Issuer groups have sent a letter to the Internal Revenue Service requesting TEFRA hearings be held over the phone permanently, as the
The letter was addressed to Lily Batchelder, assistant secretary, office of tax policy at the U.S. Department of the Treasury, William Paul, principal deputy chief counsel at the IRS and Krishna Vallabhaneni, tax legislative counsel at the U.S. Department of Treasury and was signed by representatives from the Government Finance Officers Association, National Association of Counties, National Association of State Auditors, Comptrollers and Treasurers, National Association of Health and Educational Facilities Finance Authorities, National Association of College and University Business Officers, National Council of State Housing Agencies and the National Association of Bond Lawyers.
A public notice hearing is required for the issuance of most private activity bonds under the 1982 Tax Equity and Fiscal Responsibility Act and in May 2020, citing COVID-19 precautions, the IRS began allowing such hearings to be conducted over the phone on a temporary basis.
Issuer groups have requested extensions to the temporary relief in the past, but this is the first time they have requested TEFRA hearings to be held over the phone permanently and the first time this large a coalition of issuers has come together on the issue.
“As issuers, we have appreciated the prompt flexibility provided by the IRS through these Revenue Procedures,” the letter said. “Telephonic hearings have permitted the continuance of private activity bond issuers while maintaining the continued input of our communities. In addition to providing relief from the logistical difficulties presented by the COVID-19 Pandemic, telephonic hearings have allowed our community members to participate remotely when in-person were either unavailable or inconvenient.”
But the letter comes as the most recent Omicron variant begins to wane and many jurisdictions are beginning to repeal COVID-19 related restrictions.
“Even as society, including governments and their activities, open up, there is no sense creating unnecessary risks,” said Chuck Samuels, a member at Mintz Levin and counsel to the National Association of Health & Educational Facilities Finance Authorities. “The remote TEFRA hearings option has worked out well and should be extended,” he added. “Given the marginal impact and participation at these hearings, allowing them to be done more efficiently remotely as an option is an effective burden reducing mechanism.”
The temporary relief by the IRS has come as a welcome respite from the often burdensome in-person meetings. But for some issuers, holding TEFRA hearings over the phone has been viewed as even more effective than conducting them in-person.
“Participation has increased because it's easier for folks to join via Zoom than to show up in person,” said Rich Moore, tax partner at Orrick Herrington & Sutcliffe and a former National Association of Bond Lawyers president. “I think it's been a sort of accidental but productive experiment in what's the most effective way to hold a hearing,” he said. “I think it’d be a good idea to make this permanent.”
The IRS has moved
“While some jurisdictions are completely back to work in person, the move to allow telephonic TEFRA hearings would signal that the IRS understands the enormous changes many jurisdictions have faced as a result of the pandemic,” Moore said.
How issuers conduct themselves has changed as a result of the pandemic and issuers are hoping for the IRS to recognize that.
“You've got to realize that Zoom calls, and WebEx calls are actually legitimate meeting spaces,” said Emily Brock, director of the federal liaison center at the Government Finance Officers Association. “We just support that and we'd like for the IRS to also consider supporting that into perpetuity.”
The issuance of PABs may also help jurisdictions recover from some lingering COVID-19 effects, and the option to conduct more efficient hearings only makes that process easier.
“Counties use PABs, for airport facilities, hospitals, solid waste facilities, affordable housing, other larger construction projects, as well, too,” said Eryn Hurley, deputy director of the National Association of Counties’ government affairs department. “So they're a very significant tool for counties, especially right now as we are continuing to recover from the COVID-19 pandemic.”
The IRS has been good about revisiting deadlines in the past and many expect the agency to act before this particular relief expires on March 31.
“I think this is the last of our requests,” Brock said. “Hopefully, they come to the same conclusion that we have that the legitimate meeting space concept can be embraced by the IRS as well.”
