Renters Tax Credit Act of 2021

Bill: 117-s-2554
Sponsor: full_name: Sen. Brown, Sherrod [D-OH]
Introduced: 2021-07-29
Policy area: Taxation
Latest action: action_date: 2021-07-29
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2021-07-29
action_desc: Introduced in Senate
text: <p><strong>Renters Tax Credit Act of 2021</strong></p> <p>This bill allows owners of rental buildings who provide reductions in rent to their low-income tenants a refundable tax credit for a specified percentage of the difference between market rent and 30% of the monthly family income of such tenants. The bill allocates credit amounts to states for distribution to participating taxpayers.</p> </p>

tv_txt: II 117th CONGRESS 1st Session S. 2554 IN THE SENATE OF THE UNITED STATES July 29, 2021 Mr. Brown (for himself and Mr. Wyden ) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide a refundable tax credit to taxpayers who provide reductions in rent to their tenants under State rental reduction programs, and for other purposes.

1. Short title This Act may be cited as the Renters Tax Credit Act of 2021 . 2. Renters credit (a) In general Subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 36B the following new section: 36C. Renters credit (a) Determination of credit amount (1) In general There shall be allowed as a credit against the tax imposed by this subtitle for any taxable year an amount equal to the sum of the amounts determined under paragraph (2) for all qualified buildings with a credit period which includes months occurring during the taxable year. (2) Qualified building amount The amount determined under this paragraph with respect to any qualified building for any taxable year shall be an amount equal to the lesser of— (A) the aggregate qualified rental reduction amounts for all eligible units within such building for months occurring during the taxable year which are within the credit period for such building, or (B) the rental reduction credit amount allocated to such building for such months. (3) Qualified building For purposes of this section— (A) In general The term qualified building means any building which is residential rental property (as defined in section 168(e)(2)(A)) of the taxpayer with respect to which— (i) a rental reduction credit amount has been allocated by a rental reduction credit agency of a State, and (ii) a qualified rental reduction agreement is in effect. (B) Building not disqualified by other assistance A building shall not fail to be treated as a qualified building merely because— (i) a credit was allowed under section 42 with respect to such building or there was any other Federal assistance in the construction or rehabilitation of such building, (ii) the rehabilitation credit determined under section 47 was allowed under section 38 with respect to such building, or (iii) Federal rental assistance was provided for such building during any period preceding the credit period. (b) Qualified rental reduction amount For purposes of this section— (1) In general The term qualified rental reduction amount means, with respect to any eligible unit for any month, an amount equal to the applicable percentage (as determined under subsection (e)(1)) of the excess of— (A) the applicable rent for such unit, over (B) the family rental payment required for such unit. (2) Applicable rent (A) In general The term applicable rent means, with respect to any eligible unit for any month, the lesser of— (i) the amount of rent which would be charged for a substantially similar unit with the same number of bedrooms in the same building which is not an eligible unit, or (ii) an amount equal to the market rent standard for such unit. (B) Market rent standard (i) In general The market rent standard with respect to any eligible unit is— (I) the small area fair market rent determined by the Secretary of Housing and Urban Development for units with the same number of bedrooms in the same zip code tabulation area, or (II) if there is no rent described in subclause (I) for such area, the fair market rent determined by such Secretary for units with the same number of bedrooms in the same county. (ii) State option A State may in its rental reduction allocation plan provide that the market rent standard for all (or any part) of a zip code tabulation area or county within the State shall be equal to a percentage (not less than 75 nor more than 125) of the amount determined under clause (i) (after application of clause (iii)) for such area or county. (iii) Minimum amount Notwithstanding clause (i), the market rent standard with respect to any eligible unit for any year in the credit period after the first year in the credit period for such unit shall not be less than the market rent standard determined for such first year. (3) Family rental payment requirements (A) In general Each qualified rental reduction agreement with respect to any qualified building shall require that the family rental payment for an eligible unit within such building for any month shall be equal to the lesser