may allocate for any calendar year is the portion of 
the State preservation credit ceiling allocated under 
this subsection for such calendar year to such agen-
cy. 
‘‘(2) STATE CEILING INITIALLY ALLOCATED TO 
HOUSING CREDIT AGENCIES.—Except as provided in 
paragraph (4), the State preservation credit ceiling 
for each calendar year shall be allocated to the hous-
ing credit agency of such State. If there is more 
than 1 housing credit agency of a State, all such 
agencies shall be treated as a single agency. 
‘‘(3) STATE PRESERVATION CREDIT CEILING.—
The State preservation credit ceiling applicable to 
any State and any calendar year shall be an amount 
equal to the sum of—
‘‘(A) the unused State preservation credit 
ceiling (if any) of such State for the preceding 
calendar year, 
‘‘(B) the sum of—
‘‘(i) $1.00 multiplied by the State 
population, 
‘‘(ii) $1,000,000, 
‘‘(iii) the amount of State preserva-
tion credit ceiling returned in the calendar 
year, plus
‘‘(iv) the amount (if any) allocated 
under paragraph (4) to such State by the 
Secretary. 
For purposes of clause (i), the unused State 
preservation credit ceiling for any calendar year 
is the excess (if any) of the sum of the amounts 
described in clauses (ii) through (iv) over the 
aggregate preservation credit dollar amount al-
located for such year. 
‘‘(4) UNALLOCATED CREDIT.—
‘‘(A) IN GENERAL.—In the event that a 
State does not allocate all of its preservation 
credit, such unallocated credit shall be allocated 
among qualified States for the succeeding cal-
endar year. 
‘‘(B) QUALIFIED STATE.—For purposes of 
subparagraph (A), the term ‘qualified State’ 
means, with respect to a calendar year, any 
State which allocates its entire State preserva-
tion credit from the preceding calendar year 
and for which a request is made to receive an 
allocation under subparagraph (C). 
‘‘(C) UNUSED PRESERVATION CREDIT CAR-
RYOVER.—For purposes of this paragraph, the
unused preservation credit carryover of a State 
for any calendar year is the excess (if any) of—
‘‘(i) the unused State preservation 
credit ceiling for the year preceding such 
year, over 
‘‘(ii) the aggregate preservation credit 
dollar amount allocated for such year. 
‘‘(D) ALLOCATED AMOUNT.—The amount 
allocated under this paragraph is the amount 
determined by the Secretary to bear the same 
ratio to the aggregate unused preservation cred-
it carryover of all States from the preceding 
calendar year as the population of the State 
bears to the population of all qualified States 
for the calendar year. For purpose of the pre-
ceding sentence, population shall be determined 
in accordance with section 146(j). 
‘‘(5) HOUSING CREDIT AGENCY DEFINED.—The 
term ‘housing credit agency’ has the meaning given 
such term by section 42(h)(8)(A). 
‘‘(f) RESPONSIBILITIES OF HOUSING CREDIT AGEN-
CY.—The housing credit agency (or an agent or other pri-
vate contractor of such agency) shall—
‘‘(1) determine whether the preservation enti-
ty’s plan for rehabilitation (if any) and operation of
the eligible multifamily housing property is viable for 
no less than 30 years, 
‘‘(2) monitor the affordability and use restric-
tions for the eligible multifamily housing property, 
and 
‘‘(3) notify the Internal Revenue Service as to 
any portion of such property which is out of compli-
ance. 
‘‘(g) RECAPTURE FOR NONCOMPLIANCE.—If the Sec-
retary determines that all or a portion of the multifamily 
housing property is out of compliance with the require-
ments of this section, the taxpayer’s tax under this chap-
ter for the taxable year shall be increased by the sum of—
‘‘(1) an amount equal to the amount which 
bears the same ratio to the total credit allowed to 
the taxpayer under subsection (a) as the taxpayer’s 
share of the portion of such property which is out 
of compliance bears to the entire property, plus 
‘‘(2) interest at the underpayment rate estab-
lished under section 6621 on the amount determined 
under paragraph (1) for each prior taxable year for 
the period beginning on the due date for filing the 
return for the taxable year for which the credit was 
allowed under subsection (a).