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The Public Finance Tax Blog

This blog is written by the public finance tax group of Squire Patton Boggs. We are one of the largest and most experienced public finance tax groups in the country, with six tax attorneys who devote themselves exclusively to this area and collectively possess more than 100 years of experience in handling the federal tax aspects of public finance, and several additional tax attorneys who work in public finance tax and other areas as well.

Open Market Escrow Bidding – Some Thoughts From Bidding Experts (Not Us – The Real Experts)

As we reported on November 22 in this blog (SLGS Will Soon be Unavailable for Subscription), beginning on or before December 8, we should expect the reinstatement of the federal debt ceiling to force the SLGS window to close.  The current suspension of the debt ceiling expires on December 8, and there is no expectation that the suspension will be extended or that the debt ceiling will be raised by that date.  This unfortunately occurs just as the glut of tax-exempt advance refundings is hitting the market so that those issues can close before the possible (likely?) year-end deadline before such advance refundings are outlawed by the pending House and Senate tax bills (a discussion of the Senate bill is available here and here and a discussion of the House bill is available here).  This points to open market escrow securities soon being the only game in town, raising questions as to the availability of bids and open market securities for all the escrows soon to require funding.  I recently had the nerve in this exceptionally busy time to ask two of the most experienced bidding agent representatives I know for a few moments of their time to share their perspectives on the market for these escrow securities.  Both were very generous with their time and thoughts, which I report below.… Read more

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While You Were Sleeping . . . . The Senate Passed Its Version Of The Tax Cuts And Jobs Act

At about 2:00 a.m. EST on Saturday, December 2, 2017, the only people awake in Washington, D.C. were alcoholics, the unemployable, and angry loners.  Also awake were members of the Unites States Senate (but I repeat myself).  At that early hour, the Senate passed its version of the Tax Cuts and Jobs Act (the “Act”) by a vote of 51 – 49.  Bob Corker of Tennessee was the only one of the 52 Senate Republicans to vote against the Act; none of the 48 Senate Democrats voted for it.… Read more

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SLGS Will Soon Be Unavailable For Subscription

Are we having fun yet?

To add further stress to the advance refunding issues that everyone is scrambling to close by the end of the year, subscriptions for SLGS  will not be available on or after December 8, if not earlier.

The most recent suspension of the application of the federal debt ceiling expires on December 8, and Congressional leaders have said that Congress will not vote this December either to extend the suspension of the application of the debt ceiling or to increase the ceiling.  Instead, Congress will rely on the Treasury’s use of “extraordinary measures” to defer having to deal with the debt ceiling.… Read more

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The Senate Gives The House The Byrd And Retains Tax-Exempt Qualified Private Activity Bonds, Tax Credit Bonds, And Tax-Exempt Stadium Financing Bonds. Tax-Exempt Advance Refunding Bonds, However? Not So Much.

We summarized last week the tax-exempt and tax-advantaged bond provisions of the Tax Cuts and Jobs Act (the “Act”), as introduced and referred to the House Ways and Means Committee.  As a reminder,  these provisions, which came as a shock to state and local governments, 501(c)(3) organizations, and others involved with public finance, would eliminate the ability of state and local governmental units to issue: (1) tax-exempt qualified private activity bonds (including qualified 501(c)(3) bonds); (2) tax-exempt advance refunding bonds; (3) tax-exempt professional sports stadium bonds; and (4) tax credit bonds (regardless of whether the bondholder receives a tax credit or the issuer receives a direct payment subsidy in respect of the tax credit bond).… Read more

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So It Begins: First Draft Tax Reform Bill Eliminates 501(c)(3) Bonds And All Other Private Activity Bonds, All Advance Refunding Bonds, All Tax Credit Bonds, And Governmental Bonds For Sports Venues

Notwithstanding repeated assurances from all corners that tax reform wouldn’t touch the exclusion from gross income of interest on tax-exempt bonds, proposed legislation would touch it indeed, and quite profoundly. The opening statement in what is sure to be a long legislative discussion on tax reform came this morning, as the House Ways & Means Committee released the first draft of a tax reform bill, which was introduced as the Tax Cuts and Jobs Act.… Read more

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Finally: Withdrawal Of The Political Subdivision Regulations Is Announced (updated)

(Updated on 10/20 – It’s official: Treasury officially withdraws proposed political subdivision regulations.)