of— (i) 30 percent of the monthly family income of the residents of the unit (as determined under subsection (e)(5)), or (ii) the applicable rent for such unit. (B) Utility costs Any utility allowance (determined by the Secretary in the same manner as under section 42(g)(2)(B)(ii)) paid by residents of an eligible unit shall be taken into account as rent in determining the family rental payment for such unit for purposes of this paragraph. (c) Rental reduction credit amount For purposes of this section— (1) Determination of amount (A) In general The term rental reduction credit amount means, with respect to any qualified building, the dollar amount which is allocated to such building (and to eligible units within such building) under this subsection. Such dollar amount shall be allocated to months in the credit period with respect to such building (and such units) on the basis of the estimates described in paragraph (2)(B). (B) Allocation on project basis In the case of a project which includes (or will include) more than 1 building, the rental reduction credit amount shall be the dollar amount which is allocated to such project for all buildings included in such project. Subject to the limitation under subsection (e)(3)(B), such amount shall be allocated among such buildings in the manner specified by the taxpayer unless the qualified rental reduction agreement with respect to such project provides for such allocation. (2) State allocation (A) In general Except as provided in subparagraph (C), each rental reduction credit agency of a State shall each calendar year allocate its portion of the State rental reduction credit ceiling to qualified buildings (and to eligible units within each such building) in accordance with the State rental reduction allocation plan. (B) Allocations to each building The rental reduction credit amount allocated to any qualified building shall not exceed the aggregate qualified rental reduction amounts which such agency estimates will occur over the credit period for eligible units within such building, based on reasonable estimates of rents, family incomes, and vacancies in accordance with procedures established by the State as part of its State rental reduction allocation plan. (C) Specific allocations (i) Nonprofit organizations At least 25 percent of the State rental reduction credit ceiling for any State for any calendar year shall be allocated to qualified buildings in which a qualified nonprofit organization (as defined in section 42(h)(5)(C)) owns (directly or through a partnership) an interest and materially participates (within the meaning of section 469(h)) in the operation of the building throughout the credit period. A State may waive or lower the requirement under this clause for any calendar year if it determines that meeting such requirement is not feasible. (ii) Rural areas (I) In general The State rental reduction credit ceiling for any State for any calendar year shall be allocated to buildings in rural areas (as defined in section 520 of the Housing Act of 1949) in an amount which, as determined by the Secretary of Housing and Urban Development, bears the same ratio to such ceiling as the number of extremely low-income households with severe rent burdens in such rural areas bears to the total number of such households in the State. (II) Alternative 5-year testing period In the case of the 5-calendar year period beginning in 2021, a State shall not be treated as failing to meet the requirements of subclause (I) for any calendar year in such period if, as determined by the Secretary, the average annual amount allocated to such rural areas during such period meets such requirements. (3) Application of allocated credit amount (A) Amount available to taxpayer for all months in credit period Any rental reduction credit amount allocated to any qualified building out of the State rental reduction credit ceiling for any calendar year shall apply to such building for all months in the credit period ending during or after such calendar year. (B) Ceiling for allocation year reduced by entire credit amount Any rental reduction credit amount allocated to any qualified building out of an allocating agency's State rental reduction credit ceiling for any calendar year shall reduce such ceiling for such calendar year by the entire amount so allocated for all months in the credit period (as determined on the basis of the estimates under paragraph (2)(B)) and no reduction shall be made in such agency's State rental reduction credit ceiling for any subsequent calendar year by reason of such allocation. (4) State rental reduction credit ceiling (A) In general The State rental reduction credit ceiling applicable to any State for any calendar year shall be an amount equal to the sum of— (i) the greater of— (I) the per capita dollar amount multiplied by the State population, or (II) the minimum ceiling amount, plus (ii) the amount of the State rental reduction credit ceiling returned in the calendar year. (B) Return of State ceiling amounts For purposes