IRS Regulation 1.42-5 states that the requirement to verify the income of a low-income resident with a Section 8 voucher at a tax credit property is satisfied “if the public housing authority provides a statement to the building’s owner declaring that the tenant’s income does not exceed the applicable income limit under Section 42(g).”
Based on an exact reading of this language, the verification does not have to state a specific income – it only needs to state that the household income does not exceed the qualifying income limit.
However, this creates potential problems when certifying the income of households, since residents are required to sign a tenant income certification stating a specific income.
The IRS 8823 Guide states that a tenant income certification and supporting documentation are not sufficient unless, at a minimum, the following documents are included:
- Application/Income and Asset Questionnaire – a document completed by the household that the owner uses to gather information relevant to establishing all aspects of eligibility, including, but not limited to, household composition, income, income from assets, and student status.
- Verification of Income and Assets – All sources of income and assets must be verified to establish move-in eligibility. Each tenant file must contain an annual statement of income, household composition, and student status.
- Student Status (if required).
- Tenant Income Certification – Documents must be signed by all the adult members of a household prior to move-in and at the time of the annual recertification, and must state the anticipated annual gross income of the household.
Based on #4, tenant income certifications must state a specific amount of income. If the PHA verification does not provide a specific amount, what amount should be shown on the certification? The IRS has not addressed this issue, so it is left up to the States. Most (if not all) State agencies require that income verifications, including those from PHAs, state a specific income. Theoretically, a HFA could permit the resident to self-certify income on a TIC as long as there was a PHA verification stating that the income did not exceed the maximum. However, since all income shown on a TIC must generally be verified, this type of self-certification would probably not be acceptable to most agencies.
Our recommendation is that when accepting verifications from PHAs regarding the income of voucher residents, owners should request that the PHA provide the exact income that was verified for the resident. Only in cases where HFAs have specific written policies permitting an owner to accept PHA verification that income does not exceed the qualifying limits should such verification be accepted.