The Internal Revenue Service has asked about 200 private-activity bond issuers to provide information within three weeks about their compliance with arbitrage rebate computations and payments, prompting some bond lawyers to worry about the burdens that this will impose on the issuers.

The "Information Document Requests" have been sent to issuers in the last several weeks as part of the tax-exempt bond office's continuing initiative to examine compliance with arbitrage regulations, Clifford Gannett, director of the office said at the Council of Infrastructure Financing Authorities' 2008 Federal Policy Conference here. These "correspondence audits" stem in part from the office's previous look into arbitrage rebate compliance, which found that in nine out of 58 examinations issuers failed to rebate a total of about $4 million of arbitrage on time.

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