of subparagraph (A)(ii), except as provided in subsection (d)(2), the amount of the State rental reduction credit ceiling returned in a calendar year equals the amount of the rental reduction credit amount allocated to any building which, after the close of the calendar year for which the allocation is made— (i) is canceled by mutual consent of the rental reduction credit agency and the taxpayer because the estimates made under paragraph (2)(B) were substantially incorrect, or (ii) is canceled by the rental reduction credit agency because the taxpayer violates the qualified rental reduction agreement and, under the terms of the agreement, the rental reduction credit agency is authorized to cancel all (or any portion) of the allocation by reason of the violation. (C) Per capita dollar amount; minimum ceiling amount For purposes of this paragraph— (i) Per capita dollar amount The per capita dollar amount is— (I) for calendar year 2021, $12.30, (II) for calendar year 2022, $24.50, and (III) for calendar years 2023 and thereafter, $36.75. (ii) Minimum ceiling amount The minimum ceiling amount is— (I) for calendar year 2021, $14,000,000, (II) for calendar year 2022, $28,000,000, and (III) for calendar years 2023 and thereafter, $42,000,000. (iii) Cost-of-living adjustment In the case of a calendar year beginning after 2023, the $36.75 and $42,000,000 amounts in clauses (i)(III) and (ii)(III) shall each be increased by an amount equal to— (I) such dollar amount, multiplied by (II) the cost-of-living adjustment determined under section 1(f)(3) for such calendar year by substituting calendar year 2022 for calendar year 2016 in subparagraph (A)(ii) thereof. In the case of the $42,000,000 amount, any increase under this clause which is not a multiple of $5,000 shall be rounded to the next lowest multiple of $5,000 and in the case of the $36.75 amount, any increase under this clause which is not a multiple of 5 cents shall be rounded to the next lowest multiple of 5 cents. (D) Population For purposes of this paragraph, population shall be determined in accordance with section 146(j). (E) Unused rental reduction credit allocated among certain States (i) In general The unused rental reduction credit of a State for any calendar year shall be assigned to the Secretary for allocation among qualified States for the succeeding calendar year. (ii) Unused rental reduction credit For purposes of this subparagraph, the unused rental reduction credit of a State for any calendar year is the excess (if any) of— (I) the State rental reduction credit ceiling for the year preceding such year, over (II) the aggregate rental reduction credit amounts allocated for such year. (iii) Formula for allocation of unused credit among qualified States The amount allocated under this subparagraph to a qualified State for any calendar year shall be the amount determined by the Secretary to bear the same ratio to the aggregate unused rental reduction credits of all States for the preceding calendar year as such State's population for the calendar year bears to the population of all qualified States for the calendar year. For purposes of the preceding sentence, population shall be determined in accordance with section 146(j). (iv) Qualified State For purposes of this subparagraph, the term qualified State means, with respect to a calendar year, any State— (I) which allocated its entire State rental reduction credit ceiling for the preceding calendar year, and (II) for which a request is made (at such time and in such manner as the Secretary may prescribe) to receive an allocation under clause (iii). (5) Other definitions For purposes of this section— (A) Rental reduction credit agency The term rental reduction credit agency means any agency authorized by a State to carry out this section. Such authorization shall include the jurisdictions within the State where the agency may allocate rental reduction credit amounts. (B) Possessions treated as States The term State includes a possession of the United States. (C) Family The term family has the same meaning as when used in the United States Housing Act of 1937. (d) Modifications To correct inaccurate amounts due to incorrect estimates (1) Establishment of reserves (A) In general Each rental reduction credit agency of a State shall establish a reserve for the transfer and reallocation of amounts pursuant to this paragraph, and notwithstanding any other provision of this section, the rental reduction credit amount allocated to any building by such agency shall be zero unless such agency has in effect such a reserve at the time of the allocation of such credit amount. (B) Transfers to reserve (i) In general If, for any taxable year, a taxpayer would (but for this subparagraph) not be able to use the entire rental reduction credit amount allocated to a qualified building by a rental reduction credit agency of a State for the taxable year because of a rental reduction shortfall, then the taxpayer shall for the taxable year transfer to the reserve established by such