WASHINGTON — The Internal Revenue Service has declared as taxable interest earnings from tax-exempt bonds issued by an authority in Little Rock, Ark., but that may be the least of the bondholders’ concerns because the bonds are in default and they may not receive any more interest payments.

In addition, the IRS’ tax dispute and two settlements with issuer Arkansas Residential Housing and Public Facilities Board and borrower HLR, LLC, may have caused the Service’s tax-exempt bond office to direct field agents not to enter into closing agreements involving bond redemptions until after the bonds are redeemed, sources said.

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