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November 21, 2022

Snider Page

Acting Director

Office of Civil Rights and Equal Employment Opportunity 

and Designated Federal Officer of TACRE

Department of the Treasury

1500 Pennsylvania Ave. NW

Washington, DC 20220

Dear Snider Page:

The Treasury Department has made a positive impact on thousands of distressed households 

during the national health emergency. Through emergency resources including the child tax 

credit, economic impact payments, and emergency rental assistance, the Department has 

afforded at-risk individuals and families a sense of economic stability and security.

The Treasury Department should continue to prioritize actions that have the potential to create 

economic mobility for people who have been historically marginalized by the US financial 

system. Understanding this requires a coordinated and strategic effort across multiple systems, 

there are additional actions Treasury could take to catalyze economic mobility for low and

moderate income black and indigenous people of color.

Mitigate impact of program cliffs and high effective marginal tax rates to increase assets of low 

to moderate income families.

The effective marginal tax rate (EMTR) is the percentage of an extra dollar of income that a 

benefit recipient loses due to income taxes, payroll taxes, and any decline in tax credits. For 

example, if a family earns an additional $400 during the year which prompts a $200 reduction 

in program benefits, this is an effective marginal tax rate of 50 percent on their new earnings. A 

program “cliff effect” refers to a marginal tax rate of 100 percent or more. This results from a 

loss of benefits that equals or exceeds the earnings gain. Due to a cliff effect, 100 percent or 

more of new earnings are eclipsed by benefit losses. According to a 2012 CBO report, people 

tend to work fewer hours when marginal tax rates are high, suggesting the fear of losing 

benefits creates a disincentive to make more money or build wealth. Economists have 

recommended different approaches to address high EMTR and cliff effects. For people nearing 

retirement, for example, some have suggested that lowering the means test or shielding 

pensioners from tax until their income reaches the means test cutout points could potentially

reduce EMTRs by 50 percent. Economists using recent data have shown that the child tax credit 

has significantly reduced poverty for recipient families with children, making this kind of credit 

defensible for people who qualify for means tested assistance benefits regardless of their 

parental status. We strongly encourage TACRE to recommend new policy or new policy 
2

*CSH is a Treasury designated CDFI that focuses on community thriving.

interpretations that could mitigate the impact of high EMTR and cliff effects on populations 

historically marginalized by the US financial system.

Remove administrative burdens that create barriers to receiving timely assistance through 

Treasury’s programs.

The Centers for Medicare & Medicaid Services (CMS) has found that greater reliance on 

electronic verifications has reduced the enrollment administrative burden on both States and 

individuals and has increased program integrity. CMS is now exploring ways to use data 

reported by non-CMS programs such as Social Security Administration’s SSI in making 

participant eligibility determinations, reducing the need for beneficiaries to submit duplicate 

information. We recommend that Treasury Department explore how programs such as 

Emergency Rental Assistance can be better integrated with housing assistance programs 

administered by the Department of Housing and Urban Development in order to facilitate 

and increase participation by populations historically marginalized by the US financial system. 

Enclosed are a few suggestions from one of our state partners on how this could be 

accomplished. 

Assist USDA with implementing section 22007 of the Inflation Reduction Act.

Black people and indigenous people of color have been victimized for centuries by domestic 

terrorism. Many of these acts have been rooted in fear of economic success that shifts power 

away from white dominant culture and creates intergenerational wealth for people of color.

The racism underlying these horrific acts has been prevalent throughout American systems. 

Systemic racism has been particularly evident in land use and ownership. Courts and historians 

have already determined that the agricultural system has discriminated against black farmers, 

ranchers, and forest landowners. Section 22007 of the Inflation Reduction Act of 2022 (“section 

22007”) directs the U.S. Department of Agriculture (USDA) to provide $2.2 billion in financial 

assistance for producers and landowners determined to have experienced discrimination in 

USDA's farm lending programs. This is not close to being sufficient to address centuries of land

loss and human trauma. However, it is an acknowledgement that more action is needed to 

address past discriminatory practices. USDA has held several listening sessions to request input 

on how it should design and implement this new program. One consistent theme in every 

session is an expression of distrust for USDA. During several sessions, participants 

recommended that impartial parties such as Treasury-designated Community Development 

Financial Institutions (CDFIs) design and implement this program with trusted farmer advocacy 

groups that can fairly represent BIPOC interests. Treasury should engage the USDA to learn 

more about how the CDFI Fund could assist with the section 22007 design and 

implementation effort which could be strengthened and made more reparative if leveraged 

with the $3.1 billion in loans/assistance provided through Section 22006 of the Inflation 

Reduction Act and other federal financial assistance.

