Treasury, IRS Seek Input on 2021–22 Priority Guidance Plan

The Treasury Department and Internal Revenue Service (IRS) recently issued Notice 2021-28. This is their annual public notice seeking recommendations for the next Priority Guidance Plan. The Priority Guidance Plan identifies guidance projects that the Treasury and IRS intend to work on during the period from July 1, 2021, to June 30, 2022.

One level deeper: In reviewing recommendations and selecting projects for inclusion on the 2021–2022 Priority Guidance Plan, the IRS will consider the following:

• Whether the recommended guidance resolves significant issues relevant to a broad class of taxpayers;
• Whether the recommended guidance reduces controversy and lessens the burden on taxpayers or the Service;
• Whether the recommended guidance relates to recently enacted legislation;
• Whether the recommendation involves existing regulations or other guidance that is outdated, unnecessary, ineffective, insufficient, or unnecessarily burdensome and that should be modified, streamlined, expanded, replaced, or withdrawn;
• Whether the recommended guidance promotes sound tax administration;
• Whether the Service can administer the recommended guidance on a uniform basis; and
• Whether the recommended guidance can be drafted in a manner that will enable taxpayers to easily understand and apply the guidance.

How to submit: The IRS is asking for recommendations by May 28, 2021, for possible inclusion in the original 2021–2022 Priority Guidance Plan. You may, however, submit recommendations for guidance at any time during the year. The IRS may update the 2021–2022 Priority Guidance Plan periodically to reflect additional guidance that the IRS intends to publish during the plan year. The periodic updates allow the IRS to respond to the need for additional guidance that may arise during the plan year.

You may mail comments to: Internal Revenue Service; Attn: CC:PA:LPD:PR (Notice 2021-28); Room 5203; P.O. Box 7604; Ben Franklin Station; Washington, D.C. 20044. Alternatively, you may submit comments electronically via the Federal eRulemaking Portal at www.regulations.gov (type IRS-2021-0004 in the search field on the regulations.gov homepage to find this notice and submit comments).

Watch for: There's been increasing attention brought to the newest minimum set-aside option, and additional guidance and clarity around the issue would be welcome in the coming year. In October 2020, the IRS released proposed regulations that were intended to provide clarity around the Average Income Test (AIT) option, the third minimum set-aside for the LIHTC program. The AIT was enacted in 2018 as a way to reach lower income households; it requires that at least 40 percent of the units in the project to be rent-restricted and designated low-income units, and the average unit designation to be no more than 60 percent of Area Median Income (AMI).

On March 24, the IRS held a public hearing on proposed regulations related to the AIT. One issue that was emphasized was the need for flexibility with unit designation. The proposed rule requires designations to be permanently fixed.

And most recently, during a Senate Finance Committee hearing with IRS Commissioner Rettig, Senator Maria Cantwell (D-WA) brought up her concern that the IRS’ proposed rule on the AIT treats the AIT minimum set-aside differently than the other minimum set-asides. She asked Commissioner Rettig if IRS is considering any changes to the AIT regulations. The commissioner responded that he did not have updated information but he would follow up with the senator.