Internal Revenue Service (IRS) oversight of the low-income housing tax credit (LIHTC) program has been minimal, according to a report by the Government Accountability Office (GAO).

Since 1986, the IRS has conducted just seven audits of 56 state housing finance agencies (HFAs) on which IRS relies to administer the program.

“Oversight of HFAs has been minimal, partly because LIHTC is viewed as a peripheral program in IRS in terms of its mission and priorities for resources and staffing,” says the report. “Without such reviews, IRS cannot determine the extent of noncompliance and other issues at HFAs.”

The GAO says there is little review of qualified allocation plans and audits of HFAs.

The office says Congress should consider designating HUD as a joint administrator of the program.

“Joint administration with HUD could better align program responsibilities with each agency’s mission and more efficiently address existing oversight challenges,” says the report.

The LIHTC industry has been anticipating the release of the report. Additional reports covering other aspects of the program are expected to follow.

GAO officials say the IRS faces capacity challenges. The Internal Revenue Service's budget has been cut by 10% and enforcement program performance and staffing levels have declined since 2010.

In a written response, the National Council of State Housing Agencies (NCSHA) disagrees with the recommendation. It urges officials to keep oversight  with Treasury and IRS, which have 30 years of expertise and experience with the housing credit program.

NCSHA adds that HFAs have consistently earned strong marks for their administration of the LIHTC program.

The review was requested by Sen. Chuck Grassley (R-Iowa).

“This report confirms what we’ve seen again and again,” he said in a statement. “The federal government is good at giving out money and tax breaks and terrible at checking on results. No one at the IRS or HUD seems to have any way of knowing whether a multi-billion-dollar program for low-income housing has worked as intended. This doesn’t bring accountability, and it may or may not deliver affordable housing for people in need. The agencies need to step up their oversight for the sake of low-income people who need housing and the taxpayers who deserve accountability.”