SEATTLE - Processing applications and distributing payments to issuers that have sold Build America Bonds present a "significant challenge" for the Internal Revenue Service tax-exempt bond office, an official said here Sunday.

Clifford Gannett, director of the IRS' bond office, spoke on a panel at the Government Finance Officers Association's annual meeting. He said his office's responsibility for handling BAB payments marks a significant departure from its previous workload on distributing payments, which consisted of just "a handful" of rebate refunds. Direct-pay BABs are taxable debt municipal issuers can sell and opt to receive a federal subsidy equal to 35% of their interest costs.

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