Industry Groups Oppose GAO's Joint IRS-HUD Oversight Recommendation

Industry Groups Oppose GAO's Joint IRS-HUD Oversight Recommendation


August 31, 2015

In response to a report from the Government Accountability Office (GAO) suggesting that a joint administration between the IRS and HUD would benefit the LIHTC program, LIHTC industry groups have opposed the GAO’s recommendations. The GAO report suggests that the IRS currently lacks appropriate resources to engage in more than minimal oversight of the program. It notes that, since 1986, the IRS has conducted seven audits of 56 state housing finance agencies (HFA) on which the IRS relies to administer and oversee the program.

In response to a report from the Government Accountability Office (GAO) suggesting that a joint administration between the IRS and HUD would benefit the LIHTC program, LIHTC industry groups have opposed the GAO’s recommendations. The GAO report suggests that the IRS currently lacks appropriate resources to engage in more than minimal oversight of the program. It notes that, since 1986, the IRS has conducted seven audits of 56 state housing finance agencies (HFA) on which the IRS relies to administer and oversee the program.

According to the report, federal internal control standards call for monitoring to be performed continually in the course of normal operations and be ingrained in agency operations. The report notes that oversight of HFAs has been minimal, partly because LIHTC is viewed as a peripheral program in the IRS in terms of its mission and priorities for resources and staffing. It determined that without such reviews, the IRS cannot determine the extent of noncompliance and other issues at HFAs.

Under joint administration, the report suggested the IRS could retain responsibilities consistent with its mission to enforce taxpayer compliance, while HUD, with its experience working with HFAs on other affordable housing programs, would manage oversight on the LIHTC program. In order to enact the GAO’s suggestion, Congress would need to designate HUD as a joint administrator of the LIHTC program.

In a letter to key congressional stakeholders, industry groups emphasized the following points in opposition to the recommendations:

  • HUD has no experience in administering the LIHTC program and has little capacity to take on this responsibility;
  • More resources should be given to the IRS to increase oversight as the GAO found no problems with the LIHTC;
  • The LIHTC program continues to exceed the intent of Congress when it was enacted 30 years ago. It has produced nearly 2.8 million affordable rental homes, leveraged $100 billion in private capital, and supported more than 3 million jobs since its enactment; and
  • The Treasury Department believes that the responsibility for interpreting and enforcing the provisions of the Tax Code should remain entirely with the IRS. But Treasury is supporting research and analysis by HUD on the program’s effectiveness.

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