SAN FRANCISCO – Branch 5 Chief Paul Handleman retired after 30 years of service in March but not before leaving an indelible mark on the Internal Revenue Service.
Handleman was instrumental in developing many tax credits for real estate development and businesses. According to a CPA who worked with him, the program is stronger than ever because of him.
Handleman started his IRS career in 1986 working on the low-income housing tax credit (LIHTC). At the time, the LIHTC was only considered a temporary program, designed to give tax credits to C corporations to build rental units for low-income Americans. In February, one month before his retirement, the LIHTC compliance monitoring regulation was issued.
“Every state has a housing crisis,” Michael Novogradac, CPA and managing partner of Novogradac & Co. LLP, told Northern California Record. “Tenants are the ones who really benefit from the LIHTC.”
Novogradac knew Handleman from their mutual work with the LIHTC.
“(Handleman’s retirement) is a loss for the IRS and for the program itself," he said. "Paul knew the history and was in the room actually developing the program.”
When asked if Handleman had a special interest in the LIHTC or just got it handed to him, Novogradac admitted that he didn’t know.
“He played a key role in the LIHTC program, so it must have held some interest to him," Novogradac said. “Paul had a balancing act between providing guidelines for the developers of the housing, respecting the rules of each state and the federal guidelines, and remembering the goals of the program - to provide low-income housing for tenants. There’s always a threat to tax programs, but the LIHTC has been around for 30 years.”
Novogradac doesn’t expect the program to end anytime soon.
“In some ways, the greatest sign of success is that Sen. Maria Cantwell (D-Wash.) is expressing support for increasing the program by 50 percent.” Novogradac said.
Cantwell’s office recently released a report titled Addressing the Challenges of Affordable Housing & Homelessness: The Housing Tax Credit. The LIHTC helps to finance 100,000 affordable rental units each year. Currently, there are only 7.3 million units in the U.S. but there are 11.2 million extremely low-income renters competing for these units. Although Federal Housing Assistance can assist with rent each month, the problem is the scarcity of units.
The LIHTC exists to incentivize private development of rental units that are also affordable. According to Cantwell’s report, during the past 30 years the LIHTC has helped leverage more than $100 billion in private capital that has been used to build affordable housing for people in the U.S.
"In all, every year nationwide, the LIHTC helps generate $3.5 billion in federal, state and local taxes, while also generating $9.1 billion in economic activity," the report said.
Cantwell also wants to give states even more flexibility in financing projects that target the homeless and very low-income families. She has many ideas about increasing affordable housing in the U.S.
Paul Handleman may have been a key player in developing the LIHTC, but he has proponents that will not let his legacy die.