rp-14-50.pdf

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Administrative, Procedural, and Miscellaneous

26 CFR 601.105: Examination of returns and claims for refund, credit, or abatement;
determination of correct tax liability.
(Also Part 1, §§ 142 and 42; 1.103-8)

Rev. Proc. 2014-50

SECTION 1. PURPOSE
In the context of a Major Disaster, this revenue procedure provides temporary
relief from certain requirements of § 142(d) of the Internal Revenue Code for Issuers
and Operators. This revenue procedure also provides emergency housing relief for
individuals who are displaced by a Major Disaster from their principal residences in
certain Major Disaster Areas. This revenue procedure provides relief for both Bond
Projects and Bond/LIHTC Projects. For Bond/LIHTC Projects, see also Rev. Proc.
2014-49, I.R.B. 2014-37, which provides for emergency housing relief under § 42 in
response to Major Disasters. See section 4 of this revenue procedure for definitions of
certain capitalized terms appearing throughout this revenue procedure.

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SECTION 2. BACKGROUND
.01 Upon issuance of the President’s declaration of a Major Disaster, the Federal
Emergency Management Agency (FEMA) may designate particular cities, counties, or
other local jurisdictions covered by the declaration as eligible for Individual Assistance,
Public Assistance, or both.
1
With respect to some previous Presidential declarations of
Major Disasters, the Internal Revenue Service (Service) issued notices providing relief
from certain requirements under §§ 42 and 142(d) to facilitate emergency housing relief
for Displaced Individuals without regard to the income of those Displaced Individuals.
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.02 Generally, under § 103, private activity bonds that are not qualified bonds
within the meaning of § 141 are not tax-exempt. Section 141(e) provides in part that the
term “qualified bond” means any private activity bond if such bond is an exempt facility
bond, and § 142(a) provides in part that the term “exempt facility bond” means any bond
issued as part of an issue 95 percent or more of the net proceeds of which are to be
used to provide qualified residential rental projects. To be a qualified residential rental
project, a residential rental housing project must meet the requirements in § 142(d).
The requirements include the following rules.

1
FEMA generally publishes this designation in a notice in the Federal Register.
2
For relief under § 42, see e.g., Notice 2012-7, 2012-4 I.R.B. 308 (flooding in Iowa); Notice 2012-68,
2012-48 I.R.B. 574 (Hurricane Sandy); Notice 2013-40, 2013-25 I.R.B. 1254, and Notice 2013-47, 2013-
31 I.R.B. 120 (severe storms and tornadoes in Oklahoma); and Notice 2013-64, 2013-44 I.R.B. 438
(weather-related disasters in Colorado). For relief under § 142(d), see Notice 2013-9, 2013-9 I.R.B. 529
(Hurricane Sandy); Notice 2013-39, 2013-25 I.R.B. 1252, and Notice 2013-47(severe storms and
tornadoes in Oklahoma); and Notice 2013-63, 2013-44 I.R.B. 436 (weather-related disasters in Colorado).

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(1) At all times during the qualified project period, a specified percentage of the
residential units must be occupied by individuals whose income does not exceed
applicable income limits (the set-aside requirements). § 142(d)(1) and (d)(6).
(2) The qualified project period begins on the first day on which 10 percent of the
residential units in the Project are occupied and ends on the latest of (a) the date that is
15 years after the date on which 50 percent of the residential units in the Project are
occupied, (b) the first day on which no tax-exempt private activity bond issued with
respect to the Project is outstanding, or (c) the date on which any assistance provided
with respect to the Project under section 8 of the United States Housing Act of 1937
terminates. § 142(d)(2)(A).
(3) Generally, if the income of an occupant of a residential unit was at or below
the applicable income limits when occupancy of that unit began, the occupant’s income
is treated as continuing to be at or below those limits throughout that occupant’s
occupancy. If, however, the income of the occupant rises above a specified percentage
of the applicable income limit, the occupant’s income is treated as continuing to be at or
below the applicable income limit only if the next available unit in the same project that
meets certain criteria is occupied by a person whose income is at or below the
applicable income limit (the next-available-unit rule). § 142(d)(3)(B).
(4) The Owner may elect to treat the project as a deep rent skewed project, in
which case certain modifications to the next-available-unit rule, an additional set-aside
requirement, and certain rent restrictions apply. § 142(d)(4).