agency under subparagraph (A) an amount equal to such rental reduction shortfall. (ii) Rental reduction shortfall For purposes of this subparagraph, the rental reduction shortfall for any qualified building for any taxable year is the amount by which the aggregate amount of the excesses determined under subsection (b)(1) for all eligible units within such building are less than such aggregate amount estimated under subsection (c)(2)(B) for the taxable year. (iii) Treatment of transferred amount For purposes of subsection (a)(2)(A), the aggregate qualified rental reduction amounts for all eligible units within a qualified building with respect to which clause (i) applies for any taxable year shall be increased by an amount equal to the applicable percentage (determined under subsection (e)(1) for the building) of the amount of the transfer to the reserve under clause (i) with respect to such building for such taxable year. (C) Reallocation of amounts transferred (i) In general If, for any taxable year— (I) the aggregate qualified rental reduction amounts for all eligible units within a qualified building for the taxable year exceed (II) the rental reduction credit amount allocated to such building by a rental reduction credit agency of a State for the taxable year (determined after any increase under paragraph (2)), the rental reduction credit agency shall, upon application of the taxpayer, pay to the taxpayer from the reserve established by such agency under subparagraph (A) the amount which, when multiplied by the applicable percentage (determined under subsection (e)(1) for the building), equals such excess. If the amount in the reserve is less than the amounts requested by all taxpayers for taxable years ending within the same calendar year, the agency shall ratably reduce the amount of each payment otherwise required to be made. (ii) Excess reserve amounts If a rental reduction credit agency of a State determines that the balance in its reserve is in excess of the amounts reasonably needed over the following 5 calendar years to make payments under clause (i), the agency may withdraw such excess but only to— (I) reduce the rental payments of eligible tenants in a qualified building in units other than eligible units, or of eligible tenants in units in a building other than a qualified building, to amounts no higher than the sum of rental payments required for eligible tenants in qualified buildings under subsection (b)(3) and any rental charges to such tenants in excess of the market rent standard; or (II) address maintenance and repair needs in qualified buildings that cannot reasonably be met using other resources available to the owners of such buildings. (D) Administration Each rental reduction credit agency of a State shall establish procedures for the timing and manner of transfers and payments made under this paragraph. (E) Special rule for projects In the case of a rental reduction credit allocated to a project consisting of more than 1 qualified building, a taxpayer may elect to have this paragraph apply as if all such buildings were 1 qualified building if the applicable percentage for each such building is the same. (F) Alternative methods of transfer and reallocation Upon request to, and approval by, the Secretary, a State may establish an alternative method for the transfer and reallocation of amounts otherwise required to be transferred to, and allocated from, a reserve under this paragraph. Any State adopting an alternative method under this subparagraph shall, at such time and in such manner as the Secretary prescribes, provide to the Secretary and the Secretary of Housing and Urban Development detailed reports on the operation of such method, including providing such information as such Secretaries may require. (2) Allocation of returned State ceiling amounts In the case of any rental reduction credit amount allocated to a qualified building which is canceled as provided in subsection (c)(4)(B)(i), the rental reduction credit agency may, in lieu of treating such allocation as a returned credit amount under subsection (c)(4)(A)(ii), elect to allocate, upon the request of the taxpayer, such amount to any other qualified building for which the credit amount allocated in any preceding calendar year was too small because the estimates made under subsection (c)(2)(B) were substantially incorrect. (3) Renting to noneligible tenants If, after the application of paragraphs (1)(C) (or any similar reallocation under paragraph (1)(F)) and (2), a rental reduction credit agency of a State determines that, because of the incorrect estimates under subsection (c)(2)(B), the aggregate qualified rental reduction amounts for all eligible units within a qualified building will (on an ongoing basis) exceed the rental reduction credit amount allocated to such building, a taxpayer may elect, subject to subsection (g)(2) and only to the extent necessary to eliminate such excess, rent vacant eligible units without regard to the requirements that such units be rented only to