The Internal Revenue Service and the Treasury Department are seeking public comments on the arbitrage restrictions that pertain to tax-exempt bonds.

Under federal tax law, the issuers of many tax-exempt bonds are required to rebate  the arbitrage profits that result when the yield on the invested proceeds exceeds the bond yield.

Issuers are also required to keep records of certain interest rate hedges so that the hedges are taken into account in determining arbitrage profits.

There is no change to the existing regulations, the agencies are only reviewing an extension of a currently approved continuing collection of information as required by the Paperwork Reduction Act of 1995..

Written comments should be received on or before July 30 to be considered, the agencies said. All written comments should be directed to Yvette Lawrence at the IRS.

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