Cindy Mog recently reacquainted us with abusive arbitrage devices, including the factors that evidence overburdening of the tax-exempt bond market (issuing bonds too early, issuing too many bonds, and issuing bonds with an excessive weighted average maturity) and factors that countervail what would otherwise constitute overburdening (bona fide cost underruns, bona fide need to finance … Continue Reading
On January 27, 2021, a snowy owl was seen in New York City’s Central Park for the first time in 130 years. Nine days later, on February 5, 2021, something almost as rare occurred – the Internal Revenue Service released a private letter ruling dealing with Section 103 of the Internal Revenue Code.[1] In PLR … Continue Reading
It’s fall, and that means two things. Pumpkin spice everything, and a calendar that’s replete with holidays – Sukkot, Halloween, Thanksgiving, and Sweetest Day[1] to name but a few. Diligent readers of The Public Finance Tax Blog will remember that we previously posted an exhaustive analysis of the “hold-the-offering-price-method” of establishing the issue price of … Continue Reading
Former Federal Reserve Chairman Ben Bernanke recently advised that the Fed should maintain “constructive ambiguity” about the possibility of taking the Federal funds rate below 0% in an effort to simulate the U.S. economy during the next recession. Given that current short-term interest rates in the United States are at near-historic lows, many believe that … Continue Reading
Taxable debt tempts us to put the Internal Revenue Code back on the library shelf and the tax lawyers back into their pen. But if you use taxable debt to refund tax-exempt debt, or if you might ever refund that taxable debt with tax-exempt debt, then we regret to inform you that we ought to … Continue Reading
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
On May 3, 2019, the Internal Revenue Service released Private Letter Ruling 201918008. The IRS concluded in that PLR that an issuer of exempt facility bonds used a reasonable method, under all the facts and circumstances, to determine whether the term of an operating agreement entered into with a private party exceeded 80% of the … Continue Reading
On April 3, 2019, the Internal Revenue Service issued Rev. Proc. 2019-17, which provides that a qualified residential rental project will not fail the public use element of Internal Revenue Code Section 142(d), and therefore can be financed with exempt facility bonds (assuming, of course, that other requirements are satisfied[1]), if the project contains units that … Continue Reading
Johnny Hutchinson could tell you, from memory, that the Defenestration of Prague occurred on May 23, 1618, and it precipitated the Thirty Years’ War, which ended on May 15, 1648 upon the ratification of the first of a series of peace treaties that comprised the Peace of Westphalia. In 1988, 370 years after the Defenestration … Continue Reading
The most recent partial shutdown of the federal government has halted many operations of the U.S. Department of the Treasury, including those of the Internal Revenue Service. The shutdown has, however, evidently left untrammeled the Treasury Department’s ability to promulgate regulations. On Friday, December 28, the Treasury released final regulations under Internal Revenue Code Section … Continue Reading
The Grateful Dead were noted in their live performances for, among other things, beginning a song and then segueing to one or more other songs before concluding the first song in the thread. Sometimes, the Dead would wait several concerts to complete the original song. Today we emulate the Grateful Dead by completing a string … Continue Reading
As readers of this blog know, the version of the Tax Cuts and Jobs Act that was passed by the House of Representatives would not have allowed any private activity bond (including any qualified 501(c)(3) bond) to be issued as a tax-exempt bond after December 31, 2017. The version of the Tax Cuts and Jobs … Continue Reading
Yes, you read that correctly. On June 21, 2018, the United States Supreme Court handed down its decision in South Dakota v. Wayfair, Inc. [1] (We’ve discussed the background to Wayfair here, here, here, and here.) The Court, by a 5 – 4 majority, held that a vendor need not have a physical presence in a state … Continue Reading
The Minutemen’s seminal album Double Nickels on the Dime includes the song “The Big Foist,” which opens with the lyrics, “A richer understanding of what’s already understood.” These lyrics are called to mind (my mind, at least) on occasions such as the Treasury Department’s publication today of proposed regulations (“Proposed Regulations”) that clarify the definition … Continue Reading
Last week, we posted a story about the lawsuit brought by the Ohio Attorney General under Ohio’s “Art Modell Law” to prevent Major League Soccer’s Columbus Crew from moving to Austin, Texas. We wondered aloud whether other states might enact similar laws if Ohio can succeed in preventing the Crew’s departure. Readers might have wondered … Continue Reading
The Tax Cuts and Jobs Act, as introduced in the House of Representatives on November 2, 2017, would have prohibited the issuance after that date of tax-exempt bonds to finance a professional sports stadium. The Tax Cuts and Jobs Act, as enacted, did not contain this prohibition. Even if it had, it would likely not … Continue Reading
On April 17, 2018, the U.S. Supreme Court heard oral arguments in the case of South Dakota v. Wayfair, Inc. Wayfair is a direct challenge of the Court’s holding in Quill Corp. v. North Dakota, 504 U.S. 298 (1992), that, under the dormant Commerce Clause, a remote/online vendor does not have to collect and remit … Continue Reading
On February 13, the Trump Administration released its proposal to finance improvements of the nation’s infrastructure. This proposal promotes the use of public-private partnership (“P3”) arrangements to fund these improvements by expanding exempt facility bonds (a type of tax-exempt private activity bond that can be used to finance a list of specific types of projects, … Continue Reading
On January 12, 2018, the U.S. Supreme Court announced its grant of certiorari in the case of South Dakota v. Wayfair, Inc. The oral argument for this case has not yet been scheduled, but it will most likely be held in April 2018, with a decision rendered by the end of the Court’s term in … Continue Reading
Update: The President signed the Tax Cuts and Jobs Act into law on December 22, 2017. On that same date, he also executed the Continuing Resolution passed by Congress that permits the federal government to make expenditures through January 19, 2018. This Continuing Resolution also suspends the application of the PAYGO law in respect of the … Continue Reading
At about 2:00 a.m. EST on Saturday, December 2, 2017, the only people awake in Washington, D.C. were alcoholics, the unemployable, and angry loners. Also awake were members of the United States Senate (but I repeat myself). At that early hour, the Senate passed its version of the Tax Cuts and Jobs Act (the “Act”) by … Continue Reading
Are we having fun yet? To add further stress to the advance refunding issues that everyone is scrambling to close by the end of the year, subscriptions for SLGS will not be available on or after December 8, if not earlier. The most recent suspension of the application of the federal debt ceiling expires on … Continue Reading
We summarized last week the tax-exempt and tax-advantaged bond provisions of the Tax Cuts and Jobs Act (the “Act”), as introduced and referred to the House Ways and Means Committee. As a reminder, these provisions, which came as a shock to state and local governments, 501(c)(3) organizations, and others involved with public finance, would eliminate … Continue Reading
Notwithstanding repeated assurances from all corners that tax reform wouldn’t touch the exclusion from gross income of interest on tax-exempt bonds (here, here, and here), proposed legislation would touch it indeed, and quite profoundly. The opening statement in what is sure to be a long legislative discussion on tax reform came this morning, as the … Continue Reading