eligible tenants and at the rental rate determined under subsection (b)(3). (e) Terms relating to rental reduction credit and requirements For purposes of this section— (1) Applicable percentage (A) In general The term applicable percentage means, with respect to any qualified building, the percentage (not greater than 110 percent) set by the rental reduction credit agency at the time it allocates the rental reduction dollar amount to such building. (B) Higher percentage for high-opportunity areas The rental reduction credit agency may set a percentage under subparagraph (A) up to 120 percent for any qualified building which— (i) targets its eligible units for rental to families with children, and (ii) is located in a neighborhood which has a poverty rate of no more than 10 percent. (2) Credit period (A) In general The term credit period means, with respect to any qualified building, the 15-year period beginning with the first month for which the qualified rental reduction agreement is in effect with respect to such building. (B) State option to reduce period A rental reduction credit agency may provide a credit period for any qualified building which is less than 15 years. (3) Eligible unit (A) In general The term eligible unit means, with respect to any qualified building, a unit— (i) which is occupied by an eligible tenant, (ii) the rent of which for any month equals 30 percent of the monthly family income of the residents of such unit (as determined under paragraph (5)), (iii) with respect to which the tenant is not concurrently receiving rental assistance under any other Federal program, and (iv) which is certified to the rental reduction credit agency as an eligible unit for purposes of this section and the qualified rental reduction agreement. Notwithstanding clause (iii), a State may provide in its State rental reduction allocation plan that an eligible unit shall also not include a unit with respect to which any resident is receiving rental assistance under a State or local program. (B) Limitation on number of units (i) In general The number of units which may be certified as eligible units with respect to any qualified building under subparagraph (A)(iv) at any time shall not exceed the greater of— (I) 40 percent of the total units in such building, or (II) 25 units. In the case of an allocation to a project under subsection (c)(1)(B), the limitation under the preceding sentence shall be applied on a project basis and the certification of such eligible units shall be allocated to each building in the project, except that if buildings in such project are on non-contiguous tracts of land, buildings on each such tract shall be treated as a separate project for purposes of applying this sentence. (ii) Buildings receiving previous Federal rental assistance If, at any time prior to the entering into of a qualified rental reduction agreement with respect to a qualified building, tenants in units within such building had been receiving project-based rental assistance under any other Federal program, then, notwithstanding clause (i), the maximum number of units which may be certified as eligible units with respect to the building under subparagraph (A)(iv) shall not be less than the sum of— (I) the maximum number of units in the building previously receiving such assistance at any time before the agreement takes effect, plus (II) the amount determined under clause (i) without taking into account the units described in subclause (I). (4) Eligible tenant (A) In general The term eligible tenant means any individual if the individual's family income does not exceed the greater of— (i) 30 percent of the area median gross income (as determined under section 42(g)(1)), or (ii) the applicable poverty line for a family of the size involved. (B) Treatment of individuals whose incomes rise above limit (i) In general Notwithstanding an increase in the family income of residents of a unit above the income limitation applicable under subparagraph (A), such residents shall continue to be treated as eligible tenants if the family income of such residents initially met such income limitation and such unit continues to be certified as an eligible unit under this section. (ii) No rental reduction for at least 2 years A qualified rental reduction agreement with respect to a qualified building shall provide that if, by reason of an increase in family income described in clause (i), there is no qualified rental reduction amount with respect to the dwelling unit for 2 consecutive years, the taxpayer shall rent the next available unit to an eligible tenant (without regard to whether such unit is an eligible unit under this section). (C) Applicable poverty line The term applicable poverty line means the most recently published poverty line (within the meaning of section 2110(c)(5) of the Social Security Act ( 42 U.S.C. 1397jj(c)(5) )) as of the time of the determination as to whether an individual is an eligible tenant. (5) Family income (A) In general Family income shall be determined in the same