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- Is HUD/FHA still allowing transactions with downpayment assistance
from Nehemiah Corporation?
- What is the position of Nehemiah Corporation of America (NCA) on
the IRS revenue ruling?
- Is Nehemiah Corporation of America's IRC 501(c)(3) status still
intact?
- What will it take for your tax-exempt status to be changed?
- How much lead time should we expect before a change in your
tax-exempt status occurs?
- How will we know if your tax-exempt status is revoked? How can
we be sure we are made aware if your tax-exempt status changes?
- How does this ruling immediately impact tax issues for sellers
and buyers in downpayment assistance transactions?
- Where does The Nehemiah Program fit along the spectrum of truly
legitimate nonprofit downpayment assistance providers?
Is HUD/FHA still allowing transactions with downpayment assistance from
Nehemiah Corporation?
HUD is honoring ALL contracts from lenders with downpayment assistance from
Nehemiah Corporation of America (Sacramento, CA). Nehemiah is recognized as
exempt from federal income tax under Internal Revenue Code Section 501(c)(3)
and it meets HUD requirements for a "charitable organization" (HUD Handbook
4155, Rev. 4, Section 2-10). Nehemiah will continue to operate our downpayment
assistance program to serve low- to moderate-income homebuyers across the
nation.
HUD officials have informed Nehemiah that HUD will continue to honor all
contracts from lenders with downpayment assistance as long as the charity is in
good standing with the IRS and is recognized as exempt under section 501(c)(3).
To view the list of charities in good standing with the IRS visit
http://apps.irs.gov/app/pub78.
On its website, HUD answered the question: What impact does the recent IRS
ruling have on certain down payment assistance providers? The published answer
stated: Provided that the homebuyer has entered into a contract of sale
(including any amendments to purchase price) before the date the IRS officially
announces that the charitable organization's tax-exempt status is terminated,
FHA will recognize the gift--if made to the homebuyer and properly documented--as
an acceptable source of the downpayment. FHA believes this policy avoids harm
to any homebuyer who, in good faith, has a contract of sales and anticipates
receiving a gift for the downpayment from such a charitable organization.
In addition, FHA is accepting telephone calls on this issue at the FHA Resource
Center (800) 225-5342 from 8:00 a.m. to 8:00 p.m. EST. Search the online
knowledge base and find answers to the most commonly asked questions
http://answers.hud.gov.
What is the position of Nehemiah Corporation of America (NCA) on the IRS
revenue ruling?
We have three basic positions. First, we think it is unfair for the IRS to
issue a document of this magnitude without first complying with the procedures
for notice and public comment. Second, we fault the IRS for issuing this ruling
without any consideration as to its impact on federal homeownership policies and
programs, and on recipients (present and future) of DPA. Third, we believe that
the IRS stance as to private benefit to home sellers is incorrect, at least as
applicable to Nehemiah.
Is Nehemiah Corporation of America's IRC 501(c)(3) status still intact?
Yes. NCA is in the process of being audited by the IRS. In the meantime, the
exemption of NCA remains in effect. We are of the view that the IRS revenue
ruling does not adversely affect our exemption because (1) it is not a correct
statement of the law and (2) we believe this ruling does not address the facts
pertaining to The Nehemiah Program®.
What will it take for your tax-exempt status to be changed?
That question cannot be answered at this time. Once an organization receives a
notice of proposed revocation, it has an opportunity to initiate an
administrative appeal. The administrative appeal within the IRS could take
months. If the administrative appeal process is not successful, an organization
may elect to pursue litigation. If an organization chooses to pursue litigation,
the process can extend into years.
How much lead time should we expect before a change in your tax-exempt status
occurs?
First, it is premature to conclude that our exempt status will change. We are
still tax-exempt. Second, the process involving the IRS and perhaps the courts
could take months or even years.
How will we know if your tax-exempt status is revoked? How can we be sure we
are made aware if your tax-exempt status changes?
The IRS publishes exemption revocations in the Internal Revenue Bulletin. Also,
should our exemption be revoked, we will promptly post that fact on our website.
How does this ruling immediately impact tax issues for sellers and buyers in
downpayment assistance transactions?
This question is difficult to answer because (1) the accuracy of the IRS ruling
is in doubt and (2) the ruling is vague. Basically, however, DPA payments are
not deductible as charitable contributions by home sellers and the ruling states
they are not income to home buyers.
Where does The Nehemiah Program fit along the spectrum of truly legitimate
nonprofit downpayment assistance providers?
Nehemiah Corporation was organized in 1994 in Sacramento, California, at a
time when government funds for housing were diminishing and the future of many
affordable housing programs was in jeopardy. While safe and affordable housing
was in high demand, the possibility of homeownership seemed to be vanishing in
the absence of substantial economic assistance.
Today, Nehemiah serves as a catalyst for wealth creation and economic
empowerment by providing affordable housing opportunities to families and
individuals. Nehemiah administers a host of affordable housing programs in
neighborhoods across the country. The first of these, The Nehemiah
Program®,
is the largest and most trusted privately funded downpayment assistance program
in the nation. Since 1997, The Nehemiah Program has provided over $800 million
in downpayment gifts to 212,000 families for the purchase of homes in cities
throughout the United States. Through this program and other dynamic community
development and support programs like it, Nehemiah remains devoted to finding
ways for families to have access to safe and affordable housing.
Nehemiah works continuously to meet the demands of an imposing regulatory
environment in addition to exceeding our Industry Partners' expectations for
dependability and service. We have a reputation for being the most reliable,
respected name in the industry because a Nehemiah transaction is a worry free
transaction. We protect the consumer and our industry partners by ensuring each
transaction is in strict compliance with our own set of "best practices",
renowned in the industry as the gold standard of downpayment assistance
compliance. To view a summary of Nehemiah's charitable activity visit
www.getdownpayment.com/content/community.asp
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