Tax Law Committee
Identifies and addresses issues of which NABL members should be aware in the tax law area.
ARRA Transitional Rules, Technical Corrections and Clarifications
Project Leader: Michael Larsen
NABL had previously submitted comments to the ARRA provisions. The current project will deal with additional areas involving transitional rules for refundings; issues raised by the HIRE provisions in connection with direct subsidy payments on certain qualified tax-credit bonds; remedial action; limitations on the ability to spend investment earnings off debt service reserve funds and other interpretive matters.
Status: Recruiting members and ideas.
Contact: mikelarsen@parkerpoe.com
Direct Pay Extinguishment Project
Project Leader: Michael Larsen
In light of the IRS direct pay bond audit question asking issuers to provide a record of any acquisition of the bonds in the primary or secondary market “by or on behalf of any agency, instrumentality, fund, or affiliated person related to the issuer; or by or on behalf of any pension plan that is sponsored, owned or controlled by the issuer or an agency, instrumentality, fund or affiliated person related to the issuer”, NABL has established a project the object of which is to develop a workable analysis to address a potential finding on the part of the Service that the indebtedness has been affected in some way as a result of being held by one of the persons identified above.
Status: A sizable group has been recruited and in the process of getting organized.
Contact: mikelarsen@parkerpoe.com
Allocation and Accounting Regulations
Project Leader: Perry Israel
NABL had previously submitted comments to the allocation and accounting rules issued in proposed form in 2006. This project consists of following up on those comments and attempting to achieve finality in this area.
Contact: perry@103law.com
Management and Service Contract Guidelines
Project Leader: Brenda Horn
The principal goals of this project are (a) to broaden the scope and application of the safe harbor concepts of Revenue Procedure 97-13, with a particular view to securing additional safe harbor guidance from the IRS relating to categories of management contracts that do not fit well under the existing safe harbors but that should not be treated as occasioning private business use and (b) to attempt to develop more general legal principles that may be applied in situations not covered by safe harbors.
Status: Underway, a first draft of a matrix of discussion points has been prepared.
Contact: Brenda.Horn@icemiller.com
Clinical Trials
Project Leader: Michela Daliana
The goal of this project will be to propose an analytic approach to Treasury and IRS, perhaps in a safe harbor format drawing on the principles of Revenue Procedure 2007-47, that would provide guidance under the private activity bond rules regarding clinical trial activities. The focus will likely be with respect to stage III and IV testing of therapeutic drugs.
Status: Recruiting participants. A first draft of a statement of a description of the issue providing a platform for future discussion is expected to be available by the end of March.
Contact: mdaliana@hawkins.com
Potentially Disparate Treatment of Unrelated Trade or Business Use and Private Business Use under Code Section 145.
Project Leader: Michela Daliana
The objective of this project is to attempt to clarify the interplay between the short-term use exceptions to the private business use rules of Section 141 together with unrelated trade or business activities under Section 513 in the context of 501(c)(3) financings under Section 145.
Status: just starting; looking for recruiting participants
Contact: mdaliana@hawkins.com
Additional Tax Committee Activities
In August of 2010, NABL, GFOA, SIFMA and RDBA submitted a letter to the IRS providing information on how taxable (direct subsidy) bonds and tax-exempt bonds are priced in the different markets in an attempt to assist the Service in its deliberations regarding issue price. The question of how to properly establish issue price is longstanding, and one that will continue to occupy the attention of NABL and its members. It is the intention of the Committee to continue the dialogue with the Service in an attempt to develop appropriate rules and guidelines.
In December of 2010, NABL submitted a letter to the IRS requesting a safe-harbor be established in connection with the application of Notice 2010-81 to situations involving volume cap under Section 146, including Section 146(d)(5). The Tax Committee is in the process of preparing a companion letter addressing more general concerns raised by the principles set forth in Notice 2010-81 in respect of certain draw-down bonds issued subject to Section 146.
The Tax Committee is also seeking to undertake a project to alert issuers and their counsel to the rights and responsibilities associated with the filing of Form 8038-CP requesting direct subsidy payments as refunds of overpayments of tax.
Committee Leadership