IRS Requests Comments on Low-Income Housing, Whistleblower, and Space Activity Forms

IRS Opens Comment Period on Housing Credits, Whistleblowers, and Space Income

The IRS is soliciting public input on the information collection burdens associated with three distinct tax areas: Low-Income Housing Credits (LIHC), Whistleblower Award withholding, and the sourcing of income from Space and Ocean activities. These requests are for extensions of currently approved collections, meaning no major rule changes are proposed. However, this represents an opportunity for stakeholders to challenge the IRS's estimated time burdens for compliance. The common deadline for submitting comments is March 23, 2026.

Low-Income Housing: Scrutinizing the Carryover and Certification Burden

The IRS is seeking public feedback on the information collection burdens associated with Forms used to administer the Low-Income Housing Credit (LIHC) program. Specifically, the Service is reviewing the burdens related to carryover allocations and the certification process, managed through Form 8610 and the Form 8609 series.

• Form 8610, Buildings Qualifying for Carryover Allocations: State housing credit agencies use this form to report to the IRS carryover allocations of low-income housing credits to qualified buildings. These agencies are required by Internal Revenue Code section 42(l)(3) to report annually the amount of credits allocated to qualified buildings during the year, detailing the amounts allocated to building owners. Form 8610 functions as a transmittal and reconciliation document, tying together Forms 8609, Schedule A (Form 8610), binding agreements, and election statements.
• Carryover Allocation Defined: Under IRC Section 42(h)(1)(E), a "carryover allocation" allows a project to extend the deadline for being "placed in service" (PIS) to the end of the second calendar year following the initial credit allocation, provided certain conditions are met. A key requirement is meeting the "10% test"—incurring more than 10% of the project’s reasonably expected basis typically within the year of allocation or six months after.

The estimated burden for Form 8610 is 6,738 hours annually, affecting 53 state, local, or tribal government respondents.

• Form 8609 and 8609-A, Low-Income Housing Credit Allocation Certification and Annual Statement: Building owners use these forms to claim the LIHC. Form 8609 is used to obtain a housing credit allocation from the housing credit agency. A separate Form 8609 must be issued for each building in a multiple building project. The form also serves to certify certain information. Form 8609–A is filed by a building owner to report compliance with the low-income housing provisions and calculate the low-income housing credit.

The IRS estimates a total annual burden of 428,265 hours for the Form 8609 series, impacting approximately 33,000 respondents. The primary affected parties are state housing agencies (regarding allocations) and building owners (regarding compliance and credit calculation).

The IRS is specifically soliciting comments on whether these information collections remain necessary for the proper performance of the agency's functions, the accuracy of the estimated burden, and ways to minimize the burden on respondents.

Whistleblowers: Minimizing Withholding on Awards

Continuing from the discussion on housing credits, the IRS also seeks feedback on information collection related to whistleblower awards, specifically concerning Form 14693, 'Application for Reduced Rate of Withholding on Whistleblower Award Payment'. This form addresses a critical issue for whistleblowers who receive awards under Section 7623(b), which governs awards for information leading to the detection of tax underpayments.

Form 14693 allows whistleblowers to apply for a reduction in the amount of taxes withheld from their award payments. This is crucial because whistleblowers often incur significant attorney fees and court costs to pursue their claims. Under Section 62(a)(21), legal fees paid in connection with a tax whistleblower award are deductible "above-the-line," meaning they directly reduce the whistleblower's Adjusted Gross Income (AGI). By substantiating these expenses before the award payment, whistleblowers can avoid over-withholding and a potential delay in receiving their net award. The form must be submitted within 30 days of receiving notice of an award to be effective.

While the estimated number of respondents is relatively low—approximately 10 individuals annually—the significance of this form for those individuals is substantial. Without it, the IRS might over-withhold taxes, forcing the whistleblower to wait until filing their annual income tax return to recover the excess. The IRS estimates the total annual burden hours associated with Form 14693 at just 8 hours, with each response taking approximately 45 minutes. The IRS is seeking to extend the currently approved collection, confirming the necessity and accuracy of this process despite the low respondent volume.

Space and Ocean Activities: Sourcing Income Rules

Transitioning from whistleblower considerations, the IRS is also requesting an extension of a previously approved information collection concerning the source of income from certain space and ocean activities, specifically addressing regulations under Section 863(d). Section 863(d) governs the sourcing of income derived from activities conducted in space or international waters—areas not within the jurisdiction of any specific country, U.S. possession, or the United States itself.

The final regulations, initially outlined in Treasury Decision (TD) 9305, primarily affect businesses deriving income from:

• Activities conducted in space.
• Activities conducted on or under water not within the jurisdiction of a foreign country, a U.S. possession, or the United States (international waters).
• The transmission of communications.

Under Section 863(d), the general rule dictates that income from "space or ocean activity" is sourced based on the taxpayer's residence. For U.S. persons, such income is treated as U.S. source income, while for foreign persons, it is considered foreign source income.

The IRS estimates that approximately 250 business or other for-profit organizations are affected by these regulations. The estimated time per respondent is 5 hours, leading to a total estimated annual burden of 1,500 hours. The regulations involved are under OMB Control Number 1545–1718.

Submission Details and Industry Impact

As a follow-up to the sourcing rules established under Treasury Decision 9305, which implemented final regulations under Section 863(d) governing the source of income from certain space and ocean activities—where income from "space or ocean activity" is sourced based on the taxpayer's residence—the IRS is soliciting public comments on the information collection requests associated with these notices.

To ensure consideration, written comments must be received by March 23, 2026. Submissions can be directed to:

• Mail: Andres Garcia, Internal Revenue Service, Room 6526, 1111 Constitution Avenue NW, Washington, DC 20224.
• Email: pra.comments@irs.gov. Please include the relevant OMB Control Number in the subject line:
  • For Low-Income Housing Credit (Forms 8609 and 8609-A): OMB Control No. 1545–0988
  • For Whistleblower Award Withholding (Form 14693): OMB Control No. 1545–2273
  • For Space and Ocean Activity Income Sourcing (TD 9305): OMB Control No. 1545–1718

Industry Impact: Winners and Losers

• Winners: Tax practitioners now have a formal avenue to voice concerns and provide feedback on the accuracy of the IRS's burden estimates related to these information collections. This includes commenting on the time required to complete forms, understand regulations, and comply with reporting requirements.
• Losers: Those hoping for substantive deregulation will likely be disappointed. These notices primarily focus on extending existing information collections rather than fundamentally altering regulatory requirements.

The deadline for submitting comments is March 23, 2026.