WASHINGTON — The Internal Revenue Service is auditing $65 million of general obligation, limited tax, school improvement bonds that were issued by the Washoe County, Nev. School District in 2007.
The issuer disclosed the audit in an event notice filed on the Municipal Securities Rulemaking Board’s EMMA system on Nov. 26. It received a letter from the IRS about the audit on Nov. 5.
The bonds were issued to finance the acquisition, construction, improvement and equipping of school facilities, according to the official statement.
The IRS letter said the examination was part of an initiative involving the financing of hotels, convention centers and similar facilities, but that appears to have been an error, sources said.
The IRS noted that it routinely examines bond issuances. “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 wrote.
The school district said it is cooperating with the IRS.
Roughly $50 million of the bonds were outstanding as of June 30, 2012, according to the school district’s annual report for fiscal 2012.
JNA Consulting Group, LLC was financial advisor, Swendseid & Stern served as bond counsel, and Merrill Lynch & Co. was the underwriter, according to the official statement.