1. (a)

   1. (1) I.R.C. § 42 requires that recertification of residents be completed on at least an annual basis.

   2. (2)

      1. (A) Annual recertification is crucial in identifying:

2. (i) The one hundred forty percent (140%) rule situation;

   1. (ii) Student status; and

      1. (iii) Household composition changes.
      2. (B) The one hundred forty percent (140%) rule is discussed in 15 CAR § 86-310.

3. (b)

   1. (1) The procedure for annual recertifications is virtually the same as determining initial income eligibility.

   2. (2) Owners/managers must contact the tenant and obtain an application with:

      1. (A) An accurate count of the current number of household members;
      2. (B) Information about student status of each member of the household;
      3. (C) An accurate list of income sources, including assets, for the coming year; and
      4. (D) Tenant’s written authorization to verify household income, assets, etc.
   3. (3) The owner/manager will compare income to one hundred forty percent (140%) of the current income limit.
   4. (4) Any changes in household size must be reflected.

   5. (5) If the household's income at recertification exceeds one hundred forty percent (140%) of the income limit, the available unit rule will apply.

      1. (c)
   6. (1) The preferred method for income verification is third-party written verification.

   7. (2) If third-party verification is impossible (e.g., self-employed, extended delay, etc.) owners or managers must obtain and review appropriate alternative documentation.

      1. (d) Failure to recertify tenants on an annual basis is cause for the Arkansas Development Finance Authority to issue Internal Revenue Service Form 8823.

4. (e) Report of noncompliance.

   1. (1) The timing of the recertification is critical to maintaining compliance with the tax credit program.
   2. (2) Subsequent recertifications must be completed within one hundred twenty (120) days of the anniversary of the move-in date.
   3. (3) When additional adult individuals join the household, the effective date will remain the same until the unit is completely vacated.
5. (f) See policy pertaining to one hundred percent (100%) LIHTC properties policies.

Codification Notes: "LIHTC" means low-income housing tax credit.