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IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis) · 2026 edition · updated 2026-07-29 · United States

Before beginning the examination, the file should be reviewed and information analyzed to determine the scope and depth of the examination. For audits of the IRC §42 credit, the analysis should also include consideration of information presented on IRS forms, as well as on the tax return itself, including:

  • Form 8609, Low-Income Housing Credit Allocation and Certification

  • Form 8823, Low-Income Housing Credit Agencies Report of Noncompliance or Building Disposition

  • Form 8609-A, Annual Statement for Low-Income Housing Credit

  • Balance Sheet

  • Schedule K and Schedules K-1

Based on the analysis of available information, a reasonable projection of the potential additional tax can be made. The estimate should include the current year adjustment, credit recapture under IRC §42(j) from prior years, and revenue protection if the potential adjustment affects future years of the 15-year compliance period.

An Information Document Request (IDR) should be prepared and sent to the taxpayer with the initial contact letter as specific information will be needed to audit IRC §42 issues. See Exhibit 2-1, IDR & Crosswalk to Issues

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▸Contents — IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis)
IRS IRC § 42 Audit Technique Guide — Part I (Introduction and Pre-Contact Analysis)

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