WASHINGTON - Municipal issuers and bond attorneys are concerned about when the Build America Bond cash payments issuers plan to use to make debt-service payments could be disrupted or even reclaimed by the Internal Revenue Service if it finds the BABs violate tax laws or rules.

Their concerns stem from remarks made earlier this month by tax-exempt bond director Cliff Gannett that his office would stop sending BAB payments if it uncovers fraud during an audit. In cases where BABs under audit are suspected of lesser tax violations, he said his office would immediately stop the payments when it sends a proposed adverse determination letter to the issuer.

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