manner as under section 8 of the United States Housing Act of 1937. (B) Time for determining income (i) In general Except as provided in this subparagraph, family income shall be determined at least annually on the basis of income for the preceding calendar year. (ii) Families on fixed income If at least 90 percent of the family income of the residents of a unit at the time of any determination under clause (i) is derived from payments under title II or XVI of the Social Security Act (or any similar fixed income amounts specified by the Secretary), the taxpayer may elect to treat such payments (or amounts) as the family income of such residents for the year of the determination and the 2 succeeding years, except that the taxpayer shall, in such manner as the Secretary may prescribe, adjust such amount for increases in the cost of living. (iii) Initial income The Secretary may allow a State to provide that the family income of residents at the time such residents first rent a unit in a qualified building may be determined on the basis of current or anticipated income. (iv) Special rules where family income is reduced If residents of a unit establish (in such manner as the rental reduction credit agency provides) that their family income has been reduced by at least 10 percent below such income for the determination year— (I) such residents may elect, at such time and in such manner as such agency may prescribe, to have their family income redetermined, and (II) clause (ii) shall not apply to any of the 2 succeeding years described in such clause which are specified in the election. (f) State rental reduction allocation plan (1) Adoption of plan required (A) In general For purposes of this section— (i) each State shall, before the allocation of its State rental reduction credit ceiling, establish and have in effect a State rental reduction allocation plan, and (ii) notwithstanding any other provision of this section, the rental reduction credit amount allocated to any building shall be zero unless such amount was allocated pursuant to a State rental reduction allocation plan. Such plan shall only be adopted after such plan is made public and at least 60 days has been allowed for public comment. (B) State rental reduction allocation plan For purposes of this section, the term State rental reduction allocation plan means, with respect to any State, any plan of the State meeting the requirements of paragraphs (2) and (3). (2) General plan requirements A plan shall meet the requirements of this paragraph only if— (A) the plan sets forth the criteria and priorities which a rental reduction credit agency of the State shall use in allocating the State rental reduction credit ceiling to eligible units within a building, (B) the plan provides that no credit allocation shall be made which is not in accordance with the criteria and priorities set forth under subparagraph (A) unless such agency provides a written explanation to the general public for any credit allocation which is not so made and the reasons why such allocation is necessary, and (C) the plan provides that such agency is required to prioritize the renewal of existing credit allocations at the time of the expiration of the qualified rental reduction agreement with respect to the allocation, including, where appropriate, a commitment within a qualified rental reduction agreement that the credit allocation will be renewed if the terms of the agreement have been met and sufficient new credit authority is available. (3) Specific requirements A plan shall meet the requirements of this paragraph only if— (A) the plan provides methods for determining— (i) the amount of rent which would be charged for a substantially similar unit in the same building which is not an eligible unit for purposes of subsection (b)(2)(A)(i), including whether such determination may be made by self-certification or by undertaking rent reasonableness assessments similar to assessments required under section 8(o)(10) of the United States Housing Act of 1937 ( 42 U.S.C. 1437f(o)(10) ), (ii) the qualified rental reduction amounts under subsection (c)(2)(B), and (iii) the applicable percentage under subsection (e)(1), (B) the plan provides a procedure that the rental reduction credit agency (or an agent or other private contractor of such agency) will follow in monitoring for— (i) noncompliance with the provisions of this section and the qualified rental reduction agreement and in notifying the Internal Revenue Service of any such noncompliance of which such agency becomes aware, and (ii) noncompliance with habitability standards through regular site visits, (C) the plan requires a person receiving a credit allocation to report to the rental reduction credit agency such information as is necessary to ensure compliance with the provisions of this section and the qualified rental reduction agreement, and (D) the plan provides methods by which any excess reserve amounts which become available under subsection (d)(1)(C)(ii) will be used to reduce rental payments