Tax

WASHINGTON - President-elect Barack Obama will rely on a board of external advisers to both contribute to and oversee the development of the economic recovery proposals his administration plans to introduce immediately after his inauguration in January, he announced Wednesday.

The Internal Revenue Service has released guidance for Midwestern and Gulf Coast states that wish to issue up to $17 billion of special tax-exempt private-activity bonds or tax-credit bonds authorized this year to help natural disaster recovery efforts.

WASHINGTON - President-elect Barack Obama yesterday announced his economic team and said he has directed them to draft a broad, multibillion-dollar stimulus package within the next two months that would provide funds for infrastructure projects. He also warned that the deficit will grow significantly whether or not stimulus legislation is enacted and did not rule out repealing Bush administration tax cuts before they expire.

A student housing developer will not be able to use tax-exempt bonds to finance a new development after the Internal Revenue Service concluded in a private-letter ruling that it failed to qualify as a 501(c)(3) charitable organization.

The Joint Tax Committee has modified the way it categorizes tax-exempt bonds for purposes of calculating federal tax expenditures, causing some issuers to worry that the changes will make certain types of tax-exempt bonds less attractive to lawmakers.

WASHINGTON - Senate Democratic leaders yesterday unveiled a $100 billion economic recovery package that would provide $13.5 billion for infrastructure projects and more than $1.5 billion for housing programs. However, it's unclear if the measure would include tax-exempt or tax-credit bonds, and sources are skeptical about its prospects in the current lame-duck session.

A school district would not be able to issue tax-exempt notes to finance temporary cash-flow shortfalls because of an endowment-like fund it set up with money it received from the settlement of litigation against the state, the Internal Revenue Service concluded in a private-letter ruling.

State and local governments may already be feeling the budgetary pinch due to the economic downturn, but the worst is yet to come, according to the Rockefeller Institute of Government.

Lawmakers are expected to meet in a lame-duck session next week to draft a small fiscal stimulus bill that will narrowly focus on unemployment benefits and food stamps, but is not expected to include measures related to the municipal bond market, congressional sources said this week.

The Internal Revenue Service has closed its audit of $15 million of exempt-facilities bonds issued by the Arkansas Development Finance Authority in 2001 with no change to the tax-exempt status of the debt.

WASHINGTON - State tax revenues throughout the nation are flat for the first time since the 2002 recession, the Rockefeller Institute reported yesterday.

WASHINGTON - House and Senate Democratic leaders said yesterday that they will push for a second economic stimulus package when Congress returns to Washington for a lame-duck session on Nov. 17.

WASHINGTON - The District of Columbia on Friday filed suit against Bank of America NA in D.C. Superior Court seeking $105 million of damages after the bank cashed fraudulent tax checks in a scam that cost the district $48 million over 20 years.

WASHINGTON - The Virginia Supreme Court on Friday reversed a lower court and ruled that the Glebe, an upscale continuing-care retirement community near Roanoke, is exempt from local taxes, a decision that eases the facility's concerns of owing hundreds of thousands of back taxes and improves its finances.

WASHINGTON - The Internal Revenue Service is seeking applications for two tax-exempt bond experts to serve on its Advisory Committee on Tax Exempt and Government Entities.

A case pending in a federal court in California could severely limit the Internal Revenue Service's ability to financially penalize bond lawyers and other transaction participants responsible for abuses in municipal bond deals done before 2004. But market participants are still unsure of what the final fallout from the case will be or how it might change IRS practices.

New York City officials claimed Friday that their land appraisal for the new Yankee Stadium was accurate, while a House subcommittee chairman and a state assemblyman charged that the value of the land was artificially inflated to allow for the issuance of more bonds backed by payments in lieu of taxes.

WASHINGTON - The Treasury Department yesterday issued more restrictive final regulations for bonds backed by payments in lieu of taxes, just three days before a House panel is scheduled to hold a hearing questioning the use of PILOTs to finance the new New York Yankees stadium.

The National Association of Bond Lawyers is urging the Treasury Department to clarify that muni issuers can issue a substantially lower amount of private-activity bonds than they originally proposed without having to re-obtain approval from the public.

The chairman of a House subcommittee is demanding that New York City officials provide more cooperation to its investigation of whether inflated land values were used to artificially increase the amount of tax-exempt bonds the city could issue to finance a new stadium for the New York Yankees.