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(5) Under regulations issued under the predecessor to § 142(d), units in a
qualified residential rental project cannot be used on a transient basis. § 1.103-
8(b)(4)(i) of the Income Tax Regulations.
SECTION 3. SCOPE
This revenue procedure applies when the President has declared a Major
Disaster. This revenue procedure applies to Displaced Individuals and to all Projects,
Issuers, and Operators both inside and outside States containing a Major Disaster Area.
SECTION 4. DEFINITIONS
The following definitions apply for this revenue procedure.
.01 Agency. With respect to a Bond/LIHTC Project, the Agency is the
governmental housing credit agency that has jurisdiction over the Project.
.02 Bond Project. A Bond Project is a Project that is not subject to the low-
income housing credit requirements under § 42.
.03 Bond/LIHTC Project. A Bond/LIHTC Project is a Project that is also subject
to the low-income housing credit requirements under § 42.
.04 Displaced Individual. A Displaced Individual is an individual who is displaced
from his or her principal residence as a result of a Major Disaster and whose principal
residence was located in a Major Disaster Area designated as eligible for Individual
Assistance by FEMA.
.05 Issuer. The Issuer is the entity that issued tax-exempt, exempt facility bonds
for a Project under §§ 142(d) and 103.

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.06 Low-Income Individual. A Low-Income Individual is an individual whose
income either is at or below the applicable income limit or is treated as at or below the
applicable income limit under § 142(d)(3)(B).
.07 Major Disaster. A Major Disaster is an event for which the President has
declared a major disaster under the Robert T. Stafford Disaster Relief and Emergency
Assistance Act, 42 U.S.C. 5121 et seq.
.08 Major Disaster Area. A Major Disaster Area is any city, county, or other local
jurisdiction for which a Major Disaster has been declared by the President and which
has been designated by FEMA as eligible for Individual Assistance, Public Assistance,
or both.
.09 Market-Rate Unit. A Market-Rate Unit is a unit occupied by an individual that
is not a Low-Income Individual.
.10 Operator. The Operator of a Project is the person to whom the Issuer or
Owner delegates responsibility for ensuring that the Project continues to meet the
requirements applicable to qualified residential rental projects under §§ 142(d) and 103.
(That person may be, but does not have to be, the Owner.)
.11 Owner. An Owner is the owner of a Project.
.12 Project. A Project is a qualified residential rental project that is financed with
exempt facility bonds under § 142(d), whether or not it is also subject to the low-income
housing credit requirements under § 42.
.13 Temporary Housing Period. A Temporary Housing Period is the period, if
any, beginning on the first day of the incident period, as determined by FEMA, and

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ending on the date determined by the Issuer under section 5.02 of this revenue
procedure.
SECTION 5. EMERGENCY HOUSING RELIEF — REQUIREMENTS AND
RESTRICTIONS
.01 Requirements for Relief. For an Operator to use the relief provided in
section 6 of this revenue procedure, the conditions in this section 5 must be satisfied.
.02 Issuer Approval.
(1) The Issuer provides written approval to the Operator for use of the Project to
house Displaced Individuals and specifies the date on which the Temporary Housing
Period for the Project ends. The Temporary Housing Period cannot exceed 12 months
from the end of the month in which the President declared the Major Disaster.
(2) Issuer approval is required even if a Bond/LIHTC Project subject to Rev.
Proc. 2014-49 receives approval from the Agency (as contemplated in Section 12.02(1)
of Rev. Proc. 2014-49). An Issuer that provides approval for a Bond/LIHTC Project
must adopt for purposes of § 142(d) and this revenue procedure the same Temporary
Housing Period that the Agency adopts for purposes of § 42 for that Bond/LIHTC
Project.
.03 Protection of Existing Tenants. No existing tenant whose income is, or is
treated as, at or below an applicable income limit under § 142(d) may be evicted or
otherwise have his or her occupancy terminated solely to provide emergency housing
relief for a Displaced Individual.
.04 Recordkeeping Requirements. The Operator complies with the
recordkeeping requirements in section 7 of this revenue procedure.

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.05 Rent Restrictions. If units are treated as occupied by Low-Income Individuals
under section 6 of this revenue procedure because they house Displaced Individuals,
then rent restrictions are applicable in deep rent skewed Projects and in Bond/LITHC
Projects. In these cases, the amounts that the Displaced Individuals are charged as
gross rent must satisfy §§ 142(d)(4)(B) and 42(g)(2) to the extent that those provisions
are applicable.
.06 Project Meets All Remaining Requirements. Except as expressly provided in
this revenue procedure, a Project meets all other rules and requirements of §§ 142(d)
and 103.
SECTION 6. EMERGENCY HOUSING RELIEF — IMPLEMENTATION
.01 Discretion to Apply Relief.
(1) This revenue procedure authorizes but does not require provision of
emergency housing relief to Displaced Individuals during the Temporary Housing
Period. If an Operator chooses not to provide emergency housing relief under sections
5, 6, and 7 of this revenue procedure, then all of the rules under § 142(d) apply.
(2) If an Operator chooses to provide emergency housing relief under sections 5,
6, and 7 of this revenue procedure then –
(A) The Operator may provide emergency housing relief for less than the full
Temporary Housing Period;
(B) If a Displaced Individual has demonstrated qualification as low income and
the Operator wishes to accept the individual as a tenant, the Operator may either accept
the Displaced Individual as a low-income tenant applying all the rules under § 142(d) or

