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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

What does “control” mean in the context of affiliated 501(c)(3) organizations?

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

Solicitor General Asserts that States Can Require Online Vendors to Collect and Remit Sales/Use Tax on Online Retail Sales

In January, the Supreme Court granted a writ of certiorari in the case of South Dakota v. Wayfair (discussed here).  Wayfair, which will be argued before the Court on April 17, is a direct challenge to Quill Corp. v. North Dakota, in which the Supreme Court held that a vendor does not have to collect … Continue Reading

Tax-Exempt Advance Refunding of Taxable Bonds (Including BABs)? A Report from the Tax and Securities Law Institute

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

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

Advance Refundings, Paygo, and BABs

For those of you who were enjoying Thanksgiving last week and missed the Senate Finance Committee’s release of its proposed legislative text of the Tax Cuts and Jobs Act, see below for how succinctly tax-exempt advance refunding bonds can be removed from the Code: Yes, I’m cheating a little; there are a few more lines … 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

NABL Proposes “Enhanced Infrastructure Bonds” (or Build America Bonds 2.0)

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

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

PLR 201726007 – Insights into the Facts & Circumstances Test for Private Business Use after Rev. Proc. 2017-13

The IRS recently released PLR 201726007, the first private letter ruling to interpret the revised management contract safe harbor in Rev. Proc. 2017-13. On one level, the PLR is quite straightforward – it concludes that a teaching agreement between a hospital and a school to provide clinical practice for pharmacy students does not result in … Continue Reading

The Regulatory Freeze: Where do we stand now?

The IRS tax exempt bond group (“TEB”) continues to work on completing its 2016-‘17 Guidance Plan, as Bob Eidnier wrote last week. However, it might be some time before we see that guidance because of executive branch actions intended to reduce regulations and regulatory costs.  The restrictions on new guidance are very broad, and appear … 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

2017 – What lies ahead?

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
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