WASHINGTON - Governmental issuers can purchase their own auction-rate bonds on a temporary basis without running afoul of any tax laws or extinguishing the debt, the Treasury Department said in a notice issued yesterday.

"This notice is intended to provide greater certainty and flexibility to address certain potential federal tax issues that have arisen in the tax-exempt bond market as a result of recent rating agency downgrades of major municipal bond insurers and failures of auctions in the auction-rate bond sector of the tax-exempt bond market," the 21-page document stated.

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