Increase the number BIPOC-led CDFIs

The Community Reinvestment Act (CRA) is one of several laws enacted in the 1960s and 1970s 

to address fairness and financial inclusion in access to housing and credit. These fair lending 

laws prohibit discriminatory lending practices based on race and ethnicity. However, the laws
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*CSH is a Treasury designated CDFI that focuses on community thriving.

haven’t prevented banks from continuing practices that increase racial disparities in banking or 

rectified past discrimination by banks that denied racial minority groups access to financial 

services that build intergenerational wealth. According to the Brookings Institute, “there are 

[still] stark contrasts in access to credit for African Americans: Interest rates on business loans, 

bank branch density, local banking concentration in the residential mortgage market, and the 

growth of local businesses are markedly different in majority Black neighborhoods.” These 

contrasts can be directly attributed to actions undertaken by the US banking system. For this 

reason, a new framework for addressing past discriminatory practices and current racial 

disparities needs to be constructed. This framework must ensure community agency over 

financial resources. CDFIs can be an instrument for effecting this outcome.

Treasury-certified CDFIs address the development needs of small businesses and communities 

that have been underserved by conventional banks. Some have had much success in partnering

with banks in this endeavor although white-led CDFIs hold six times as many assets as black-led 

CDFIs. This is a contradiction in purpose of CDFI existence. We recommend that Treasury with 

TACRE’s assess how direct infusion of capital will allow existing and upcoming black-led CDFIs

to strengthen their balance sheets, build loan capacity and generate more revenue through 

interest income. In turn, black-led CDFIs can provide more affordable capital to communities 

and businesses they serve. 

Thank you for the opportunity to comment. We hope that TARCRE takes these comments into 

consideration in advising and making recommendations to the Offices of the Secretary and 

Deputy Secretary.

Marguerite Pridgen

Marguerite Pridgen

Director, Federal Policy

CSH*

Enclosure:

 As stated.
 1

Federal Regulatory Reforms To End Administrative Burdens In Housing

A nationwide housing crisis requires policies that respond with urgency and help Americans secure safe, quality housing as quickly as 

possible. Yet access to public assistance, rental subsidy vouchers, and affordable units often requires long and onerous processes involving 

extensive paperwork, in-person appointments, and valuable time that people facing housing instability or homelessness simply do not 

have. Applicants are often asked to repeatedly verify basic facts about their identity and eligibility for benefits to multiple government 

agencies. These burdens have a very real cost for Americans in need, causing families experiencing homelessness to live in shelter longer 

and allowing scarce affordable housing to sit vacant for months.

A large portion of units financed by municipalities are subject to federal standards, pursuant to financing from LIHTC, PBV Section 8, HOME, 

Tax-Exempt Bonds, and other programs. The following suggestions are proposed changes to HUD and IRS rules relating to these programs, 

some to be changed through statute, some through regulation, that can remove administrative burdens that keep Americans from getting 

the housing they need. We look forward to working with our partners in the federal government and advocacy to bring about change.

Proposed changes to HUD and IRS rules:

Rule/Requirement Challenges Proposal Citations

“120 Day Rule” –

all documents 

must be dated 

within 120 days.

• HUD allows for document to be dated 

within 120 days of receipt, while IRS 

requires document to be dated within 

120 of move-in.

• Documents “go stale” during processing 

due to reasons outside of the 

applicant’s control, e.g., construction 

delays, and all documentation must be 

resubmitted.

• Align interpretation of “120 days” 

between HUD and IRS. Allow for certain 

documents for fixed income sources (e.g. 

Social Security, Pensions, etc.) to be 

exempt from this rule as long as it is 

within the current calendar year, since 

these amounts do not change.

• Only require 120-day rule to be 

implemented at time of processing and 

certification, regardless of the actual 

date of move-in. I.e. Eligibility 

determination does not expire after 

initial qualification, prior to lease up.

• HUD 4350 5-13, 

Section B,b(1): 

• HUD 4350 5-16, 

Section B,1: 

• IRS 8823 guide 

Pg 4-30 

‘Documentation 

Requirements’

6 statements 

required for all 

checking accounts.

• 6 statements is excessive, especially for 

extremely low-income households with 

very few assets.

• The more statements submitted, the 

more the developer needs to review 

and scrutinize for other income sources 

that often are not significant.

Allow for the current balance of checking 

accounts to be accepted instead of 6, which 

would align with all other asset sources such 

as savings and retirement accounts.

HUD 4350.3 REV-1 

Appendix 3

Bank deposits 

must be 

scrutinized and 

explained.

• While the intent of this guidance from 

HUD and the IRS is to look for 

unreported sources of income, many 

applicants receive and send money 

electronically through their banks for 

everyday reasons that are unrelated to 

income sources (e.g. Venmo, Zelle, 

Cashapp, etc.)

