Tax

WASHINGTON - South Carolina Gov. Mark Sanford on Friday released a budget proposal that calls for an optional flat income tax and cuts spending as the state prepares for tough economic conditions in 2009.

WASHINGTON - House Financial Services Committee chairman Barney Frank is expected to introduce legislation today that will give the Treasury Department and the Federal Reserve explicit authority to purchase or guarantee municipal debt under their economic recovery programs, congressional sources briefed on the legislation said.

WASHINGTON - Sen. John Kerry, D-Mass., has introduced legislation that would exempt all private-activity bonds, from the alternative minimum tax, hoping it will be included in the tax portion of the stimulus package that the Senate Finance Committee could consider as early as Monday, sources said.

WASHINGTON - President-elect Barack Obama and congressional Democrats have conceded that an economic recovery bill containing $310 billion of tax cuts and $465 billion of spending may not be ready until early February, while Senate Finance Committee leaders prepare to vote on the tax portion of the bill as early as next week, sources said.

The Internal Revenue Service has determined that some tax-exempt enterprise zone facility bonds issued to finance the construction of a business within a zone will remain tax-exempt even if the facility is sold to another buyer to operate it after its construction.

WASHINGTON - State and local governments could get an infusion of federal funds next year to jump-start many of their shovel-ready transportation projects if Democrats and President-elect Barack Obama are able to enact a promised stimulus package soon after Obama takes office, industry stakeholders said in recent interviews.

WASHINGTON - Tax-exempt issuers will face a generally difficult and volatile economy in 2009, one that will challenge issuers as they try to sell debt during a recession expected to continue until at least the third quarter, economists and market participants said.

WASHINGTON - New population estimates released by the Census Bureau yesterday for 50 states, the District of Columbia, and Puerto Rico, coupled with an inflation adjustment for the 20 smallest states and the district, will boost the amount of private-activity bonds that can be issued nationwide in 2009 to $30.607 billion.

Rule changes proposed by the Internal Revenue Service that would ease public approval requirements for projects financed with private-activity bonds could leave local governments out of the loop, the National Association of Counties warned in a recent letter sent to the agency.

WASHINGTON - The District of Columbia's fiscal 2009 revenues will be $127 million less than were projected in September and will continue to deteriorate in each of the next three fiscal years, chief financial officer Natwar Gandhi said Friday.

WASHINGTON - The Internal Revenue Service's tax-exempt bond branch plans to extend the breadth of its activities in 2009, as it rolls out a post-issuance compliance survey to roughly 200 governmental bond issuers that could be followed up with audits, and launches several targeted research projects examining how bond proceeds are spent.

WASHINGTON - The coming year will mark a reversal for tax-exempt bonds in Washington, as Congress and the new administration focus on using them to help stimulate the economy rather than on restricting them to curb federal revenue losses, market participants said in interviews on the outlook for tax legislation and regulation.

All private-activity bonds would be exempt from the alternative-minimum tax under a bill introduced by House Ways and Means Committee member Richard Neal, D-Mass.

House Republicans have tapped Rep. Dave Camp, R-Mich., to become ranking minority member of the House Ways and Means Committee.

Senate Finance Committee chairman Max Baucus yesterday said that forthcoming economic stimulus legislation would allow state and local governments to issue additional private-activity bonds not subject to the alternative minimum tax for infrastructure projects.

Several community and labor groups are opposing the Treasury Department's proposed regulations that would ease the requirements for municipal issuers to obtain public approval for projects funded by private-activity bonds, warning they would all but remove public input from the process.

The National Association of Bond Lawyers has chosen Victoria P. "Penny" Rostow, a former bank lobbyist and Treasury Department official, to become its director of governmental affairs.

WASHINGTON - A federal court in Indiana has blocked a company from obtaining a $120 million termination payment from the Hoosier Energy Rural Electric Cooperative Inc. in connection with a 2002 sell-in/lease-out, or SILO, transaction, which technically defaulted after the rating of guarantor Ambac Assurance Corp. was downgraded in June.

WASHINGTON - The Internal Revenue Service's tax-exempt bond branch plans to send out about 200 surveys to governmental issuers on their post-issuance compliance practices next month. But unlike a similar questionnaire sent to charities earlier this year, the agency may follow up with audits in some cases.

WASHINGTON - The Internal Revenue Service has launched a "Fast Track Settlement" program that would allow tax-exempt bond issuers and nonprofit organizations that are under audit by the IRS and meet certain conditions to obtain settlements within 60 days.