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Public Finance Matters Updates on recent public finance and municipal bond developments

Tag Archives: tax-exempt

IRS Clarifies New Management Contract Safe Harbors

Posted in Tax/arbitrage

By MAXWELL D. SOLET and CHRISTIE MARTIN In August, 2016, the IRS issued Revenue Procedure 2016-44, the first comprehensive revision of its management contract safe harbors since Revenue Procedure 97-13.  Rev. Proc. 2016-44 (see our description here) built upon and amplified principles laid out in private letter rulings issued over many years and in Notice… Continue Reading

Municipal Bond Interest Paid By a Bond Insurer After an Issuer’s Bankruptcy Discharge Can Remain Tax-Exempt

Posted in Bankruptcy, Bond Insurance, Tax/arbitrage

By LEN WEISER-VARON and MAXWELL D. SOLET In the aftermath of recent municipal bankruptcies in which issuers proposed and/or implemented bankruptcy plans involving partial discharges of the issuer’s payment obligation on insured bonds, there has been increased focus on whether municipal bond interest paid by a bond insurer after the bankruptcy plan’s effective date continues… Continue Reading

IRS Provides Increased Flexibility on Management Contracts for Tax-Exempt Bond-Financed Property

Posted in Tax/arbitrage

By Maxwell D. Solet On October 24, 2014, the Internal Revenue Service issued Notice 2014-67 (the “Notice”), which provides important guidance and increased flexibility for issuers and conduit borrowers of tax-exempt bonds regarding contracting with private parties in a manner that avoids “private use” by such parties of bond-financed facilities. The Internal Revenue Code restricts private… Continue Reading

“28% Cap” Unlikely to Trigger Wave of Municipal Bond Tax Calls

Posted in Tax/arbitrage

By LEN WEISER-VARON Market commenters have suggested that billions of dollars in municipal bonds may be subject to par redemptions if the much-discussed “28% cap” on the value of certain federal income tax deductions or exclusions is enacted and if the capped items include municipal bond interest.  While such commenters flag an issue worthy of… Continue Reading

IRS Warns That Financial Restructurings Can Jeopardize Tax-Exemption of Bonds

Posted in Tax/arbitrage

By JEREMY A. SPECTOR The IRS is planning on sending out letters (“Letters”) over the next few months to several hundred issuers who have experienced covenant or payment defaults from 2007 to the present. The Letters remind issuers of their tax compliance responsibilities in the context of a restructuring and encourage them to self-police compliance… Continue Reading