Tax

WASHINGTON — Build America Bond issuers that inadvertently violate tax law requirements and voluntarily seek to correct them would have their federal subsidy payments reduced, rather than eliminated, if the Internal Revenue Service adopts recommendations an advisory committee presented to it yesterday.

ATLANTA — A Treasury Department official Monday said that federal regulators already have attempted to assuage muni market participants’ worries about how to determine issue price for Build America Bonds in guidance issued in April, even though issuers continue to air concerns about the lack of guidance.

WASHINGTON — Internal Revenue Service officials Thursday said that there are no plans to audit up to half of all Build America Bond deals, backing away from remarks they made last week.

WASHINGTON — A consulting firm has warned the Treasury Department that interim guidance it released in March might force small school districts to obtain Cusip numbers for their tax-credit bonds even if the issuer has no intention of ever stripping the tax credit from the bonds and selling it separately.

WASHINGTON — Municipal issuers and their bond lawyers last week were scheduling meetings to discuss whether the Internal Revenue Service’s compliance push on Build America Bonds will deter them from issuing the bonds in the future or force them to change the offering documents to protect themselves in case the IRS audits the bonds.

The Internal Revenue Service closed an audit of $61.3 million of revenue bonds issued in 2005 by the Coastal Bend Health Facilities Development Corp. of Corpus Christi, Tex., and has determined the debt can remain tax-exempt.

WASHINGTON — The House on Friday voted 215 to 204 to approve legislation that would extend the Build America Bond program for two years, while gradually reducing the subsidy payments the federal government makes to BAB issuers.

WASHINGTON — The Internal Revenue Service plans to ask issuers of negotiated Build America Bond transactions, in a revised “compliance-check questionnaire,” if any investors who bought their bonds in the primary market paid more than the price the bonds were initially offered at.

WASHINGTON — The Internal Revenue Service plans to audit one of every two Build America Bond transactions, Steve Chamberlin, a senior manager in the IRS’ tax-exempt bond office, said during a teleconference Tuesday sponsored by the National Association of Bond Lawyers.

WASHINGTON — Maryland has become the first state to disclose that a portion of its Build America Bond subsidy payment was reduced so that it could pay the federal government outstanding payroll taxes, state officials said this week. The offset could affect BAB issuance in the future, they said.

WASHINGTON — The Internal Revenue Service, concerned that some Build America Bonds are being sold to investors at prices that are too high, is urging municipal issuers to track the trading of their BABs through the Electronic Municipal Market Access system and to question underwriters about the pricing.

DALLAS — The Internal Revenue Service is withholding up to $1.2 million of direct-payment subsidies for Build America Bonds issued by Austin last year, said Treasurer Art Alfaro.

WASHINGTON — The recovery zone bond program would double in size to $50 billion and Build America Bonds could be used to do current refundings of existing BABs under a new tax and jobs bill released late Thursday evening by leaders of the House and Senate tax-writing committees.

WASHINGTON – Leaders of the House and Senate taxwriting committees are expected today to introduce jobs and extenders legislation that would extend the Build America bonds program for two years, until the end of 2012, and gradually lower the subsidy to 30%.

Two bond-issuing authorities in Virginia entered into a voluntary closing agreement with the Internal Revenue Service to preserve the status of $74.3 million of bonds after one of them sold its waste-to-energy facilities, which were financed with the bonds, to Wheelabrator Portsmouth Inc.

WASHINGTON — The Internal Revenue Service has closed its audit of $161.3 million of variable-rate demand student housing revenue bonds issued by the Payne County, Okla., Economic Development Authority in 2002 with no change to the tax-exempt status of the debt.

A position the Internal Revenue Service is taking regarding $150 million of student-loan revenue bonds under audit could have ramifications for the entire tax-exempt student loan bond industry, market participants said last week.

WASHINGTON — Reliance on volatile sources of tax revenue that swing in boom-and-bust cycles led to budget woes most states are currently facing, according to a new report published by the Tax Foundation.

WASHINGTON — Energy and climate change legislation unveiled yesterday in the Senate would create a $3 billion tax-credit bond program for vehicles powered by natural gas, allow private-activity bond financing for advanced nuclear power facilities, expand a nuclear loan guarantee program, and provide $2 billion of competitive grants for transportation projects.

WASHINGTON — The Treasury Department and Internal Revenue Service are seeking public input on which projects should be included on the 2010-2011 priority guidance list.