On June 7, 2017, the Final Issue Price Regulations (the “Final Regulations”) become effective. More specifically, the Final Regulations apply to bonds sold on or after June 7, 2017 and without regard to the bonds’ issuance date. Suffice it to say, if you have read our blog or been practicing in the area of municipal … Continue Reading
The “reasonable expectations” approach to determining the issue price of a tax-advantaged bond[1] has been the law since 1989. On June 7, it is scheduled to join Betamax tapes and parachute pants as another relic of that bygone decade. Barring intervention (either Divine or as part of the President’s executive order to undo recent regulations … Continue Reading
For those of you new to bonds and not generally familiar with financial terms, you may hear the term “yield curve” thrown around and be wondering what it means and why it matters. The yield curve is a chart showing the yield of debt instruments (such as U.S. treasuries or notes) on the y-axis and … 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
Joel Swearingen reported last week that the National Association of Bond Lawyers (“NABL”) recently released exposure drafts of model issue price certificates that reflect the final Treasury regulations on issue price that take effect for tax-advantaged bonds sold on or after June 7, 2017. As Joel reported, the model issue price certificates cover the direct … Continue Reading
As Alexios wrote about a few weeks ago (here), we are in the middle of a dry spell when it comes to new guidance from the IRS. Thankfully, the National Association of Bond Lawyers (“NABL”) recently released exposure drafts of several model issue price certificates (see here and here). The draft certificates are the product … 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
Despite an increase in the federal funds rate by the Federal Open Market Committee in December, municipal bond interest rates throughout 2016 were (and still are) extremely low when compared to historic rates. As a result, the volume of municipal bond issues reached an all-time high in 2016. As discussed below, the Treasury Department released … Continue Reading
As you have heard, and as we noted last week, Treasury and the IRS recently released final regulations that tell issuers how to calculate the “issue price” of tax-advantaged bonds that are issued for money. The regulations don’t take effect until June 7, 2017, so we can spend some time luxuriating in their nuances and … Continue Reading
‘I meant by “impenetrability” that we’ve had enough of that subject, and it would be just as well if you’d mention what you mean to do next, as I suppose you don’t mean to stop here all the rest of your life.’ ‘That’s a great deal to make one word mean,’ Alice said in a … Continue Reading
Many of the tax-exempt bond rules apply to an “issue” of bonds. With a few exceptions, an issue of bonds includes all bonds sold by an issuer less than 15 days apart under the same plan of financing, if the debt service on those bonds is reasonably expected to be paid from the same source … 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
From time to time, issuers will use bond proceeds to make grants to accomplish a governmental purpose. For example, a State bond issuer may make grants to various counties and cities to help with the cost of local transportation improvements. Under the arbitrage regulations (Reg. 1.148-6(d)(4)), the bond proceeds are treated as spent once an issuer … Continue Reading
In case you missed it, we prepared a chart comparing the differences between the old arbitrage regulations and the new arbitrage regulations that were released recently. We published it as part of Joel’s comprehensive summary of the new regulations, but here is the chart by itself. The chart shows you the old language and the new … Continue Reading
On July 18, 2016, the Treasury Department published final regulations on non-issue price arbitrage restrictions (the “Final Regulations”) in the Federal Register. The Final Regulations finalize regulations proposed in 2007 and 2013 (collectively, the “Proposed Regulations”). Click here for a copy of the Final Regulations, and read below for a high-level summary of them. We … Continue Reading
Generally, a person that pays interest on a debt to another person must report the amount of interest, usually on IRS Form 1099-INT. In the past, payments of tax-exempt interest did not have to be reported in this way; however, beginning in 2006, the statutory exclusion from information reporting for interest on tax-exempt obligations was … 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
Every year, the National Association of Bond Lawyers (“NABL”) hosts the Tax and Securities Law Institute (“TSLI”), which is an advanced conference with various workshops related to pressing issues confronting tax and securities lawyers in the public finance arena. Essentially, the annual TSLI is like Chrismukkah for tax and securities lawyers. This year’s meeting … 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
This is Part 2. Go here for Part 1. When we left off, the New Hampshire Health and Education Facilities Authority had shown the IRS Tax-Exempt Bond Division (“TEB”) its Old Man in the Mountain face on June 27, 2013, after TEB insisted that the Authority admit that it violated the tax-exempt bond rules before it would allow … Continue Reading
Often we would all like things to happen quickly in life. At other times things happen in the blink of an eye and we wish we had more time to appreciate the moment. One thing about the development of federal tax law, it rarely happens quickly. Perhaps this deliberate process is for the best as … Continue Reading
The IRS Appeals office has dropped the examination of nine student loan bond issues of the New Hampshire Health and Education Facilities Authority. The examination had begun after the Authority entered but then withdrew from the IRS specialized “voluntary closing agreement program” for student loan bonds. The IRS created this targeted VCAP in 2012 as a standalone … Continue Reading
On the heels of the November 2 budget deal, Treasury has announced that it will re-open the SLGS window effective at noon on Tuesday, November 3, 2015. Treasury had previously closed the SLGS window on March 13, 2015.… Continue Reading
On October 27, 2015, the Treasury Department published final regulations on the allocation of tax-exempt bond proceeds to mixed use projects and related topics (the “Allocation Regulations”). The Allocation Regulations finalize proposed regulations that were issued in 2006 and 2003. Click here for a copy of the Allocation Regulations, and read below for a high-level summary … Continue Reading
