Can Refunding Be Private Activity? IRS to Propose Rules

Hume, Lynn
May 2003
Bond Buyer;5/9/2003, Vol. 344 Issue 31632, p5
Trade Publication
The U.S. Internal Revenue Service (IRS) is about to propose long-awaited rules that municipal issuers can use to determine whether their refunding bonds would be private-activity bonds, which would have higher coupons than governmental bonds and could be taxable, a Treasury official said as of May 8, 2003.For governmental bonds, if the average private use and private payments do not meet the 10thresholds before the refunding, the issuer can measure private use and private payments over the term of the refunding bonds or over the combined terms of the refunded and refunding bonds.Meanwhile, Mark Scott, the director of tax-exempt bonds at the IRS who also spoke during the session, said a significant number of issuers should be receiving letters from the IRS' Ogden, Utah Service Center or the IRS' Office of Outreach, Planning, and Review pertaining to the private-activity bond forms they filed, particularly those accompanying rebates of arbitrage and requests for refunds.


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