Reportable Transactions and the "Forgotten" Historic Rehabilitation Tax Credit

The Internal Revenue Service recently released Revenue Procedure 2007-20 to the cheers of the low-income housing tax credit (LIHTC) and New Markets Tax Credit (NMTC) investment community. Revenue Procedure 2007-20 specifically excluded LIHTC transactions from being considered reportable transactions under the U.S. Treasury Department's tax shelter reporting regulations. LIHTC limited liability corporate investors breathed a collective sigh of relief, but concern remains about the status of federal Historic Rehabilitation Tax Credits (HTC). Why did the Internal Revenue Service (IRS) fail to extend this relief to HTC transactions? What is the effect of these regulations for projects involving both LIHTC and HTC, or NMTC and HTC? While the results are sorted out by the IRS, we have advised our banking and other institutional investors to continue to make protective disclosures to the IRS when investing in funds or properties involving HTC.