How the IRS is expanding its muni outreach

Register now

WASHINGTON — One sign that the Internal Revenue Service has stepped up its outreach efforts to municipal bond market participants was a recent email containing an "issue snapshot."

In the snapshot, the IRS summarized five issue briefs it produced for the tax-exempt bond community between Jan. 29 and April 12. The topics include yield and rebate reduction rules and the rules applicable to establishing that a guaranteed investment contract (GIC) was purchased at fair market value.

“I don’t see GICs often being done anymore,” said Carol Lew, a past president of the National Association of Bond Lawyers and a shareholder of Stradling Yocca Carlson & Rauth in Newport Beach, Calif. “There had been some abuses in the past and I don’t perceive this as or have any knowledge of a new area where people are doing GICs or a big abuse going on.”

However, Lew considers the snapshots as providing important educational information.

“I don’t think it’s intended to be new, hot controversial advice,” Lew said. “What’s interesting though is that they are doing it and they seem to have found a way in the same way I know they are trying to make the VCAP [Voluntary Closing Agreement Process] be more user-friendly and helpful for people."

The IRS has published dozens of these issue snapshots for the tax-exempt bond community, charities and non-profits, retirement plans, Indian tribal governments and federal, state and local governments since it began producing them in 2016.

The first two snapshots for the tax-exempt bond community published in June 2016 addressed the 95% expenditure requirement for exempt facility bonds and the requirement to spend available project proceeds of qualified tax credit bonds within three years of the date of issuance.

Five additional snapshots on tax-exempt bonds were issued in 2017.

According to the IRS website, “Issue snapshots are employee job aids that provide analysis and resources for a given technical tax issue. They are developed through internal collaboration and may evolve as the compliance environment changes and new insights and experiences are contributed.”

The IRS website advises practitioners to “visit the site periodically for new and updated Issue Snapshots.”

Anyone interested in getting email notices of new snapshots or other updates from the IRS can sign up at

For reprint and licensing requests for this article, click here.
Tax-exempt bonds Muni tax exemption Tax planning Tax laws Government finance IRS Washington DC