Even before the advent of P3s (public-private-partnerships), it was not uncommon for a governmental entity or a 501(c)(3) to enter into a joint venture with a for-profit, taxpaying entity. Sometimes these joint ventures take the form of either a state law partnership or a state law limited liability company (“LLC”). Most LLCs are taxed as … Continue Reading
What would a Clinton or Trump presidency mean for tax-exempt bonds? Both candidates have declared a desire to change our tax system, but will this mean any changes to the tax-exempt bond rules? Neither candidate has expressed a desire to change how the tax-exempt bond rules work, but their other policy goals may have an … Continue Reading
A little over a week after the IRS released Revenue Procedure 2016-44 (the “Revenue Procedure”), it has been updated! The IRS recently (and covertly) updated Section 7 (“Date of Applicability”) of the Revenue Procedure. Following the update, the prior safe harbors established in Revenue Procedure 97-13, as modified by Notice 2014-67, can be applied to any management contract entered … Continue Reading
On August 15, 2016, the Treasury Department released its 2016 – 2017 Priority Guidance Plan (the “Plan”). Tax-exempt bonds are the last category in the Plan, but the Plan lists the priority guidance categories in alphabetical order. Had these categories been listed in order of esteem, we know that tax-exempt bonds would have been [INSERT … Continue Reading
When most bond advisors think of the types of projects that bond proceeds may be used for, they think of roads, bridges, hospital or university buildings, etc. I think it is safe to say that very few bond advisors visualize an ark, let alone a replica of Noah’s Ark. However, the City Council of Williamstown, … 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
On Friday, June 24th, House Republicans released a blueprint for tax reform that suggests ways to increase federal tax revenue. Among other things, the blueprint may signal lawmakers’ willingness to curb or eliminate certain tax expenditures. A “tax expenditure” is a tax subsidy (including deductions, exclusions, and other tax preferences) in the Internal Revenue Code and corresponding … Continue Reading
Although this blog post has nothing to do with tax advantaged bonds, it does involve taxpayers, large sums of money, allegations of deceit and a strange saga in which the IRS has become embroiled. The story begins in 1999, when William Esrey, the CEO of Sprint Corporation at the time, and Ronald LeMay, COO of Sprint … Continue Reading
That is, according to certain U.S. lawmakers, who believe that private colleges and universities with 501(c)(3) status that have at least a $1 billion endowment should be subject to some extra rules and regulations. If these well-endowed private colleges and universities fail to abide by such extra rules and regulations, under the proposed legislation (which … Continue Reading
The federal government has brought the first ever criminal securities fraud charges in connection with a municipal bond financing, following an investigation by U.S. Attorney for the Southern District of New York Preet Bharara, according to recent news reports. (NYT, Reuters.) So what lessons are there to be learned from this?… Continue Reading
By permitting the issuance of tax-advantaged bonds, the federal government has provided an economic subsidy to state and local governments and other issuers of such bonds. In other words, the federal government is foregoing revenue in order to allow the issuers or conduit borrowers of tax-advantaged bonds to borrow at a lower cost. In December, … Continue Reading
Earlier this week, the President released his budget proposals for fiscal year 2017 (the “Proposed Budget”) (Treasury Department’s Green Book). Although it is unlikely that the Proposed Budget will be enacted, it is illustrative of the viewpoints held by the President (and possibly by supporting lawmakers). The Proposed Budget contains a number of noteworthy provisions … Continue Reading
We all know that the federal tax rules and regulations applicable to tax-exempt bonds are very complex. So are the federal and state securities laws. At times this is frustrating for bond advisors. However, we should remember that the federal and state securities laws are intended to protect investors/bondholders by requiring that all material facts … Continue Reading
As we begin a new year with all the new self-set goals that will soon be forgotten, let us pause for a moment to review 2015, or at least, what transpired on the Public Finance Tax Blog. Below the break are some of the posts announcing new guidance from the IRS, some of our most … Continue Reading
The IRS recently issued TAM 201544025 (“TAM”) in which it held that a 501(c)(3) organization’s activities constituted unrelated business taxable income (“UBTI”). As explained in more detail below, UBTI may negatively impact the tax-exempt character of 501(c)(3) bonds. If you are a regular reader of this Public Finance Tax Blog, you already know that in … Continue Reading
In CCA 201537022, the IRS Chief Counsel’s office addressed (1) whether a real estate developer could include amounts advanced to a special district to fund common improvements in the tax basis of the developer’s lots, and (2) whether interest on obligations issued by that district and held by the developer would be tax-exempt. For purposes … Continue Reading
[UPDATE (9/11/2015): At the 2015 NABL Bond Attorneys’ Workshop in Chicago, representatives from the Securities and Exchange Commission (including individuals previously employed at the Internal Revenue Service) discussed whether the Edward Jones case (the topic of the blog post following the jump) should impact bond pricing. The Bond Buyer was at the Bond Attorneys’ Workshop and … Continue Reading
While the specific legal issue presented in Altera Corp. v. Commissioner, 145 T.C. No. 3 (July 27, 2015) has nothing to do with tax-exempt bonds, it is nonetheless instructive to many readers of this blog because it shows how a taxpayer may successfully challenge an IRS regulation in court. Want to know how? It’s all … 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
During his NBA playing career, former Philadelphia 76ers point guard Allen Iverson was known as The Answer. He famously minimized the importance of practice compared to official games, making it clear that he was compensated for playing in games, not for practicing. For income tax purposes, the City of Cleveland agrees with Mr. Iverson, taxing nonresident … Continue Reading
Probably not as many people as want to be a millionaire. However, being an instrumentality can also have lucrative benefits, without having to answer increasingly difficult trivia questions or having to deal with Regis Philbin. For example, entities qualifying as “instrumentalities” for federal income tax purposes obtain two significant tax benefits. First, an instrumentality is … Continue Reading
My last blog entry discussed how the final regulations issued last December under the Patient Protection and Affordable Care Act (“ACA”) were mostly good news for charitable hospitals that benefit from the issuance of 501(c)(3) bonds. For example, under these regulations, only egregious violations by a charitable hospital of the requirements imposed under the ACA … Continue Reading
Our own Roddy Devlin contributed to Practical Law’s review of project finance trends in 2014 and outlook for the future, entitled Key Developments and Trends from 2014 and the Outlook for 2015. Check it out here, because there shouldn’t be any more rogue llamas or arcane debates about human visual biology to distract you this weekend.… Continue Reading
On January 22, 2015, the National Association of Bond Lawyers submitted comments on Notice 2014-67 to the IRS. For those of you who like acronyms and defined terms, we’ll call these the “NABL” “Comments” on the “Notice,” and we’ll let you guess what “IRS” stands for. The first part of the Comments focuses on Accountable … Continue Reading
