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Finally: Withdrawal of the Political Subdivision Regulations Is Announced (updated)

(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 Constitution Prevails as the Political Subdivision Regulatory Project Gets Trumped

July 7, 2017 witnessed a once-in-a-career moment for any tax practitioner.  On that date, the Treasury Department released Notice 2017-38, which acknowledged that eight regulatory projects are unduly burdensome and should be reconsidered for modification or repeal – a rare display of administrative modesty.  Included in the list of burdensome regulations are the proposed regulations … Continue Reading

Treasury: Proposed Political Subdivision Regulations are “Burdensome,” Issue Price Regulations are “Insignificant”

The noise that you just heard may be another blessed nail in the coffin of Treasury’s proposed regulations that would have made it more difficult for an entity to qualify as a political subdivision so that it can issue tax-exempt bonds on its own behalf. Treasury just issued Notice 2017-38, which sends 8 regulatory projects, including … Continue Reading

Report from TSLI – What Can We Expect in the Near Term from the IRS?

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

2016 Year-End Review

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

Is It Possible for a Municipal Corporation Not to be a Political Subdivision?

With the recent issuance of the proposed regulations that would redefine the term “political subdivision” for purposes of determining which entities can issue tax-exempt bonds under Section 103 of the Internal Revenue Code, as amended (the “Code”), the answer to this seemingly rhetorical question is “yes,” at least according to the Treasury Department.  This is … Continue Reading

Proposed Political Subdivision Regulations Recall Earlier Failed Regulations

As we have discussed here before, we may be coming to the point where there are no new ideas in public finance tax law. Yet another example: The recent proposed political subdivision regulations hearken back to a similar regulation project on a related topic many years ago, which suffered from many of the same drawbacks … Continue Reading

The Proposed Political Subdivision Regulations: A Puzzling Reference Impacts Legal Framework of Official Legal Signals

Treasury recently issued proposed regulations that tell us whether an entity is a “political subdivision” that can issue tax-exempt bonds on its own behalf. One requirement is that an entity must serve a “governmental purpose” to be a political subdivision. The proposed regulations say that an entity is only organized for a governmental purpose if the … Continue Reading

Hot Topics from the Tax and Securities Law Institute’s Annual Meeting

                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

Treasury Corrects Proposed Regulations on Political Subdivisions

This post has been edited to correct an error. The proposed regulations, if finalized, would apply to bonds issued no more than 90 days, not 30 days, after the publication of the final regulations in the Federal Register.  Recently, Treasury proposed a new test for an entity to qualify as a “political subdivision” that is entitled to issue … Continue Reading

Line Drawing

(This Has Nothing to Do with Geometry, Art Class, or Parenting of Young Children) Lawyers profess a love of clarity while making their living from a lack of clarity.  Lawyers nobly use phrases such as “black letter law” and “bright line test”.  Lawyers ask regulators and courts for clear and concise rules that are easily … Continue Reading

Treasury Proposes a Definition of “Political Subdivision” for Tax-Exempt Bonds

Treasury has released long-awaited proposed regulations that define the entities that are “political subdivisions” eligible to issue tax-exempt bonds. The Internal Revenue Code explicitly allows States, territories, possessions of the U.S., or the District of Columbia, or “any political subdivision thereof” to issue tax-exempt bonds. We’ll have more to say about this in coming days.  These … Continue Reading

Who Wants to be an Instrumentality? Episode 2

My last blog post described two of the tax related benefits that an entity may receive if it is properly characterized as an “instrumentality” of a state or political subdivision for federal income tax purposes.  It also described the six factors that the IRS takes into consideration when determining whether or not an entity is properly … Continue Reading

The New Phonebooks are Here!

New private letter rulings are here! The IRS released two new private letter rulings. Neither of them is earth-shattering. In the first, PLR 201445002, the IRS ruled that an authority created by a tribal government is a political subdivision so that it can issue tax-advantaged bonds. In the second, PLR 201445007, the IRS granted a school district … Continue Reading