Last week’s NABL Tax and Securities Law Institute included a discussion featuring John Cross (Associate Tax Legislative Counsel – Treasury) and Vicky Tsilas (Chief Branch 5 — IRS General Counsel’s Office) of whether tax-exempt bonds can be issued to advance refund taxable bonds, including build America bonds (BABs) despite the prohibition of tax-exempt advance refundings … Continue Reading
Public finance tax lawyers have been acutely aware of the direct effects of the 2017 tax legislation, especially the elimination of tax-exempt advance refundings, but some of the indirect effects have begun to appear only recently. One of those is the triggering of bank rate adjustments resulting from the drop in the corporate tax rate. … Continue Reading
(Updated on 10/20 – It’s official: Treasury officially withdraws proposed political subdivision regulations.) The eagerly awaited verdict on the proposed political subdivision regulations (Proposed Political Subdivision Regulations) (“Proposed Regulations”) is finally in and their withdrawal has been announced. These regulations have been a frequent subject of our posts (here, here, here, here, here, and here) … Continue Reading
The National Association of Bond Lawyers submitted eight legislative proposals to Treasury on August 22 with the stated purpose of improving the efficiency of tax-advantaged financing of much-needed public infrastructure projects (here is a link to the proposals). The proposals would broaden the availability and simplify the existing forms of tax-exempt bonds as well as … Continue Reading
On June 13, 2017, U.S. Senators Cory Booker (D-NJ) and James Lankford (R-OK) introduced the latest bill (S. 1342) (“Senate Bill”) intended to end tax-exempt financing of professional sports stadiums. The Senate Bill mirrors the bill (H.R. 811) introduced by Rep. Steve Russell (R-OK) on February 1, 2017, reported in this blog by Johnny Hutchinson … Continue Reading
The effective date of the new issue price regulations (Regulations) is less than a week away, and because of the need to discuss and plan for application of the new rules with issuers, underwriters and financial advisors for bonds that will be subject to the new rules, we are already gaining experience with documentation relating … Continue Reading
Premium bonds have been the choice of investors now for many years but is that preference beginning to shift in favor of discount bonds? Discount bonds are appearing in bond structures with increasing regularity in recent months. We lawyers leave that question for the underwriters and financial advisors as interest rates turn upward. However, we … Continue Reading
Last week I attended the NABL Tax and Securities Law Institute, which always provides valuable insights from representatives of Treasury and the IRS. Vicky Tsilas, Chief, Branch 5, Financial Institutions and Products, was a panelist for Tax Hot Topics and gave a very interesting status report on the 2016-2017 Guidance Plan (first reported on here … Continue Reading
The year 2017 promises, and threatens, to be a potentially momentous one for public finance in the United States. The Trump Administration and the 115th Congress may put in place tax reforms and infrastructure programs that will have transformative consequences for the financing of public projects in all sectors and at all levels. These are … Continue Reading
For the third time in less than three years, the IRS has issued major guidance – Revenue Procedure 2017-13 – on the safe harbor rules for management or service contracts to avoid private business use. The new revenue procedure follows closely behind the total rewrite of the safe harbor rules that the IRS issued as … Continue Reading
On November 21, as most of us were preparing for a relaxing Thanksgiving holiday, the IRS publicly released two internal guidance memoranda (both available at TEGE-04-116-0028) addressed to “All TE/GE Examiners,” the first of which describes new procedures for the preparation and issuance of IDRs in connection with tax-favored bond audits and procedures for the enforcement … Continue Reading
As reported several times in this blog (here, here, and here), Rev. Proc. 2016-44 significantly expands the opportunities for management/service contracts that don’t result in private business use. One such post was Joel Swearingen’s very thoughtful piece on the future of the facts and circumstances test as applied to these contracts (here). Of course, Rev. … Continue Reading
The 2013 proposed arbitrage regulations included significant changes to the working capital financing rules, including the first rules for long-term working capital financings. The proposed rules have been finalized in the recently issued final arbitrage regulations (discussed here) (“Final Regulations”), with some changes but without one very significant suggested change. This post summarizes the important changes that … Continue Reading
The flexibility to reallocate proceeds to expenditures using an accounting method other than direct tracing has been a well-recognized and much-appreciated opportunity under the allocation and accounting rules of IRC section 141. The former proposed section 141 regulations (REG-140379-02, Sept. 26, 2006) (“Proposed Regulations”), now replaced by the final section 141 regulations issued October 27, … Continue Reading
Rep. Steve Russell, R-Okla., recently introduced a bill (H.R. 4838) in the House to prohibit tax-exempt financing of professional sports stadiums and for-profit entertainment facilities. This is only the most recent in a string of similar proposals, including by President Obama and former Senator Tom Coburn. In this case, tax-exempt financing would be prohibited for … Continue Reading
A few weeks ago, Joel began our coverage of the President’s FY 2017 budget proposals [Link] by describing several of the bond proposals. [Link] After a short break to talk football among other things (we’ll do whatever it takes to keep you readers coming back!) [Link], we’re back to the budget proposals, this time with … Continue Reading
Since the final allocation and accounting regulations (“Allocation Regs”) were published on October 27, 2015, they have been a recurring topic of this blog (see here, here, here, and here). One question yet to be addressed is what, if anything, is the continuing importance of a “final allocation” of tax-favored bond proceeds in the wake … Continue Reading
Last week Mike Cullers summarized Treasury’s latest addition to the final private activity bond regulations – the “Allocation and Accounting Regulations” — which were published earlier that week (LINK). This week we begin to focus on the details of those Regulations, beginning with the much appreciated “anticipatory remedial action” rule (the “ARA Rule”). [1] Prior … Continue Reading
While sitting through several sessions at the Bond Attorneys Workshop last week, I heard references to “measurement period” in different contexts. Although trying to stay focused on the always scintillating discussion, my mind wandered to the good and the bad of that concept. This post explores certain consequences of measurement period, including some surprising results.… Continue Reading
As memories begin to fade of the excitement we all had in trying to decipher the alphabet soup of tax credit bonds enacted during the depth of the recession, the IRS recently reminded us that our interpretations of those often vague rules may soon be put to the test of an audit. On July 20, … Continue Reading
At least from this practitioner’s perspective, in the earlier days of IRS bond audits, there were substantial inconsistencies in IRS practices. Different documents were requested by the examining agents, different tax-exemption requirements were reviewed, and different positions were taken with respect to those requirements. And this was the case taking into consideration the various audit … Continue Reading
The Bond Buyer recently reported on a warning by Federal Reserve Bank of New York president and chief executive officer William Dudley ($) against borrowing to cover operational deficits. Mr. Dudley distinguished capital borrowings from operational, or working capital, borrowings to illustrate the objective of “matching” the cost and benefits of financed facilities through long-term capital … Continue Reading
The federal debt limit, which has been suspended since February 2014, will be reinstated Sunday, March 15. At that time, the debt limit will be equal to the amount of debt then outstanding – in other words, there will be no room for additional debt. If Congress does nothing to change this (which seems likely), … Continue Reading
Last week we reported on recently released PLR 201502008 (Jan. 9, 2015), which involved a total return swap (TRS) relating to an issue of tax-exempt bonds (Bonds) where the holder of the Bonds was also the TRS counterparty. The TRS originally had a term of about two years and was being extended an additional five … Continue Reading
