once the agency files a corrected 8823 showing the issue was corrected. Uncorrected findings, and findings affecting the minimum set-aside or eligible basis, carry the real exposure.
How should an owner respond to a Form 8823?
Read the notice to identify the building, units, and category cited; separate documentation gaps from actual noncompliance; correct within the agency correction period; review neighboring files for the same issue; document each correction with its citation, corrected document, and date; and brief the investor or asset manager in writing.
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