The Internal Revenue Service's Office of Appeals is recommending that the agency issue a new determination letter in order to reinstate the tax exemption of approximately $8.5 million charter school project revenue bonds issued for the LEAP Academy University Charter School in 2003.

The IRS had revoked LEAP's tax-exempt status earlier this year after the nonprofit failed to file Form 990 financial statements for three fiscal years ending June 30, 2007, 2008 and 2009. Organizations with 501(c)(3) status are required to file these financial forms with the IRS.

The IRS reinstated its tax-exempt status as of May 17, 2012, but not during the months prior to that, after LEAP filed Form 990 financial statements that were past due.

The latest development came in a letter dated July 8 from the Office of Appeals to LEAP and was disclosed in an event notice by the Delaware River Port Authority on the Municipal Rulemaking Securities Board's EMMA system on July 19.

"Subject to receiving such determination letter consistent with the recommendation of the IRS appeals office, LEAP expects that its status as a qualified 501(c)(3) organization for all relevant periods since the date of issuance of the bonds will be favorably resolved without adverse effect upon the exclusion from gross income of the interest on the bonds for any period," LEAP said in the event notice.

The Delaware River Port Authority had lent the proceeds of the charter school project revenue bonds to LEAP, a nonprofit organization to finance a charter school in Camden, N.J., on property owned by Rutgers University that was leased by LEAP.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.