The Internal Revenue Service has closed its audit of roughly $20 million of bonds issued by the City of Waterloo, Iowa, with no change to the tax status of the bonds.
The IRS notified the city Aug. 24, according to
The brief notice stated that “based on their audit of the debt issuance, General Obligation Bonds, Series 2016A, the audit will be closed with no change to the tax-advantaged status of the bonds.”
The IRS conducts both routine and targeted audits of tax-exempt bonds, and many are never disclosed on EMMA. Most recently, at the end of July, El Paso County, Texas, disclosed that the IRS had reached a
In June, Winchester, Virginia
The IRS said that its initial 2021 focus on tax compliance and enforcement involves potential arbitrage violations of Internal Revenue Code Section 148 by the investment of bond proceeds in higher-yielding investments beyond the allowable temporary period under Treasury Regulation (Treas. Reg.)1.148-2(e).
In fiscal 2020, the top IRS enforcement and compliance priorities were public safety and jail bonds, sinking fund overfunding, and variable-rate bonds.
Waterloo’s municipal advisor, Speer Financial, did not respond to a request for comment on the audit or a question about whether the audit stemmed from a routine examination.
The Series 2016A was comprised of $8.6 million of tax-exempt GO bonds, in a competitive deal priced at the same time Waterloo sold a $1.8 million taxable GO Series 2016B and a $9.25 million taxable urban renewal bond Series 2016C.