of eligible tenants or to address maintenance and repair needs in qualified buildings, including how such assistance will be allocated among eligible tenants and qualified buildings. (g) Qualified rental reduction agreement For purposes of this section— (1) In general The term qualified rental reduction agreement means, with respect to any building which is residential rental property (as defined in section 168(e)(2)(A)), a written, binding agreement between a rental reduction credit agency and the taxpayer which specifies— (A) the number of eligible units within such building for which a rental reduction credit amount is being allocated, (B) the credit period for such building, (C) the rental reduction credit amount allocated to such building (and dwelling units within such building) and the portion of such amount allocated to each month within the credit period under subsection (c)(2)(B), (D) the applicable percentage to be used in computing the qualified rental reduction amounts with respect to the building, (E) the method for determining the amount of rent which may be charged for eligible units within the building, and (F) whether— (i) the agency commits to entering into a new agreement with the taxpayer if the terms of the agreement have been met and sufficient new credit authority is available for such new agreement, and (ii) the taxpayer is required to accept such new agreement. (2) Tenant protections A qualified rental reduction agreement shall provide the following: (A) Non-displacement of non-eligible tenants A taxpayer receiving a rental reduction credit amount may not refuse to renew the lease of or evict (other than for good cause) a tenant of a unit who is not an eligible tenant at any time during the credit period and such unit shall not be treated as an eligible unit while such tenant resides there. (B) Only good cause evictions of eligible tenants A taxpayer receiving a rental reduction credit amount may not refuse to renew the lease of or evict (other than for good cause) an eligible tenant of an eligible unit. (C) Mobility A taxpayer receiving a rental reduction credit amount shall— (i) give priority to rent any available unit of suitable size to tenants who are eligible tenants who are moving from another qualified building where such tenants had lived at least 1 year and were in good standing, and (ii) inform eligible tenants within the building of their right to move after 1 year and provide a list maintained by the State of qualified buildings where such tenants might move. (iii) Fair housing and civil rights If a taxpayer receives a rental reduction credit amount— (I) such taxpayer shall comply with the Fair Housing Act with respect to the building, and (II) the receipt of such amount shall be treated as the receipt of Federal financial assistance for purposes of applying any Federal civil rights laws. (iv) Admissions preferences A taxpayer receiving a rental reduction credit amount shall comply with any admissions preferences established by the State for tenants within particular demographic groups eligible for health or social services. (3) Compliance requirements A qualified rental reduction agreement shall provide that a taxpayer receiving a rental reduction credit amount shall comply with all reporting and other procedures established by the State to ensure compliance with this section and such agreement. (4) Projects In the case of a rental reduction credit allocated to a project consisting of more than 1 building, the rental reduction credit agency may provide for a single qualified rental reduction agreement which applies to all buildings which are part of such project. (h) Certifications and other reports to Secretary (1) Certification with respect to 1st year of credit period Following the close of the 1st taxable year in the credit period with respect to any qualified building, the taxpayer shall certify to the Secretary (at such time and in such form and in such manner as the Secretary prescribes)— (A) the information described in subsection (g)(1) required to be contained in the qualified rental reduction agreement with respect to the building, and (B) such other information as the Secretary may require. In the case of a failure to make the certification required by the preceding sentence on the date prescribed therefor, unless it is shown that such failure is due to reasonable cause and not to willful neglect, no credit shall be allowable by reason of subsection (a) with respect to such building for any taxable year ending before such certification is made. (2) Annual reports to the Secretary The Secretary may require taxpayers to submit an information return (at such time and in such form and manner as the Secretary prescribes) for each taxable year setting forth— (A) the information described in paragraph (1)(A) for the taxable year, and (B) such other information as the Secretary may require. The penalty under section 6652(j) shall apply to any failure to submit the return required by the Secretary under the preceding sentence