The Internal Revenue Service is auditing $10.24 million of sales and use tax revenue bonds Castle Rock, Colo., issued in 2008.

The audit was disclosed in an event noticed the town submitted to the Municipal Rulemaking Securities Board's EMMA system.

"The town is cooperating with the IRS in its examination of the bonds," the notice said.

The IRS said it routinely examines municipal debt issuances to determine compliance with federal tax requirements.

The bonds were used to finance a portion of costs of constructing certain voter-approved transportation projects, according to the official statement.

The IRS requested documents and information relating to the transaction and asked the town if there were any unspent bond proceeds, if the bond proceeds were invested in interest bearing accounts or other investment arrangements, and if there were any bond proceeds loaned to a non-governmental person.

Stifel, Nicolaus & Co., and George K. Baum & Co. were co-underwriters on the transaction. Sherman & Howard, L.L.C. was bond counsel. James Capital Advisors Inc. was the town's financial advisor.

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