The Internal Revenue Service closed a routine audit without changing the tax-exempt status of $147.5 million of auction-rate securities sold by the New Mexico Hospital Equipment Loan Council in May 2004.
The council is an independent issuer that sells tax-exempt bonds on behalf of nonprofit and for-profit health care facilities. The audited bonds were issued on behalf of the nonprofit Presbyterian Healthcare Service in 2004 and were refunded in 2008. The IRS opened its audit of the bonds in December.
The council disclosed the IRS closure of the audit in an event notice filed with Municipal Securities Rulemaking Board's EMMA system on July 7.
In its letter to the council, dated June 28, the IRS said if it needs to open another examination of the bonds, "any change resulting from [any] future examination may affect all open years of the beneficial owners of the bonds."
The letter was signed by Robert Henn, manager of the IRS tax-exempt bond office's field operations.
Bond proceeds were loaned to the Presbyterian Healthcare Service for land acquisition, construction, and equipping of hospital facilities in the state. The proceeds were also used to refund bonds previously issued by Albuquerque, according to the offering statement.
The Presbyterian Healthcare Service is the largest health care provider in New Mexico and operates eight hospitals in the state, according to its website.
Standard & Poor's in November revised its outlook for the nonprofit to positive and affirmed an AA-minus rating. The provider had half a billion dollars of debt outstanding as of November, according to the rating agency.
The audited bonds were insured by MBIA Insurance Corp. Goldman, Sachs & Co. underwrote the debt and Sherman & Howard LLC was bond counsel. Jones Day represented the underwriters.
The same parties facilitated the 2008 refunding transaction.