The One Big Beautiful Bill Act created tax-exempt private activity bonds for spaceports, a nascent industry, with a select group of potential issuers.
"I wonder what kind of demand there is for these facilities and what Congress is trying to encourage," said Matthias Edrich, partner at Kutak Rock.
"I realize all these facilities are needed and there are companies doing this. But is there such a need to encourage this development? Maybe in the future this is a long-term provision that will have some benefit beyond the handful of entities."
The Federal Aviation Administration lists twenty spaceports scattered across ten states. Florida accounts for six, Texas has four, California and Virginia both have two. Alabama, Alaska, Colorado, Georgia, New Mexico, and Oklahoma all have one.
"I think the genesis of this bill was by the Florida congressional delegation," said Ed Oswald, partner at Orrick, Herrington & Sutcliffe. "You can understand why, but it could also certainly work in other parts of the country."
The legal framework of spaceport bonds is similar to PABs used by airports for infrastructure improvements.
"Like airport private activity bonds, the architecture in spaceport private activity bonds will be conduit bonds issued by a governmental unit and a private lessee will make lease payments and perhaps other amounts will repay the bonds," said Oswald.
The attorneys are unsure of the exact meanings of some new terms including "flight control operations, launch services, re-entry services," and a manufacturing provision.
"This is expressly blessing manufacturing, which, as we know, has really been the domain of small issue industrial development bonds for quite some time," said Oswald.
The OBBBA provision differs from PABs used by airports by turning off a requirement that the bonds must financing something the public can use. People can use airports servicing common carriers but not necessarily spaceports.
Clarifications on new tax laws typically fall to the Internal Revenue Service which has been victimized by budget cuts and staff reductions that have reduced its workforce by an estimated 13%, as of this year.
"I'm not sure who's working in guidance at the IRS anymore," said Oswald. "We hope that this would get some attention but as we all know there's a lot of areas in need of attention. Certainly, Chief Counsel has been quiet and Treasury has been quiet."
The beleaguered agency may be getting some help via a reported hiring effort looking to fill 60 positions in the Office of Chief Counsel to assist with international tax and litigation support.
Tax lawyers are dealing with a rising tide of unanswered questions, odd requests in audits and a revolving door of agents.
"A person might be assigned to help with bonds one day and then two months later, they're assigned to help out with insurance, and it's causing issues," said Barbara League a partner in Orrick's Houston and Austin offices.
The IRS is currently helmed by Scott Bessent, who is also serving as the Secretary of the Treasury. Since the Trump administration took over there have been six acting IRS Commissioners counting Bessent.
