SAN ANTONIO — Treasury Department and Internal Revenue Service officials are trying to figure out how to apply long-standing tax requirements to Build America Bonds that, if interpreted broadly, could have major ramifications for certain BABs held by public pension funds and other governmental entities, possibly leading to their extinguishment.

Officials also are putting the finishing touches on a revenue procedure clarifying that the IRS could suspend BAB subsidy payments to an issuer during an audit once it says the bonds do not qualify as BABs under tax law requirements.

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