You have been waiting all weekend to hear the news, so we will get straight to the point. It took three years, but the IRS finally corrected the brain-melter that we posted a few days ago, making fairly comprehensive changes to Part 4, Chapter 81, Section 6 of the Internal Revenue Manual (IRM 4.81.6), titled … Continue Reading
Here’s a little puzzle for you, from that eternal font of delight, the Internal Revenue Manual. The Internal Revenue Manual illustrates how an issuer should present-value or future-value penalty amounts in a VCAP or in an audit: [A] closing agreement expected to be executed on January 15, 2016 includes amounts corresponding to future tax … Continue Reading
When you enter into a closing agreement with the IRS to fix a problem with a tax-exempt bond issue, the IRS will often require a penalty payment in an amount relating to the “taxpayer exposure” on some or all of the bond issue. Taxpayer exposure “represents the estimated amount of tax liability the United States … Continue Reading
The National Association of Bond Lawyers recently held its 41st Annual Bond Attorneys’ Workshop in Chicago. Below are some odds and ends from the conference.… Continue Reading
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
When an issuer of tax-advantaged bonds discovers a problem with the bonds, the issuer can resolve the problem by requesting a closing agreement through the IRS Voluntary Closing Agreement Program (VCAP). Similarly, where the IRS discovers a problem in the course of an audit of a tax-advantaged bond issue, and the issuer agrees that there … Continue Reading
This is Part 2. Go here for Part 1. When we left off, the New Hampshire Health and Education Facilities Authority had shown the IRS Tax-Exempt Bond Division (“TEB”) its Old Man in the Mountain face on June 27, 2013, after TEB insisted that the Authority admit that it violated the tax-exempt bond rules before it would allow … Continue Reading
The IRS Appeals office has dropped the examination of nine student loan bond issues of the New Hampshire Health and Education Facilities Authority. The examination had begun after the Authority entered but then withdrew from the IRS specialized “voluntary closing agreement program” for student loan bonds. The IRS created this targeted VCAP in 2012 as a standalone … Continue Reading
Remedial actions, the IRS Voluntary Closing Agreement Program, and IRS audits – these are the three venues in which most problems with tax-exempt bonds are aired. We’ll ignore remedial actions in this post (as well as most rebate/yield reduction payment problems). We’ll focus instead on the IRS Voluntary Closing Agreement Program (usually abbreviated as “VCAP”) … Continue Reading
The IRS recently announced that it will devote 50% of the Tax-Exempt Bond office’s (“TEB’s”) budget for its 2016 fiscal year (beginning October 1, 2015) to examinations. Accordingly, issuers and conduit borrowers of tax-advantaged bonds should be very interested in the newly revised Internal Revenue Manual (“IRM”) procedures addressing the Voluntary Closing Agreement Program (“VCAP”), … Continue Reading
The IRS has issued Announcement 2015-02, which allows issuers of qualified 501(c)(3) bonds to pay a small penalty to protect the tax status of the bonds where the conduit borrower lost its 501(c)(3) status because it failed to file returns with the IRS for three straight years. It’s welcome relief from a particularly nasty rule, but … Continue Reading
Like most organizations, the IRS Tax-Exempt Bond Division (TEB) is facing a shrinking budget and a shrinking workforce. In response, the magic word at TEB these days is “efficiency.” As part of that effort, TEB has established policies that seek to maintain uniformity in the settlement amounts that arise from examinations (audits) or within the … Continue Reading