The eagerly awaited verdict on the proposed political subdivision regulations (Proposed Political Subdivision Regulations) (“Proposed Regulations”) is finally in and their withdrawal has been announced.  These regulations have been a frequent subject of our posts (here,  here, here, here, here, and here) Treasury issued its interim Report on June 22, 2017 (here) under Executive Order 13789 (here) identifying eight regulations for review, including the Proposed Regulations.  (Discussed in previous blogs by Michael Cullers and Johnny Hutchinson here and here.) Now Treasury has issued its “Second Report to the President on Identifying and Reducing Tax Regulatory Burdens,” (“Second Report”) dated October 2, 2017, announcing its recommendations on those eight regulations as well as potentially far-reaching plans for further review of burdensome regulations.  Of the eight regulations reviewed, Treasury recommended full withdrawal of only two, one being the Proposed Regulations (the other being an anti-taxpayer regulation addressing transfers of family businesses, which could be an especially sympathetic area under the Trump administration).  In recommending withdrawal of the Proposed Regulations, Treasury noted that “some enhanced standards for qualifying as a political subdivision may be appropriate” but that “regulations having as far-reaching an impact on existing legal structures as the proposed regulations are not justified.”  So what might we expect in the future?… Read more

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When Gratuitous Honesty May Be The Best Policy?

A few years ago, I wrote two blog posts (#1 and #2) regarding the likely penalties that a hospital qualifying for Section 501(c)(3) status (a “501(c)(3) hospital”) would incur if it failed to comply with the Patient Protection and Affordable Care Act (“ACA”) provisions set forth in Section 501(r) of the Internal Revenue Code of 1986, as amended.  In sum, there are three levels of penalties for three levels of violations.  Minor violations of the ACA made inadvertently or due to reasonable cause may be corrected by the 501(c)(3) hospital without any need to disclose them.… Read more

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Finally: Withdrawal Of The Political Subdivision Regulations Is Announced

The eagerly awaited verdict on the proposed political subdivision regulations (Proposed Political Subdivision Regulations) (“Proposed Regulations”) is finally in and their withdrawal has been announced.  These regulations have been a frequent subject of our posts (here,  here, here, here, here, and here) Treasury issued its interim Report on June 22, 2017 (here) under Executive Order 13789 (here) identifying eight regulations for review, including the Proposed Regulations.  (Discussed in previous blogs by Michael Cullers and Johnny Hutchinson here and here.) Now Treasury has issued its “Second Report to the President on Identifying and Reducing Tax Regulatory Burdens,” (“Second Report”) dated October 2, 2017, announcing its recommendations on those eight regulations as well as potentially far-reaching plans for further review of burdensome regulations.  Of the eight regulations reviewed, Treasury recommended full withdrawal of only two, one being the Proposed Regulations (the other being an anti-taxpayer regulation addressing transfers of family businesses, which could be an especially sympathetic area under the Trump administration).  In recommending withdrawal of the Proposed Regulations, Treasury noted that “some enhanced standards for qualifying as a political subdivision may be appropriate” but that “regulations having as far-reaching an impact on existing legal structures as the proposed regulations are not justified.”  So what might we expect in the future?… Read more

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“TEFRA Is A Four-Letter Word”

The title of this post is taken from an observation that a client once made when the strictures of the notice, hearing, and approval requirements set forth in Internal Revenue Code Section 147(f), which with limited exceptions apply to all issues of tax-exempt private activity bonds, worked to prevent a hoped-for use of proceeds of a qualified private activity bond issue.  These notice, hearing, and approval requirements were originally enacted as part of the Tax Equity and Fiscal Responsibility Tax Act of 1982, so the acronym “TEFRA” is commonly used in connection with these requirements.  According to urban legend, the coarsest of the four-letter words is also an acronym, the components of which the esteemed etymologists Van Halen detailed in the title to the band’s triple platinum 1991 album.… Read more

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