The Internal Revenue Service’s tax-exempt bond office will start including questions about post-issuance compliance procedures and implementation in information document requests, an official said here on Thursday at the Government Finance Officers Association winter meeting.
“We’ve always from the beginning talked about the importance of post-issuance compliance,” Steve Chamberlin, acting director of the TEB office, told GFOA’s debt committee. “On the theory the presence of procedures is helpful in determining the likelihood of the risk of noncompliance. You will start to see questions that ask what active steps are being used.”
TEB first introduced post-issuance compliance questions in their questionnaires on 501c3 bonds around 2005. Those questions evolved into a series of questionnaires on different kinds of bonds as part of the IRS’s ongoing efforts to promote voluntary compliance with federal tax requirements, Chamberlin said.
Several years later, TEB wanted to create a program that provided a benefit for issuers, which was their voluntary closing agreement program in 2011.
“We’ve been responding to the questions of post-issuance compliance,” said Ben Watkins, director of Florida’s bond finance division director and chair of GFOA’s committee on governmental debt management. “We want to be doing the right thing and check the box that we have policy and procedures in place. That will be a focus for us to get guidance out for our members even though it’s not a requirement. We feel that is necessary.”
Chamberlin also told debt committee members that their compliance practice research team is getting ready to publish a document draft that identifies for issuers red flags that are likely to occur over the life of a bond issue from the planning stages through the final redemption. Red flags would be warnings of potential non-compliance.
He said the IRS is seeking feedback from GFOA and other market groups on how to improve the draft and help to incorporate it into TEB’s next webinar in September.
Separately, Chamberlin said that he is “optimistic” that the TEB office will be authorized to hire six to eight new revenue agents this year.
The department has been cleared to announce the positions on usajobs.gov, but doesn’t have the authority to fill them until its annual budget is known, which is determined by Congress. The positions will be posted next week.
There are currently 86 people in the TEB office, Chamberlin said, adding the additional hires would be approximately a 15% to 20% increase for the office. The TEB office has been operating under a hiring freeze for several years.