Form 8703: What It Is and Who Is Required to File?

Form 8703, Annual Certification of a Residential Rental Project, is a document filed by project owners with the Internal Revenue Service. Its purpose is to certify that a residential rental property financed by tax-exempt bonds meets federal requirements to serve low-income tenants. This annual certification is necessary for the bonds that financed the project to maintain their tax-exempt status.

Who Is Required to File Form 8703

The owner or operator of a residential rental project is required to file Form 8703 if the project was financed with proceeds from a tax-exempt bond issue. These bonds are typically issued under Internal Revenue Code Section 142 for qualified residential rental projects. A separate Form 8703 must be submitted for each individual project.

This is a mandatory annual requirement for the duration of the project’s qualified project period. The form must be filed by March 31 of the year following the calendar year for which the certification is being made. Failure to file can result in a $100 penalty for each failure, as outlined in tax code Section 6652.

Information and Calculations for Form 8703

Part I of the form requires basic identifying details, including the project’s name and physical address, along with the name, address, and Taxpayer Identification Number (TIN) for both the project owner and the operator. Part III requires information about the tax-exempt bond issue that financed the project, such as the issue date and CUSIP number.

The core of the form’s compliance demonstration is the minimum low-income set-aside test, detailed in Part II. Project owners must have elected to meet one of two tests when the project was placed in service. The “20-50 test” requires that at least 20% of the residential units are occupied by tenants whose income is 50% or less of the area median gross income (AMGI), adjusted for family size.

The alternative is the “40-60 test,” which requires that at least 40% of the units are occupied by tenants with incomes at or below 60% of the AMGI. To verify compliance, owners must calculate the percentage of low-income units based on tenant income certifications and rent records for the calendar year. The owner then checks the box on the form corresponding to the elected test and enters the calculated data to prove the minimum threshold is met.

How to File the Completed Form

Once Form 8703 is filled out and signed, it must be mailed to the Internal Revenue Service at the IRS Service Center in Ogden, UT 84201. The IRS does not currently offer an electronic filing option for this form.

Before mailing, the filer should make a complete copy of the signed Form 8703 for their own records. To ensure proof of timely filing, it is advisable to send the form using a mail service that provides a tracking number and delivery confirmation, such as Certified Mail.

This documentation serves as the owner’s evidence of having met the annual certification requirement. In the event of an audit or IRS inquiry, the retained copy and proof of mailing will demonstrate that the filing obligation was satisfied.