The Internal Revenue Service temporarily withheld Build America Bond subsidies from New York City, Comptroller John Liu’s office said Wednesday.
“It was under $200,000 and we got it back with interest,” deputy comptroller Carol Kostik said in an e-mail. “It was a non-event.”
The delay was first reported by Dow Jones Newswire.
The IRS withheld the subsidies on May 10 on belief that the city had not filed its payroll documents on time, according to the comptroller’s office. The subsidy payment, which was related to $560 million of BABs that were sold in December as part of a $1.4 billion general obligation deal, was made on Monday. The bonds pay interest on June 1 and December 1, according to the official statement.
BABs are taxable bonds created under the American Recovery and Reinvestment Act that offer issuers a 35% interest subsidy.
New York City is not the first municipality whose BABs subsidies were reduced — if temporarily — by federal offsets. The IRS in April withheld $617,284 offset of BABs subsidies due to Austin over a dispute regarding the city’s payroll taxes. A Treasury Department attorney last month said that about 1% of BABs subsidies are affected by offsets.