WASHINGTON — The Internal Revenue Service is auditing $26.5 million of general obligation bonds issued in 2006 by the Johnston Community School District in Iowa.
The school district disclosed the examination in an event notice posted on the Municipal Securities Rulemaking Board's EMMA system this week.
The IRS notified the school district about the audit in a letter dated Dec. 3. In that letter, the IRS said it routinely examines municipal bond issuances to determine compliance with the federal tax law.
"At this time, we have no reason to believe that your debt issuance fails to comply with any of the applicable tax requirements," the IRS told the school district.
Proceeds of the bonds were used for a school building program consisting of various projects. At the time the bonds were issued, the projects were expected to include the construction and equipping of an elementary school building, improvements to athletic facilities and improvements to a middle school, according to the official statement.
Some of the bonds under audit are to be advance refunded in June 2015, according to bond documents.
Ahlers & Cooney, P.C. served as bond counsel for the 2006 issue. A group of 15 firms — including LaSalle Financial Services, Inc.; Griffin, Kubik, Stephens & Thompson, Inc.; Stifel Nicolaus & Company, Inc.; and Hutchinson, Shockey, Erley & Co. — underwrote the bonds.