A student housing developer will not be able to use tax-exempt bonds to finance a new development after the Internal Revenue Service concluded in a private-letter ruling that it failed to qualify as a 501(c)(3) charitable organization.

"Providing housing for students in the manner you have described, absent special facts and circumstances, is a trade or business that is not a charitable activity," the agency stated in its ruling. "Accordingly, you do not qualify for exemption as [a charitable] organization ... and you must file federal income tax returns."

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.