Tax

WASHINGTON — Claims that states and localities are facing massive budget gaps, unfunded pension liabilities, and health care costs that will lead to bond defaults and bankruptcy filings are greatly exaggerated, and mask the need for states to overhaul out-of-date tax systems and make other structural changes, a new report warns.

WASHINGTON — The House Ways and Means Committee will hold the first of a series of hearings on tax reform on Thursday.

The American Bar Association’s tax group is urging the Treasury Department and Internal Revenue Service to publish guidance confirming that bond counsels’ long-standing practices for bonds issued to finance grants comply with tax law requirements.

Ambac Assurance’s bid to protect its municipal bond insurance book from the Internal Revenue Service faces a daunting hurdle in federal court as the U.S. government argues it has every right to collect taxes it is owed regardless of how the company structures itself.

The Internal Revenue Service ­withheld $707,757, or 15%, of the District of Columbia’s Dec. 1 Build America Bond subsidy payment because of payroll taxes, making the city the latest issuer caught by surprise with an offset.

The Internal Revenue Service is auditing $250 million of Build America Bonds issued by Denver School District No. 1 in December 2009 to finance construction, renovation, and repair of school ­facilities.

WASHINGTON — The federal debt limit must be raised by the end of March to avoid the suspension of federal programs such as state and local government series securities that municipal issuers purchase for advance refunding escrows, Treasury Secretary Timothy Geithner warned Thursday.

WASHINGTON — The Internal Revenue Service is auditing $130.96 million of consolidated revenue bonds issued in September 2002 by the Board of Regents of the University of Houston System to finance the acquisition, construction, and renovation of facilities.

Municipal government tax receipts in the third quarter grew at the fastest annual rate since 2007 as property taxes continue to defy the years-long housing malaise.

The Internal Revenue Service and the Treasury Department told issuers on Wednesday that they may release guidance as soon as possible on tax law issues triggered by the end of the year with regard to certain auction-rate securities and draws under draw-down loans or commercial paper programs.

Tennessee tax collections exceeded budgeted estimates in November — the third month this fiscal year that all tax collections have been better than estimates, with state sales taxes showing growth.

Municipal market groups next year will face an uphill battle trying to get Congress to resurrect the Build America Bond program and other bond-related tax incentives that expire Dec. 31.

Oklahoma tax revenue collections were up more than 9% in November over last year, Treasurer Scott Meacham said last week, as the state's economy continues to rebound from the deepest recession since World War II.

Some transaction participants appear to be rushing to market questionable Build America Bond, bank-qualified or other municipal bond deals before tax incentives expire at the end of the year and risking Internal Revenue Service enforcement action for violations of tax requirements, according to market sources.

WASHINGTON — Municipal market participants are disappointed that the tax bill signed into law by President Obama Friday does not extend the Build America Bond program and other key bond-related tax incentives, but will urge lawmakers to reconsider them next year.

The House is expected Thursday to take up an $857 billion tax package that contains neither an extension of the Build America Bond program nor the increased small issuer limit for bank-qualified bonds, both of which expire Dec. 31.

The Alabama Supreme Court ruled Tuesday that Jefferson County can continue to collect an occupational and business license tax while appealing a lower court decision that it's unconstitutional.

The Internal Revenue Service appears to be escalating its audit of $15 million of school improvement bonds that were issued by Cave Creek Unified School District No. 93 of Maricopa County, Ariz., in 2006 to finance a renovation project.

The Internal Revenue Service is auditing $117.45 million of variable-rate demand utilities system subordinate-lien refunding revenue bonds that were issued in 2004 by Colorado Springs, Colo., for Colorado Springs Utilities to refund some 1994 bonds.

Supporters of Build America Bonds lobbied hard Wednesday to convince lawmakers and administration officials to extend the program for another year as it appeared possible that any compromise tax legislation might not contain any municipal bond-related provisions.