Tax

WASHINGTON - The House Ways and Means Committee's chief tax counsel assured bond lawyers yesterday that although some of the bond programs created by the stimulus law are "unprecedented," particularly the taxable Build America Bonds program, none of them are meant to undercut the traditional tax-exempt bond market.

A tribal government's gas-fired combustion turbine electric generating project can be financed with tax-exempt bonds even though the borrower, a political subdivision of the tribe, charges residents for the power, the Internal Revenue Service determined in a recent private-letter ruling.

WASHINGTON — The House Financial Services Committee’s staff is drafting a three-pronged bill that would authorize federal guarantees for new muni general obligation debt, create a reinsurance program that could bolster monoline bond insurers underwriting new business, and provide a liquidity backstop for variable-rate demand obligations.

The relationship between bond issuers and the Internal Revenue Service will fundamentally change in enforcement actions involving direct-pay Build America Bonds authorized by the stimulus package, bond lawyers said this week.

Rep. Gerald Connolly said yesterday that he will introduce legislation during the next few weeks to provide some sort of federal support for municipal bonds, and that the chairman of the House Financial Services Committee has promised the panel will consider it.

ORLANDO - Treasury Department guidance on how issuers or bondholders can "strip" and separately sell the tax credits from the new tax-credit bonds authorized for 2009 and 2010 by the stimulus law will likely not be ready for several months, department officials said Friday.

Karen L. Hawkins, a partner at the boutique tax law firm of Taggart & Hawkins in Oakland, has been appointed head of the Internal Revenue Service's office of professional responsibility, the IRS announced Tuesday.

WASHINGTON - A federal claims court ruled it did not have jurisdiction over a Texas nonprofit housing corporation's claim that the Internal Revenue Service abused its authority when it demanded $267,440 of arbitrage be rebated from a lease-to-own deal before concluding an audit.

A bill pending in two House committees would allow state and local governments and other municipal bond issuers to sell up to $11 billion of tax-credit bonds over a three-year period to finance new broadband infrastructure projects.

WASHINGTON - State and local governments need prompt guidance from the Treasury Department before they can issue the new taxable Build America or Recovery Zone bonds for cash subsidies or investor tax credits, market participants said last week.

WASHINGTON - President Obama's fiscal 2010 budget proposes a five-year, $25 billion national infrastructure bank, a five-year $5 billion high-speed rail state grant program, $4.5 billion for community block development grants, and $3.9 billion for clean and drinking water state revolving funds.

WASHINGTON - The Village Center Community Development District's issuance of $64.3 million of recreational revenue bonds "effectively perverts" Florida law by allowing the private developer of the Villages retirement community to "engage unchecked in self-dealing," an Internal Revenue Service agent warned in three notices he sent the district last month.

The Village Center Community Development District of Lake County, Fla., has been notified by the Internal Revenue Service that $64.3 million of recreational revenue bonds issued in 2003 to finance the acquisition of golf courses, parks, and facilities for the Villages retirement community may be taxable.

The Internal Revenue Service has begun auditing $149.2 million of excise tax revenue refunding bonds that were issued by the city and county of Denver in 2005.

WASHINGTON - The $787 billion stimulus package signed into law by President Obama yesterday may spur smaller issuers to increase debt issuance through tax code changes, but may also limit the debt that is sold for transportation, water and wastewater, and other infrastructure projects in the near term because of the new federal funds provided for them.

WASHINGTON - Market participants are pleased that the $787 billion economic stimulus package expected to be approved by Congress and signed by President Obama before today contains several provisions that would expand the use of municipal bonds and provide funds to state and local governments for education, transportation, and housing projects.

WASHINGTON - Congress is expected within the next two days to pass a $789 billion economic stimulus bill that contains all of the proposed muni bond initiatives, mostly at the larger authorization levels, as well as a new provision that would eliminate the alternative minimum tax for refundings of bonds that were issued during the last five years.

CHICAGO - Michigan Gov. Jennifer Granholm yesterday unveiled a $44.2 billion 2010 budget that includes more than 1,500 layoffs, spending cuts to prisons and education, and reliance on $500 million in federal stimulus dollars.

SAN FRANCISCO - The borrowing elements in a California budget deal that could be voted on this weekend are largely the same as those proposed by Gov. Arnold Schwarzenegger in January, an administration spokesman said.

WASHINGTON - Senate conferees announced yesterday afternoon that they had reached an agreement on a $789 billion economic stimulus bill, paving the way for House and Senate approval of a final bill that lawmakers hope to send President Obama before next week.