The Internal Revenue Service has closed its audit of $40 million of 2002 revenue bonds issued by the Illinois Health Facilities Authority, now part of the Illinois Finance Authority, without changing the tax-exempt status of the debt, the IFA disclosed Thursday.
The IRS action was disclosed by the issuer in a material event notice it submitted to the nationally recognized municipal securities information repositories, one day after the authority issued a similar notice for another bond issue. On Wednesday, the authority released a material event notice stating the IRS had concluded an examination of $50 million of 2002 revenue bonds with no change to that debt's tax-exempt status.
According to the Thursday notice, the authority received a letter on Aug. 25 stating that the IRS had opted to close the examination. The bonds had been issued for the Riverside Health System to finance the costs of acquiring, constructing, renovating, remodeling, and equipping health care facilities.
The examination has been closed "with no change to the position that interested received by bondholders is excludable from gross income under section 103 of the Internal Revenue Code," the IRS said in the letter.
The IRS had begun the audit on April 30. In the letter announcing the examination, the IRS said that it had no specific reason to suspect the bonds were not compliant with federal tax requirements.
Jones, Day, Reavis & Pogue, now Jones Day, was bond counsel on the deal, according to the bond documents. Gardner, Carton & Douglas, now part of Drinker Biddle & Reath LLP, was underwriter's counsel. Cain Brothers & Co. was the underwriter.