Cynthia Mog

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IRS Notice 2019-39: Perpetuating the Gift of Targeted Bond Programs, but Creating Confusion about the Tax-Exempt Current Refunding of Build America Bonds

To promote the provision of disaster relief and the development (or redevelopment) of economically distressed areas, Congress will at times enact targeted bond programs that authorize the issuance of specialized tax-exempt bonds.  Tax-exempt targeted bond programs frequently contain both a cap on the amount of tax-exempt bonds that can be issued under the program and … Continue Reading

Infrastructure – Stays In the USA (Please Help)

According to the Federal Trade Commission’s website, only products made with “all or virtually all” U.S. parts that are processed in the U.S. may bear the cherished Made in the USA label.   In addition, according to the FTC’s guidelines, products that include foreign parts, but that are assembled in the U.S., may bear an Assembled … Continue Reading

A Reshuffling of the 8038 Deck

The IRS recently released a new Form 8038-G, which is the information return for issues of tax-exempt governmental bonds, and a new Form 8038, which is the information return for tax-exempt private activity bonds.  In addition, the IRS has released draft instructions for each form.  The revised forms are in part a response to changes … Continue Reading

Kicking the Sequestration Can Down the Road

This past summer, I wrote a blog post showing how the sequestration rate, which reduces federal subsidy payments to issuers of “Direct Pay Bonds” (defined below), has generally been decreasing since the spending cuts enacted by the Budget Control Act of 2011 (“BCA”) began on March 1, 2013.  As a reminder, sequestration refers to the automatic, … Continue Reading

Diagnosis – Unhealthy Financials Cause Another 501(c)(3) Hospital To Lose Its Favorable Tax Status

A few months ago, I wrote a blog post about a hospital that had its Section 501(c)(3) status revoked by the IRS. In that case, the IRS found that the hospital had committed willful and egregious violations of the Patient Protection and Affordable Care Act (the “ACA”).  For example, the hospital was not conducting a community … Continue Reading

A Christmas Tax Story

Over the last six weeks, my colleagues have posted numerous insightful posts about the various tax bills’ impact on tax-advantaged bonds (see here, here and here).   For our readers who have been entirely consumed by those provisions of the bill, I thought it would be helpful to highlight some of the other provisions of the … Continue Reading

When Gratuitous Honesty May be the Best Policy?

A few years ago, I wrote two blog posts (#1 and #2) regarding the likely penalties that a hospital qualifying for Section 501(c)(3) status (a “501(c)(3) hospital”) would incur if it failed to comply with the Patient Protection and Affordable Care Act (“ACA”) provisions set forth in Section 501(r) of the Internal Revenue Code of … Continue Reading

Moving On Down – In the Right Direction

In contrast to the theme song, “Movin’ on Up”, from the 1970s sitcom The Jeffersons, sometimes “moving on down” is better in certain circumstances. For example, it is preferable when discussing the sequestration rate for direct pay bonds.  Since sequestration began during the fiscal year ending September 30, 2013, the sequestration rate (i.e., the portion … Continue Reading

The P3 Wars Continue – Trump vs. Texas vs. Tolls (the T3s)

A few years ago, I wrote a blog post entitled “The P3 Wars”  in which I provided a brief explanation of how a P3 (i.e., a public-private partnership) works, and the general arguments for and against the use of P3s.  More recently, President Trump proposed a $1 trillion U.S. infrastructure plan that likely includes the … Continue Reading

Potential Changes for Churches and Charities Regarding Political Campaigning

A few weeks ago, President Trump announced that he would advocate for the repeal of the prohibition against certain religious organizations (i.e., those exempt from paying federal income taxes under Section 501(c)(3)) from engaging in political campaigning.  His statement was made at the National Prayer Breakfast to a group of religious leaders.  However, since the … Continue Reading

What Makes a Bond “Green”?

Most people agree that a “bond” is a financial instrument pursuant to which a creditor (holder of the bond) lends money to a borrower (the issuer of the bond) over a specified period of time in exchange for a periodic interest payment. However, although I occasionally see headlines about green bonds being issued, it was … Continue Reading

What Happens When the IRS and Issuer Agree to Disagree?

My last blog post was about how, as a result of a change in the Internal Revenue Code (the “Code”), the IRS will be altering the manner in which it audits many partnerships (and limited liability companies that are taxed as partnerships under the Code). In a nutshell, for tax years beginning on or after January … Continue Reading

What’s in your Partnership Agreement? Why Non-Taxpaying Entities Should Care About Allocations of Taxable Income.

Even before the advent of P3s (public-private-partnerships), it was not uncommon for a governmental entity or a 501(c)(3) to enter into a joint venture with a for-profit, taxpaying entity. Sometimes these joint ventures take the form of either a state law partnership or a state law limited liability company (“LLC”).  Most LLCs are taxed as … Continue Reading

Bondholders of the Lost Ark

When most bond advisors think of the types of projects that bond proceeds may be used for, they think of roads, bridges, hospital or university buildings, etc.  I think it is safe to say that very few bond advisors visualize an ark, let alone a replica of Noah’s Ark.  However, the City Council of Williamstown, … Continue Reading

Sometimes the Truth is Stranger than Fiction

Although this blog post has nothing to do with tax advantaged bonds,  it does involve taxpayers, large sums of money, allegations of deceit and a strange saga in which the IRS has become embroiled.  The story begins in 1999, when William Esrey, the CEO of Sprint Corporation at the time, and Ronald LeMay, COO of Sprint … Continue Reading

It is Possible to be Too Well-Endowed

That is, according to certain U.S. lawmakers, who believe that private colleges and universities with 501(c)(3) status that have at least a $1 billion endowment should be subject to some extra rules and regulations.  If these well-endowed private colleges and universities fail to abide by such extra rules and regulations, under the proposed legislation (which … Continue Reading

Enquiring Minds Want to Know – But Are Still Somewhat Confused

By permitting the issuance of tax-advantaged bonds, the federal government has provided an economic subsidy to state and local governments and other issuers of such bonds.   In other words, the federal government is foregoing revenue in order to allow the issuers or conduit borrowers of tax-advantaged bonds to borrow at a lower cost.  In December, … Continue Reading

Bond Advisors Behaving Badly

We all know that the federal tax rules and regulations applicable to tax-exempt bonds are very complex.  So are the federal and state securities laws.  At times this is frustrating for bond advisors.  However, we should remember that the federal and state securities laws are intended to protect investors/bondholders by requiring that all material facts … Continue Reading

No Good Deed Goes Unpunished: When fundraising for a good cause results in bad tax consequences.

The IRS recently issued TAM 201544025 (“TAM”) in which it held that a 501(c)(3) organization’s activities constituted unrelated business taxable income (“UBTI”).  As explained in more detail below, UBTI may negatively impact the tax-exempt character of 501(c)(3) bonds. If you are a regular reader of this Public Finance Tax Blog, you already know that in … Continue Reading
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