IRS

A fourth audit in two months fuels the perception that the IRS has launched an enforcement initiative involving the island territory.

The clarification allows dozens of otherwise stalled housing projects around the nation to move ahead with financing that includes a combination of tax exempt multifamily PABs and the 4% federal housing tax credit.

The IRS audit of the Puerto Rico Municipal Finance Agency's $59 million in 2005 Series B Refunding Bonds is the third IRS audit of tax-advantaged bonds involving the commonwealth announced over the last six weeks.

If the IRS fails to provide a regulatory fix, two members of Congress may address the issue legislatively in bicameral affordable housing legislation that had wide bipartisan support in the last Congress.

Midwest Fertilizer Co. announced Monday it has settled with the IRS Office of Appeals an audit that originally disqualified the tax-exempt status of $1.259 billion of refunding bonds that will be used to help finance a fertilizer plant in Posey County, Indiana.

The $11 million in tax exempt bonds that financed the construction of the K through 6 school are being paid off by the owner of the apartment building developed on part of the 1.67-acre site.

Telley Meier, IRS field operations manager for the Indian Tribal Government/Tax Exempt Bonds office, advises bond attorneys to call the examination agent if they think an audit has been erroneously selected.

All four industry groups that submitted comments on the proposed rule requested a continuation of the practice that allows remarketing reissuances at a premium.

An easier procedure for declaring when a reissuance occurs is among NABL's recommendations.

The federal tax issue that is at stake in both audits involve the federal payments for the direct-pay subsidy.

The cap, repeal of which is a priority for state and local groups, will affect nearly 11 million taxpayers, an audit found.

“Major banking organizations have now used this abusive tax shelter scheme to illegally shelter well over $1 billion in taxable income,” said the letter by W. Mark Scott.

None of the 12 recommendations require congressional action and all are within the scope of the administrative powers of the IRS, according to NABL.

Libor based municipal debt stood at $47.6 billion at the end of 2018, or about 1.3% of the overall muni market.

The U.S. Court of Appeals for the District of Columbia ordered a district judge to review four documents totaling 16 pages in an IRS Office of Professional Responsibility case file for possible release under the federal Freedom of Information Act.

Until a clarification is issued, bond lawyers are requiring that the rental units be open to all who qualify without any preferences for special groups such as veterans.

Federal subsidy payments made to issuers of Build America Bonds are continuing even as Congress remains deadlocked over funding for government agencies.

The proposed settlement involves the Jan. 3 issuance of $7.3 million in transportation development refunding revenue bonds that are being used in the hope of resolving the tax audit of $9.55 million in tax-exempt bonds issued in 2009 for construction of a parking garage.

It’s unclear if monthly federal subsidy payments on Build America Bonds will be made.

Only five priorities remain on the Treasury and IRS work plan in 2019 for the municipal bond market.