• Requiring the applicant to explain every 

single deposit on 6 months of their bank 

account history is tedious and invasive.

HUD/IRS currently requires owners to use 

“due diligence” in identifying potential 

sources of unreported income. However, 

HUD must publish guidance on what 

qualifies a deposit needing an explanation so 

developers and agencies alike have clear 

instruction on when an applicant must 

clarify their bank deposits. This reasoning 

should be based in logic and reduce burden 

on the applicant.

• HUD Notice PIH 

2018-18

• IRS 8823 guide 

Page 4-7

EBT card balances 

must be 

documented 

through an ATM 

receipt or other

method.

• Award letters from the Public Assistance 

source of this cash card is also a 

required document, making this request 

redundant.

• Applicants with EBT cards often do not 

know how to retrieve a paper 

statement of their balance since they 

only use it as the source of their cash 

assistance and not for any other 

banking method.

• Because the EBT cards hold a cash 

balance, housing agencies are required 

to document these accounts as assets.

Adjust the definition of an asset, and 

exclude EBT cards.

HUD 4350 Section 

5-7, A
 2

Proposed changes to HUD and IRS rules continued:

Rule/Requirement Challenges Proposal Citations

Households 

comprised of full-time students 

may not qualify for IRS/HUD 

funded housing.

• Current IRS and HUD rules were

intended to prevent subsidized 

housing from becoming student 

housing. However, the other 

documentation requirements, layered 

with the restriction on guarantors, 

does not make this concern a reality.

• These rules disincentivize tenants 

from going back to school once in 

affordable housing.

• HUD and IRS requirements on the 

definition of a student and any 

exemptions to this rule are not 

consistent. IRS rules are more

restrictive.

• HUD and IRS must align 

their definitions of this 

rule. 

• Pass Section 203 of the 

Affordable Housing Credit 

Improvement Act 

(S.1136/H.R.2573), which 

clarifies that full-time 

students are eligible for 

federally-assisted so long 

as they meet all other 

eligibility criteria.

• IRC §152(f)(2)

• IRC §42(i)(3)(D)

Proposed changes to IRS rules:

Rule/Requirement Challenges Proposal Citations

For LIHTC, if total assets are less 

than $5K, an “Under $5,000 

Certification” form can be 

accepted with no backup. For 

Tax-Exempt Bonds (TEB), 

account 

statements/verifications are 

needed for all assets regardless 

of total value of household 

assets.

• LIHTC and TEB are often layered 

programs, so the more restrictive 

policy will always apply.

• By requiring the verification of assets 

under $5k, applicants are burdened 

when it is very unlikely that eligibility 

will be impacted.

Align requirements across 

LIHTC and TEB programs and 

allow the self-declaration of 

assets under $5k to be 

sufficient for TEB.

• 26 CFR § 1.42-5 

(b)(vii) ‘Monitoring 

compliance with 

low-income housing 

credit requirements’

• IRC §142(d)(3)

Proposed changes to HUD rules:

Rule/Requirement Challenges Proposal Citations

For Section 8 units, PHAs are 

required to conduct Employer 

Verifications via third-party 

system for all employed 

applicants. LIHTC has different 

verification rules.

• Extremely administratively 

burdensome.

• Most commonly redundant, as the 

information provided by the thirdparty system is the same as provided 

by the applicant from paystubs or taxreturn documentation.

• Recommendation for 

Section 8: Remove the 

requirement to perform 

on all applicants. Only 

make available when 

clarification is needed or a 

discrepancy is suspected. 

• Impactful change for 

Section 8 and LIHTC:

Allow LIHTC program to 

access the EIV and use EIV 

alone to verify income, 

therefore not requiring 

any documentation from 

the applicant.

• PIH 2017-12

• HUD 4350.3 5-13(A) 

Acceptable 

Methods of 

Verification:

• 26 CFR § 1.42-5

(b)(1)(vii), 

‘Monitoring 

compliance with 

low-income housing 

credit 

requirements’:

Section 8 qualification cannot 

serve as a proxy for LIHTC 

tenant income certification, 

despite sharing almost entirely 

the same documentation 

requirements and eligibility 

methodologies.

• The CFR rule on LIHTC certification 

explicitly allows this.

• However, the McKinney Act presently 

prevents PHAs from sharing 

participant information externally.

Legislative recommendation:

Amend the McKinney Act to 

have a carve-out for sharing 

of discrete participant 

information to meet the 

proxy definition in the CFR.

• 26 CFR § 1.42-5 

(b)(vii)

• Section 904 of the 

Stewart B. 

McKinney Act 

Homeless 

Assistance 

Amendments Act of 

1988 (McKinney 

Act) (42 U.S.C. 3544)