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provide emergency housing relief to the Displaced Individual under sections 5, 6, and 7
of this revenue procedure; and
(C) If a Displaced Individual has not demonstrated qualification as low income
and the Operator wishes to accept the individual as a tenant, the Operator may either
accept the Displaced Individual as a tenant that is not a low-income tenant or provide
emergency housing relief to the Displaced Individual under sections 5, 6, and 7 of this
revenue procedure.
.02 Satisfaction of the Non-Transient Use Requirement. The occupancy of a unit
in a Project by a Displaced Individual during the Temporary Housing Period is treated
as satisfying the non-transient use requirement under § 1.103-8(b)(4).
.03 Treatment of Displaced Individuals Under the Next-Available-Unit Rule.
During the Temporary Housing Period, for purposes of determining compliance with the
next-available-unit rule under §142(d)(3)(B), an Operator disregards any unit then
occupied by one or more Displaced Individuals and applies the rule based solely on
occupancy by persons who are not Displaced Individuals. See sections 6.04 and 6.05
of this revenue procedure for the treatment of income of Displaced Individuals for
purposes of § 142(d).
.04 Income Qualification of Units in Bond Projects During Temporary Housing
Period. If a Displaced Individual begins occupancy of a unit in a Bond Project during
the Temporary Housing Period, then the unit retains the status it had immediately
before that occupancy. The actual income of the Displaced Individual occupying the
unit is disregarded during the Temporary Housing Period for purposes of § 142(d). That
is ̶

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(1) If a unit in a Bond Project was a unit occupied by a Low-Income Individual, a
Market-Rate Unit, a unit never previously occupied, or an unavailable unit, then the unit
remains as such while occupied by a Displaced Individual during the Temporary
Housing Period, regardless of the occupancy by, or income of, the Displaced Individual.
See Rev. Proc. 2004-39, 2004-2 C.B. 49 (treating never previously occupied units as
unavailable).
(2) The income of the Displaced Individual occupying the unit does not affect
whether the Bond Project satisfies the set-aside requirement, including the additional
set-aside requirement for deep rent skewed Projects.
.05 Income Qualification of Units in Bond/LIHTC Projects During Temporary
Housing Period. During the Temporary Housing Period, a unit in a Bond/LIHTC Project
then occupied by a Displaced Individual is treated for purposes of § 142(d) in a manner
similar to how it is treated for purposes of § 42 under Rev. Proc. 2014-49. That is,
during the Temporary Housing Period ̶
(1) The actual income of the Displaced Individual occupying the unit is
disregarded for purposes of § 142(d);
(2) To the extent provided in Rev. Proc. 2014-49, if a Displaced Individual takes
occupancy of a unit in a Bond/LIHTC Project during the first year of the credit period,
the unit is treated as a unit occupied by a Low-Income Individual; and if, after the first
year of the credit period, a Displaced Individual begins occupancy of a unit, that unit
retains the status that it had before occupancy by the Displaced Individual, whether as a
unit occupied by a Low-Income Individual, a Market-Rate Unit, a unit never previously
occupied, or an unavailable unit, as the case may be.

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.06 Treatment of a Unit Vacated by a Displaced Individual.
(1) If a Displaced Individual vacates a unit in a Project before the end of the
Temporary Housing Period, that unit retains the status provided under section 6.04 or
section 6.05 of this revenue procedure until it is occupied by the next tenant, even if the
next tenant takes occupancy after the end of the Temporary Housing Period. If the next
tenant is also a Displaced Individual and begins occupancy during the Temporary
Housing Period, the status of the unit is determined under section 6.04 or 6.05 of this
revenue procedure. If the next tenant is not a Displaced Individual or begins occupancy
after the end of the Temporary Housing Period, the status of the unit is determined
under § 142(d).
(2) For as long as a unit retains its status because of the application of this
section 6.06, the relief provided under section 6.08 of this revenue procedure applies to
that unit. In particular, the unit is disregarded for determining the start of the qualified
project period.
.07 Income Qualifications when Temporary Housing Period Ends.
(1) If a Displaced Individual continues to occupy a unit in the Project at the end of
the Temporary Housing Period, then except as provided in section 6.07(3) of this
revenue procedure, the status of the unit occupied by the Displaced Individual and the
income of that individual are re-evaluated as though the individual commenced
occupancy of the unit on the day immediately following the end of the Temporary
Housing Period. For example, a unit is a Market-Rate Unit beginning immediately after
the end of the Temporary Housing Period if, immediately after the end of the Temporary
Housing Period, the Displaced Individual’s income exceeds the applicable income limit.

