Report Recommends Joint IRS-HUD Oversight of LIHTC Program

A report from the Government Accountability Office (GAO) suggests that a joint administration between the IRS and HUD would benefit the LIHTC program. The 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 suggests 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.