WASHINGTON — The Internal Revenue Service is auditing $51 million of general obligation bonds issued by Garfield School District, No. RE-2 in Colorado in 2006.
The issuer disclosed the audit in an event notice filed with the Municipal Securities Rulemaking Board's EMMA system on Friday. The IRS notified the issuer about the audit in November.
The IRS told the issuer that it routinely examines bond issuances to determine compliance with federal tax requirements. "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 said in its letter to the school district, according to the event notice.
The district is located in the central Rocky Mountains and had a fall 2006 enrollment of 4,270. It issued the bonds to finance the costs of new construction and upgrades to school buildings, according to bond documents.
Stifel, Nicolaus & Co. was underwriter. Kutak Rock LLP served as bond counsel.
In a separate event notice filed on EMMA Friday, the Northside Independent School District in San Antonio disclosed that the IRS has closed an audit of its bonds issued in 2003 with no change to the bonds' tax-exempt status.
The school district issued $47.9 million of Series 2003-A and $47.9 million of Series 2003-B variable rate unlimited tax refunding bonds. Proceeds from the sale were used to refund outstanding bonds, according to the official statement.
The Series 2003-A bonds were converted to a fixed-rate mode in 2009, with $29.49 million currently outstanding, according to the event notice. The Series 2003-B bonds were converted to a fixed-rate mode in 2010, with $28.82 million outstanding, the notice said. Fulbright & Jaworski LLP was bond counsel, according to NISD's event notice.
The school district's bonds were audited as part of an initiative to check arbitrage compliance with regard to the 8038-T arbitrage rebate forms filed, according to a letter from the IRS in January 2013. Bonds for which the 8038-T form is filed are being audited as part of the IRS' market segment approach to examinations. Under this approach, which began in fiscal 2013, the IRS chooses certain types of bonds to audit and then selects specific bond issues within those segments to examine.