Federal Subsidy Payments For Tax-Advantaged Bonds Reduced by 7.2% For FY 2014; All Bond Subsidy Payments Threatened By Shutdown


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.

Written by:

Published In:


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Sherman & Howard L.L.C. | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.