Use Checklist to Help Owner Complete Annual Certification Form

Each year, your state housing agency sends the owner of your tax credit site a certification form. The owner is supposed to complete the form, sign it to certify that the information on it is correct and the site complies with the tax credit law, and send the form back. But many owners don't take this annual filing requirement seriously. Many ignore the certification form entirely. And others file the form without checking with the management companies to ensure that the information they certify to is correct. If the owner of your tax credit site doesn't comply with the annual filing requirement, this noncompliance can jeopardize its tax credits. And the owner may well hold you—as manager of the site—liable for the mistake.

     You can prevent this headache by sending the owner the information it needs to complete the certification form. That way, you've done all you can to ensure that the owner complies with its annual filing requirement and keeps its tax credits safe. To help you give the owner all the information it needs to comply, we've put together an annual compliance checklist that you can photocopy and send to the owner.

What Checklist Includes

The 12 items on our checklist both track and paraphrase the 12 annual certifications that the tax credit rules require from owners. These certifications cover every major aspect of tax credit compliance, including meeting the minimum set-aside and applicable fraction requirements, restricting rents, addressing changes in the eligible basis, complying with the vacant unit and next available unit rules, complying with fair housing rules, and certifying that the site hasn't discriminated against Section 8 applicants.

     Your specific state agency's annual certification of continuing program compliance may include fewer or more than 12 certifications. Since each agency designs its own form, your state's agency may group the information in the 12 required certifications differently. Also, the agency may want owners to certify to more information, such as whether their sites' ownership or management changed over the year.

How to Use Checklist

Prepare a copy of the checklist for each tax credit site you manage. Prepare the checklist after the end of each year of the compliance period, making sure to send it out before the owner must file its annual certification with the state housing agency. After you send a checklist to the owner, follow up with a telephone call. That way, the owner will have all the information it needs to complete the certification form and file it on time.

     Be sure to confirm with your state housing agency what the deadline is for filing the certification form. It varies by state. For example, New York's Department of Housing Preservation & Development requires certifications to be submitted no later than March 1, whereas the Wisconsin Housing and Economic Development Authority requires its annual certification of continuing program compliance no earlier than Jan. 1 and no later than Jan. 31 of each year.

     To complete the checklist, check true or false next to each of the 12 items listed. Refer to your files, including the owner's IRS Form 8609, any Form 8823 that your state housing agency issued to report noncompliance, and your household files to get the information you need to respond to each item. If you check false, explain why on a separate piece of paper. And attach your explanation to the checklist before sending it to the owner.

     If you have to check false for any item, it shouldn't be a cause for concern. That's because your state housing agency should already know about any noncompliance the owner will admit to on the certification form. But if your state housing agency hasn't discovered a particular act of noncompliance, it's still in the owner's interest to reveal it to the agency when the owner completes the form. If an owner falsely certifies, for instance, that it hasn't gotten any fair housing violations, both the owner and its management company open themselves to charges of fraud.