Spilman Alert - Breaking Insights: Update from IRS - Tax-Exempt Private Activity Bonds

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At the end of December, the Internal Revenue Service released the final regulations under Internal Revenue Code 147(f), which relate to public notice, hearing, and approval requirements for private activity bonds, which include bonds issued for exempt facilities, qualified 501(c)(3) bonds, and other qualified bonds to be used for non-governmental purposes.

The IRS released the Final TEFRA Regulations after considering comments to its Proposed TEFRA Regulations, which were released in September 2017. Some of the significant changes from the Proposed TEFRA Regulations include:

  • Notice of a public hearing is presumed to be reasonable if it is published at least seven days prior to the public hearing. The prior regulations required notice to be published at least 14 days before a public hearing.
  • Notice of a public hearing now may be posted on the website of the issuer of the private activity bonds.
  • The definition of the term "project" includes land, buildings, equipment, and other property on the same site, adjacent sites, or proximate sites, and such items located on non-proximate sites if they will be used in an "integrated operation." The Proposed Regulations did not address bond-financed facilities on non-proximate sites. However, commenters urged the IRS to include the caveat for facilities not located on adjacent or proximate sites, but are part of an "integrated operation."
  • The Final TEFRA Regulations apply to private activity bonds issued pursuant to public approval given on or after April 1, 2019. In addition, Issuers may apply the Final TEFRA Regulations in whole, but not in part, to private activity bonds issued before April 1, 2019.
Click here to find the Final TEFRA Regulations. 

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.

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