Low-Income Housing Tax Credit Program Gets "Minimal" IRS Oversight, GAO Says

Press Release

Sen. Chuck Grassley of Iowa asked the Government Accountability Office (GAO) to review various aspects of the Low-Income Housing Tax Credit program, including federal oversight of the program. According to the GAO, this program is the largest source of federal assistance for developing affordable rental housing with an estimated cost of $8 billion in forgone revenue in 2014. The GAO found that the IRS conducted "minimal" oversight of the state housing finance agencies (HFAs) that award the tax credits to developers. The GAO said, "Monitoring, one of the internal control standards, should occur in the course of normal operations, be performed continually, and be ingrained in the agency's operations," yet the GAO found that the IRS has performed only seven audits of HFAs (of 56 total HFAs) between 1986 and 2015. The GAO further stated, "As a result of minimal monitoring, IRS does not know the extent of compliance monitoring by HFAs, which limits its ability to determine if the HFAs appropriately awarded credits to projects." The GAO also said the state entities "increasingly" have missed the deadline to submit their annual report to the IRS and "often submit incomplete or inaccurate forms." Grassley, a watchdog of the IRS and the Department of Housing and Urban Development, released the GAO report and made the following comment on it.

"This report confirms what we've seen again and again. The federal government is good at giving out money and tax breaks and terrible at checking on results. No one at the IRS or HUD seems to have any way of knowing whether a multi-billion-dollar program for low-income housing has worked as intended. This doesn't bring accountability, and it may or may not deliver affordable housing for people in need. The agencies need to step up their oversight for the sake of low-income people who need housing and the taxpayers who deserve accountability."

The GAO is performing subsequent reviews of the tax credit at Grassley's request.

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