IRS Seeks Comments on Information Collections for LIHTC, REMICs, and Federal Hires

IRS Opens Comment Period on Routine Compliance Extensions

As part of its ongoing efforts to ensure tax compliance and efficient administration, the Internal Revenue Service (IRS) is soliciting public comment on several Information Collection Requests (ICRs). These ICRs pertain to forms used in various contexts, including federal hiring, mortgage investments, and low-income housing initiatives. While the IRS proposes 'no change' to the existing paperwork burdens associated with these forms, the exercise underscores the significant regulatory obligations in these sectors.

Ensuring Tax Compliance for Federal Appointees

Building on ongoing efforts to ensure tax compliance and efficient administration, the Internal Revenue Service (IRS) is soliciting public comment on several Information Collection Requests (ICRs). These ICRs pertain to forms used in various contexts, including federal hiring, mortgage investments, and low-income housing initiatives. While the IRS proposes 'no change' to the existing paperwork burdens associated with these forms, the exercise underscores the significant regulatory obligations in these sectors.

Specifically, the IRS seeks to extend its approval for Form 14767, Consent to Disclose Tax Compliance Check. This form exists because of Section 6103(c) of the Internal Revenue Code, which generally prohibits the IRS from disclosing a taxpayer's confidential tax information to a third party. Form 14767 provides the explicit consent required for the IRS to share an individual's tax compliance status with a federal agency considering them for appointment.

The form authorizes the IRS to prepare a Tax Compliance Report (TCR), which informs the hiring agency whether the appointee has any outstanding tax liabilities or unfiled returns. This information is a crucial factor in determining suitability for government employment, particularly for positions requiring security clearances or access to sensitive information. The IRS estimates that this requirement affects individuals and households, resulting in approximately 46,000 responses annually, with an estimated total burden of 7,664 hours.

Reporting Mandates for Mortgage Conduits and CDOs

The previous section discussed the use of Form 14767 and the Tax Compliance Report (TCR), which informs the hiring agency whether the appointee has any outstanding tax liabilities or unfiled returns. This information is a crucial factor in determining suitability for government employment, particularly for positions requiring security clearances or access to sensitive information. The IRS estimates that this requirement affects individuals and households, resulting in approximately 46,000 responses annually, with an estimated total burden of 7,664 hours.

Shifting gears to investment vehicles, the IRS also seeks comment on information returns for Real Estate Mortgage Investment Conduits (REMICs) and issuers of Collateralized Debt Obligations (CDOs). Specifically, the focus is on Form 8811, Information Return for Real Estate Mortgage Investment Conduits (REMICs) and Issuers of Collateralized Debt Obligations.

A REMIC, governed by Internal Revenue Code (IRC) Sections 860A through 860G, is an entity that holds a fixed pool of mortgages and issues multiple classes of interests to investors. It is generally treated as a flow-through entity, meaning the income is taxed at the investor level, not at the REMIC level.

The challenge arises because of the complex computations required at each level of these investment structures, as well as the use of nominees. These factors can prevent the ultimate investors from receiving timely Forms 1099 and other information necessary to prepare their tax returns. Form 8811 addresses this problem by collecting information that the IRS publishes, allowing brokers and other nominees to contact the REMICs or CDO issuers directly to request the necessary financial data to accurately and promptly issue Forms 1099 to the actual interest holders. Without this mechanism, it can be exceedingly difficult for brokers to obtain the information required to fulfill their tax reporting obligations under Section 6045, which requires brokers to report sales of securities to the IRS.

Heavy Burden: The Low-Income Housing Tax Credit

Following our discussion of REMIC reporting and the measures the IRS is taking to facilitate accurate 1099 issuance, we turn to the Low-Income Housing Tax Credit (LIHTC) program established under Section 42 of the Internal Revenue Code. This section provides a tax incentive for the construction or rehabilitation of affordable rental housing, a sector vital to community development but often burdened by complex compliance requirements.

The IRS is seeking comment on the information collection requirements associated with LIHTC, specifically regarding Forms 8610, 8609, and 8609-A. These forms are essential for administering and monitoring the LIHTC program, but they also represent a significant compliance burden for state agencies and building owners.

Here's a breakdown of the roles these forms play:

• Form 8610, Low-Income Housing Credit Allocation Certification: State housing credit agencies (Agencies) are required by Internal Revenue Code section 42(l)(3) to report annually the amount of low-income housing credits that they allocated to qualified buildings during the year. Agencies report the amount allocated to the building owners and to the IRS in Part I of Form 8609. Carryover allocations are reported to the Agencies in carryover allocation documents. The Agencies report the carryover allocations to the IRS on Schedule A (Form 8610). Form 8610 is a transmittal and reconciliation document for Forms 8609, Schedule A (Form 8610), binding agreements, and election statements.
• Form 8609, Low-Income Housing Credit Allocation Certification: Building owners use Form 8609 to obtain a housing credit allocation from the housing credit agency, certifying that their building meets the requirements of Section 42. A separate Form 8609 must be issued for each building in a multiple building project.
• Form 8609-A, Annual Statement for Low-Income Housing Credit: Building owners must file Form 8609-A annually for each year of the 15-year compliance period to report compliance with the low-income housing provisions and calculate the low-income housing credit. The owner files one Form 8609–A for the allocation(s) for the acquisition of an existing building and a separate Form 8609–A for the allocation(s) for rehabilitation expenditures.

The sheer volume of work associated with these forms is substantial. The IRS estimates the total annual burden hours for Form 8609 and Form 8609-A alone at 428,265 hours, reflecting the complexity of Section 42 and the ongoing reporting requirements for LIHTC projects.

The IRS is specifically seeking comments on:

• Whether the collection of information is necessary for the proper performance of the functions of the agency.
• The accuracy of the agency’s estimate of the burden of the collection of information.
• Ways to enhance the quality, utility, and clarity of the information to be collected.
• Ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.
• Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

Industry Impact and Opportunity to Comment

As detailed above, the IRS is seeking public input on the accuracy of its information collection burden estimates. While no changes to the underlying rules governing Real Estate Mortgage Investment Conduits (REMICs) under Internal Revenue Code (IRC) Sections 860A through 860G, or the reporting requirements for federal appointees via Form 14767 and IRC Section 6103(c) are being proposed, the practical burden of compliance remains a significant factor for affected industries. This is particularly true for those involved with the Low-Income Housing Tax Credit (LIHTC) under IRC Section 42, where compliance costs continue to rise even as project performance weakens.

Businesses and state governments, especially those involved in affordable housing development and the securitization of mortgages, should consider the impact of these information collection requirements on their operations. Stakeholders have until March 23, 2026, to submit comments to Andres Garcias at the IRS, either via mail or email (pra.comments@irs.gov, including ‘‘OMB Number: 1545–1099’’ in the subject line). The IRS is specifically interested in feedback regarding the accuracy of its burden estimates and suggestions for technological improvements that could ease the compliance workload.