WASHINGTON – Alabama’s Jefferson County expects within the next few weeks to ask the county commission to approve a proposed settlement between it and the Internal Revenue Service nearly $3.1 billion of outstanding sewer revenue warrants.
The county disclosed the notice in an event filing with the Municipal Securities Rulemaking Board’s EMMA system on Monday.
Under the settlement, called a closing agreement, it would make a payment to the IRS to settle tax violations in return for preserving the tax-exempt status of the warrants.
“The County expects the closing agreement to extend to all series of the warrants,” the County said in the event notice. “The proposed closing agreement has not yet been finally approved by the IRS or the County Commission.
The county said it would file another notice if the closing agreement is approved.
The IRS had notified the County in May 2011 that it had selected $2.3 billion of sewer warrants issued in 2003 for examination “to determine compliance with federal tax requirements.”
Separately, Jefferson County officially filed a 101-page plan late Sunday outlining how it will adjust its debt and plans for the future, making it the largest municipal bankruptcy in U.S. history.
The county owes $4.1 billion in outstanding debt. The plan would remove $1.2 billion in debt and would raise more than $1.2 billion in part by increasing sewer rates by 7.4% annually for four years.
Jefferson County filed for Chapter 9 bankruptcy on Nov. 9, 2011.