When the project is complete and operations commence, the entities will be required to comply with a new set of requirements and guidelines that continue for several years beyond project completion. This period is called the compliance period and is important because failure to comply with the respective Tax Credit requirements may result in a “recapture” event. Should a recapture event occur, the project entity would be required to pay back all, or portions of the funds received as well as related interest and penalties.
Several actions may trigger a "recapture event" such as physical changes to an Historic structure without National Park Service approval or changes in ownership.
Plymouth Soundings oversees the transition of the project from construction to the compliance and operations period. Protocols are developed and implemented for cash flow management, operations segregation between entities, and compliance reporting needs. Compliance reports generated by the Client are reviewed for submission throughout the operations compliance period.
Plymouth Soundings coordinates and assists Client with the multiple entity audit and tax return process with audit and tax preparers.
A sampling of activities Plymouth Soundings provides during this phase are:
- Continues to act as liaison with investors and/or CDE’s.
- Provides guidance on establishing accounting and cash flow protocols and preparing entries.
- Provides guidance on all other accounting and finance issues related to the Tax Credit structure during the operations compliance period, including reports, oversight and accounting entries.
- Helps prepare for and review of the first-year audit under new entity structure.
- Provides information for transaction structure, entity relationship, roles, document requirements, timing for audits, and tax returns.
This program is really not about how smart a person or staff at a project is. It is about understanding a hundred different fine points about the program, regulations, and requirements of all parties.
Missing some of those fine points could at worst ruin a project or at the very least cause significant legal fees and other costs as the project stumbles around learning what everything means.