The time has come, friends. The Rebate Series ends with this post. At least for a little while. So far we’ve covered the basics of arbitrage and rebate and two key timing-based spending exceptions: the 6-Month Exception and the 18-Month Exception. This party bus now comes to a halt with the Two-Year Spending Exception, the … Continue Reading
Our previous post kicked off our Rebate Series by introducing core concepts and terms. However, for every rule there is an exception. And, as you will learn shortly, for every exception there is an exception to that exception (except when there is not). The next two episodes will focus on the so-called timing exceptions. In … Continue Reading
Reader’s Note: As this is my first post on The Public Finance Tax Blog™ let me provide a necessary introduction. My name is Natalie, an associate with the Public Finance Tax Group here at Squire Patton Boggs. A little bit about me: I have the superhuman ability of not getting mosquito bites; I hate when … Continue Reading
(Episode 3 – What Happens to the Arbitrage Sinners and the Arbitrage Saints?) As you may remember, in Episode 1 we discussed some background regarding the prohibition against abusive arbitrage devices and the policy behind that prohibition – to encourage investment of tax-exempt bond proceeds in long-lived, tangible assets, while discouraging the generation of arbitrage … Continue Reading
(Episode 2 – Overburdening (Generally) Not Allowed) As you may remember, in the first episode, we discussed how the federal government’s primary goal in subsidizing tax-exempt bonds is to encourage investment by issuers in long-lived, tangible assets. We also discussed how the federal government has tried to keep issuers on the intended path by preventing … Continue Reading
(Episode 1 – Background and Arbitrage Basics) Sometimes it is a good exercise to remind ourselves of some basic rules governing tax-exempt bonds. One such rule is that bonds are taxable arbitrage bonds if an “abusive arbitrage device” is used in connection with the bonds. An abusive arbitrage device is any action that has the … Continue Reading
This is the second in a series of posts about neutral principles that make for “good” tax-advantaged bond legislation. We pick up our series as the Senate prepares for a final vote on a bipartisan infrastructure bill in the coming days. In the last post, we stated the general rule that a good piece of … Continue Reading
On the 396th day of March, 2020 (or March 31, 2021 for those who have returned to some semblance of normalcy), President Joe Biden outlined his vision for a new economy. Specifically, President Biden focused on the American Jobs Plan as a $2.25 trillion investment in the United States that “will create millions of good … Continue Reading
Remember back in the day when we would all gather for a transaction closing to get documents signed and enjoy a nice meal out at a restaurant together? Me neither. In fact, in-person closings were starting to fade long before the pandemic. Now that we have been closing transactions from the comfort [sic] of our … Continue Reading
We can all agree that the year 2020 has been incredibly polarizing. Never have the authors of this blog fought with family members over politics, what to do or not do during the COVID-19 outbreak, and who should or should not be invited to Christmas Eve dinner more than we have this year. However, one … Continue Reading
Yes, The Thing touches everything. COVID-19 affects the muni bond world in some fairly obvious ways. The general mandate is “everybody do less.” Decreasing activity in general translates to decreased business revenues and decreased tax revenues, which means less money available to repay bonds. This has set the disclosure world ablaze, as securities lawyers ponder … 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
Early in my career, I learned to dread telling people that I was a lawyer because when I explained the niche practice of public finance tax law, their eyes started to get sleepy, then their eyes started to glaze over. That was usually when I would blurt out “I help finance airports, hospitals, schools, and … Continue Reading
On June 10, 2019, Senators Michael Bennet (D-CO) and Rob Portman (R-OH) introduced Senate Bill 1763 (the “Carbon Capture Bill”), which, if passed, would allow the issuance of exempt facility bonds for “qualified carbon dioxide capture facilities.” The Carbon Capture Bill has bipartisan support as this bill encourages continued use of carbon-generating natural resources by providing … Continue Reading
The Opportunity Zone program was created by the 2017 Tax Cuts and Jobs Act (which we have previously written about here, here and here), to allow investors the “opportunity” to defer paying tax on gains from selling property by investing the proceeds from the sale into an Opportunity Zone Fund. The IRS issued a first … Continue Reading
On April 3, 2019, the IRS published Rev. Proc. 2019-17, which provides that multifamily housing projects (or, for those of you who prefer Grey Poupon, “qualified residential rental projects”) won’t violate the general public use requirement even if the landlord offers units of the project to certain specific groups. Congress had made this point clear for low-income … Continue Reading
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
The Opportunity Zone program was created by the 2017 Tax Cuts and Jobs Act and is intended to increase investment in areas designated as Opportunity Zones (i.e., economically distressed communities). The general idea behind the program (which we have previously written about here) is that investors are able to defer paying tax on gains from … Continue Reading
For those who still had doubts, the IRS has now made it crystal clear: You can still issue tax-exempt bonds to advance refund most taxable bonds. In other words, the much-lamented “repeal of tax-exempt advance refunding bonds” in the Tax Cuts and Jobs Act from December 2017 isn’t ironclad. The repeal prevents the issuance of … Continue Reading
Hope you all had a nice summer – the blog is officially back from summer break. The Hutchinsons had a good one; we took Charlie to visit his grandparents at the beach in Pensacola, FL, where he went to Waffle House for the first time, and to visit his great-grandparents in Clinton, MS, where he … Continue Reading
The IRS recently sent out an email (to those of you brave enough to willingly put yourselves on a government email list – rather like those intrepid souls who voluntarily follow @CIA on Twitter), regarding its “Issue Snapshots” webpage. The email lists the latest Snapshots, but the full list can be found at the bottom … Continue Reading
Our tax and public policy colleagues have prepared a newsletter that illustrates some of the key take-home points for businesses based on our experience of the first few months after US tax reform. While US tax reform may not have been all that the business community hoped for, it has given taxpayers, both in the … Continue Reading
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
The IRS recently issued Private Letter Ruling 201811009, which provides helpful insight into how the IRS construes the term “control” for purposes of determining whether two affiliated 501(c)(3) organizations are “related” for purposes of the definition of “refunding issue.” The ruling involved a 501(c)(3) university (“Seller”) that sold its medical center to another 501(c)(3) organization … Continue Reading
