WASHINGTON – The Internal Revenue Service recently issued a favorable private letter ruling that found a public power utility's contracts with other utilities, including some that were private, would not give rise to private business use that would jeopardize the tax-exempt status of refunding bonds it wanted to issue.

The IRS cautioned that private letter ruling 201727003, which was publicly issued on July 7, is only directed at the public utility, which was not identified. But several lawyers said that the letter-ruling shows flexibility on the part of the IRS and sheds light on the complex area of tax law and regulations covering public utilities, the contracts they have with other utilities and entities, and the bonds they issue.

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