The IRS Office of Tax Exempt Bonds has announced that payments to issuers of direct pay bonds (including Build America Bonds, Qualified School Construction Bonds, Qualified Zone Academy Bonds, New Clean Renewable Energy Bonds, and Qualified Energy Conservation Bonds) for FY 2014 will be reduced 7.2 percent to comply with the sequester law. The new percentage will apply, in general, to payments made on or after October 1, 2013, and before October 1, 2014. The reduction percentage could change if Congress changes the sequester.

Click here to read the announcement.

Also, issuers of direct pay tax credit bonds listed above should be aware that the government shutdown will likely delay the processing of federal government payments to those bond issuers. In most cases, a result of this will be that the issuers of those bonds will be required to make payment of the FULL amount interest on the bonds from the issuer’s resources to avoid a default on the bonds at this time, and to be reimbursed when the government shutdown is over and the federal government can process requests for, and make payment of, the applicable tax credit payments.