Updates to Instructions to IRS Form 8038 and 8038-G
Members have noted that there are inconsistencies between the Form 8030 and Form 8038-G and their respective instructions, as well as ambiguities regarding how certain items should be completed in situations that do not fit squarely within the current forms and instructions. The project involves presenting recommendations to the IRS to change the instructions to the forms.
With the demise of advance refunding bonds, issuers have looked for ways to take advantage of historically low interest rates. One structure that seems to be gaining traction is a Cinderella bond structure in which bonds are issued on a taxable basis and “convert” to tax exempt at some future date. The project involves making recommendations regarding pricing safe harbors for Cinderella bonds.
IRS User Fees for Private Letter Rulings Regarding Tax-Exempt Bonds
The volume of private letter ruling requests has tapered off significantly in recent years. It is believed that one of the reasons that issuers and conduit borrowers are not submitting private letter ruling requests is the high user fee that must be paid to obtain a ruling. The project involves proposing a reduced user fee for certain private letter rulings regarding tax exempt bonds. An initial proposal was submitted to the government in December 2020, and work continues in addressing feedback from the IRS.
Project Needing Volunteers:
Expanding the Floating Equity Approach of PLR 201847001 (the “wine shop ruling”)
On November 23, 2018, the IRS released a private letter ruling allowing an issuer to use a floating equity approach to address compliance with the rule in Section 147(e) of the Code that prohibits the use of proceeds of tax-exempt private activity bonds for a business the principal purpose of which is the sale of alcoholic beverages for consumption off premises. NABL believes that additional guidance to expand the approach in this PLR to other areas of the law governing private activity bonds might be helpful. The Committee seeks volunteers to assist with this request for expanded guidance.