Archives: Refundings

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IRS: You Can Still Issue Tax-Exempt Bonds to Advance Refund Most Taxable Bonds, Including BABs

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

Further Fallout from the 2017 Tax Legislation – Beware of Reissuance of Bank-Held Tax-Exempt Obligations

Public finance tax lawyers have been acutely aware of the direct effects of the 2017 tax legislation, especially the elimination of tax-exempt advance refundings, but some of the indirect effects have begun to appear only recently. One of those is the triggering of bank rate adjustments resulting from the drop in the corporate tax rate. … Continue Reading

Final Tax Reform Legislation Saves PABs and Stadium Bonds, Kills Advance Refundings and Tax Credit Bonds

Signaling the end of our six-week ride in a runaway cement mixer, the Conference Committee for the Tax Cuts and Jobs Act has released its Conference Report, which represents a compromise version of the House and Senate-passed versions of the Act. Each chamber has the votes to enact the compromise bill; they’ll do it, and … Continue Reading

Inconceivable! Congressional Repeal of Tax-Exempt Advance Refunding Bonds Might Not Generate the Revenue that Congress Thinks it Will

White smoke rises in the east! Later today (Friday), it is expected that the House-Senate Conference Committee will release a final draft of the Tax Cuts and Jobs Act. Consistent with what was in both the Senate version (discussed here) and the House version (discussed here), it is further expected that the draft released by … 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

A Summary of the Final Regulations on Non-Issue Price Arbitrage Restrictions

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

Crossover Refunding – Does It Really Have to Come to This?

Suppose you, or a friend, issued build America bonds or another form of direct payment subsidy bonds in 2009 or 2010, as permitted by the American Recovery and Reinvestment Act, to do your bit to stimulate aggregate demand during the depths of the Great Recession.  You, or your friend, as applicable, did not, however, include … 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

NABL Joins the Fray, Asks the IRS to Revoke BABs Reissuance Memo

As Naomi Jagoda reported in The Bond Buyer yesterday ($), the National Association of Bond Lawyers has asked the IRS to revoke Advice Memorandum 2014-009, in which the IRS concludes that if you defease BABs with tax-exempt bonds, the BABs are treated as retired and reissued and are therefore no longer eligible for subsidy payments because the … Continue Reading

More on the BAB Defeasance Memo

Naomi Jagoda has an article in The Bond Buyer ($) today with more commentary on Advice Memorandum 2014-009, where the IRS says that BABs don’t get the benefit of the rule that the defeasance of a “tax-exempt bond” doesn’t cause the bond to be reissued. Note that others in the community are raising the same point that was raised in yesterday’s … Continue Reading

Bah. Humbug. How the IRS Took Away Direct Subsidies from Defeased BABs

Earlier this year, we wrote about issuers that are weary of losing interest subsidies to sequestration and that have paid off their direct pay bonds with tax-exempt bonds. We noted two main questions where the issuer doesn’t pay off the direct pay bonds immediately, but instead puts the refunding bond proceeds into a defeasance escrow … Continue Reading
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