on the date prescribed therefor. (3) Annual reports from rental reduction credit agency (A) Reports Each rental reduction credit agency which allocates any rental reduction credit amount to 1 or more buildings for any calendar year shall submit to the Secretary (at such time and in such manner as the Secretary shall prescribe) an annual report specifying— (i) the amount of rental reduction credit amounts allocated to each such building for such year, (ii) sufficient information to identify each such building and the taxpayer with respect thereto, (iii) information as to the demographic and income characteristics of eligible tenants of all such buildings to which such amounts were allocated, and (iv) such other information as the Secretary may require. (B) Penalty The penalty under section 6652(j) shall apply to any failure to submit the report required by subparagraph (A) on the date prescribed therefor. (C) Information made public The Secretary shall, in consultation with Secretary of Housing and Urban Development, make information reported under this paragraph for each qualified building available to the public annually to the greatest degree possible without disclosing personal information about individual tenants. (i) Special rule for payments to partnerships and S corporations For purposes of this subtitle, in the case of any qualified building directly held by any partnership or S corporation, the payment under section 6433 shall be made in lieu of the credit determined under this section with respect to such building. (j) Regulations and guidance The Secretary shall prescribe such regulations or guidance as may be necessary to carry out the purposes of this section, including— (1) providing necessary forms and instructions, and (2) providing for proper treatment of projects for which a credit is allowed both under this section and section 42. . (b) Payment to partnerships and S corporations in lieu of credit (1) In general Subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 6433. Payments in lieu of renters credit for partnerships and S corporations (a) In general In the case of any qualified building (as defined in section 36C(a)(3)) directly held by any partnership or S corporation, the Secretary shall pay to such partnership or S corporation for any taxable year an amount equal to the amount of the credit which, but for section 36C(i), would be allowed under section 36C with respect to such building. (b) Regulatory authority The Secretary shall prescribe such regulations, rules, and guidance as may be necessary to carry out section 36C(i), section 92, and this section, including regulations, rules, and guidance providing for— (1) the application of the rules under section 36C with respect to payments under this section in the same manner as such rules apply for purposes of the credit under section 36C, (2) the time and manner of payments under subsection (a), and (3) the determination of a partner's distributive share, or an S corporation shareholder's pro rata share, of any payment under subsection (a). . (2) Conforming amendment The table of sections for subchapter B of chapter 65 of the Internal Revenue Code of 1986 is amended by adding at the end the following new item: Sec. 6433. Payments in lieu of renters credit for partnerships and S corporations. . (c) Credit includible in gross income (1) In general Part II of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: 92. Inclusion in income of renters credit and payments Gross income includes the amount of the credit allowed to the taxpayer under section 36C for the taxable year and the amount of any payment in lieu of such credit under section 6433. . (2) Income disregarded for alternative minimum taxable income Section 56(a) of such Code is amended by adding at the end the following: (8) Section 92 not applicable Section 92 (relating to inclusion in income of renters credit) shall not apply. . (3) Conforming amendment The table of sections for part II of subchapter B of chapter 1 of such Code is amended by adding at the end the following new item: Sec. 92. Inclusion in income of renters credit and payments. . (d) Administrative fees No provision of, or amendment made by, this Act shall be construed to prevent a rental reduction credit agency of a State from imposing fees to cover its costs or from levying any such fee on a taxpayer applying for or receiving a rental reduction credit amount. (e) Other conforming amendments (1) Section 6211(b)(4) of the Internal Revenue Code of 1986 is amended by inserting 36C (including any related payment under section 6433), after 36B, . (2) Paragraph (2) of section 1324(b) of title 31, United States Code, is amended by inserting 36C (including any related payment under section 6433), after 36B, . (3) The table of sections for subpart C of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 36B the following new item: Sec. 36C. Renters credit. . (f) Effective date The amendments made by this section shall apply to taxable years beginning after December 31, 2020.