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(2) If the Project fails to comply with the set-aside requirement of § 142(d) solely
because of continued occupancy of a unit after the Temporary Housing Period by a
Displaced Individual, a 60-day period is allowed for correction.
(3) If the Displaced Individual was accepted as a low-income tenant applying all
the rules under § 142(d) as permitted by section 6.01(2)(B) of this revenue procedure,
then all the rules under § 142(d) apply to the Displaced individual, including
§ 142(d)(3)(B).
.08 Qualified Project Period.
(1) Start of the Qualified Project Period. Occupancy of a unit by a Displaced
Individual during the Temporary Housing Period does not count for determining the
beginning of the qualified project period under § 142(d)(2)(A). Thus, this occupancy is
not used to determine the first day on which 10 percent of the residential units in a
Project are occupied for purposes of § 142(d)(2)(A).
(2) End of the Qualified Project Period. Occupancy of a unit in a Project by any
tenant (whether a Displaced Individual or someone who is not a Displaced Individual)
counts for purposes of determining the end of the qualified project period under
§ 142(d)(2)(A)(i). However, solely for purposes of § 142(d)(2)(A)(iii), the Project is
treated as continuing to receive assistance under section 8 of the United States
Housing Act of 1937 until the end of the Temporary Housing Period plus 180 days.
SECTION 7. EMERGENCY HOUSING RELIEF — RECORDKEEPING
.01 Operators must maintain certain information concerning each Displaced
Individual temporarily housed in the Project under sections 5 and 6 of this revenue

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procedure. For each Displaced Individual, the records must contain the following items
in a statement signed by the Displaced Individual under penalties of perjury:
(1) The name of the Displaced Individual;
(2) The address of the principal residence at the time of the Major Disaster of the
Displaced Individual;
(3) The Displaced Individual’s social security number; and
(4) A statement that he or she was displaced from his or her principal residence
as a result of a Major Disaster and that his or her principal residence was located in a
city, county, or other local jurisdiction that is covered by the President’s declaration of a
Major Disaster and that is designated as eligible for Individual Assistance by FEMA
because of the Major Disaster.
.02 The Operator must maintain a record both of the Issuer’s approval of the
Project’s use for Displaced Individuals and of the approved Temporary Housing Period.
The Operator must report to the Issuer at the end of the Temporary Housing Period a
list of the names of the Displaced Individuals and the dates the Displaced Individuals
began occupancy. The Operator must also provide any dates Displaced Individuals
ceased occupancy and, if applicable, the date each unit occupied by a Displaced
Individual becomes occupied by a subsequent tenant.
.03 The Operator must maintain the records described in this section as part of
the annual compliance monitoring process imposed under § 142(d) and provide this
information to the Service upon request. For purposes of § 42, Operators of
Bond/LIHTC Projects are also subject to the recordkeeping requirements of Rev. Proc.
2014-49.

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SECTION 8. EFFECTIVE DATE
This revenue procedure is effective for Major Disasters declared on or after
August 21, 2014.
SECTION 9. PAPERWORK REDUCTION ACT
The collection of information contained in this revenue procedure has been
reviewed and approved by the Office of Management and Budget in accordance with
the Paperwork Reduction Act (44 U.S.C. 3507) under control number 1545-2237.
A Federal Agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless the collection of information displays a
valid OMB control number.
The collection of information in this revenue procedure is in section 7. This
information is required to enable the Service to verify whether the Operators and
Displaced Individuals satisfy various requirements for the relief provided in this revenue
procedure. The collection of information is required to obtain a benefit. The likely
respondents are individuals, businesses, and state and local governments.
The estimated total annual recordkeeping burden is 675 hours.
The estimated annual burden per recordkeeper is approximately 30 minutes. The
estimated number of recordkeepers is 1,350.
Books or records relating to a collection of information must be retained as long
as their contents may become material to the administration of the internal revenue law.
Generally, tax returns and tax return information are confidential, as required by § 6103.

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SECTION 10. DRAFTING INFORMATION
The principal authors of this revenue procedure are Timothy L. Jones and
Spence Hanemann of the Office of Associate Chief Counsel (Financial Institutions &
Products). For further information regarding this revenue procedure, contact Mr.
Hanemann at (202) 317-6980 (not a toll-free call).