WASHINGTON — The new position on political subdivisions that the Internal Revenue Service has taken in a bond-related tax dispute with a community development district in Florida has had a "chilling effect" on the issuance of such bonds and has hurt existing bond issues, bond lawyers are warning.

The National Association of Bond Lawyers made the warning in a letter sent to Treasury Department and IRS officials on Nov. 21. Accompanying the letter was a four-page memorandum explaining NABL's opposition to the ruling and urging the agency and the Treasury Department to adopt new guidance containing a "safe harbor" for tax-exempt bond issuers.

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