What We Do
ESG / Sustainable Finance Consulting
Swap Monitoring, Valuation, GASB 53/72
Structured Investment Product Bidding
Municipal Liquidity Facility Program (MLF)
Tobacco Bond Administrative Agent Services
Post-issuance tax compliance related to tax-exempt bonds continues to be a priority for the IRS. Such efforts include (i) annual reporting requirements for nonprofit organizations in the form of IRS Schedule-K (Form 990) which requires detailed annual private use calculations, (ii) audits of tax-exempt bonds (including physical examination of the bond financed facilities), and (iii) enhanced information gathering through the IRS Form 8038.
The IRS has indicated that they are monitoring Schedule K returns and may base audits on information reported in such returns for nonprofit organizations. In the event of an IRS bond audit or a Schedule-K audit, it is necessary for borrowers to provide clear and convincing information to support their Schedule-K reporting.
The regulatory structure for greater scrutiny is in place, calling for tax-exempt debt issuers and borrowers to focus on post-issuance tax compliance to preserve the tax-exempt status of outstanding bonds. Issuers and nonprofit corporations need to implement a rigorous post-issuance compliance program to meet these new requirements.
WHAT SHOULD YOUR ORGANIZATION DO TO BE PREPARED?
Issuers and borrowers of tax-exempt debt that implement a comprehensive post-issuance tax compliance program will be in a strong position to defend their position in the event of IRS scrutiny or an audit, and do so in a cost-effective manner. Four broad actions are vital to compliance:
- Establish written policies and procedures addressing post-issuance tax compliance.
- Calculate accurate percentage of private business use on all facilities financed with tax-exempt bonds.
- Retain records for all tax-exempt bond issues.
- Consider professional post-issuance tax compliance assistance.
HOW BLX CAN HELP
To assist issuers and nonprofit organizations in meeting ongoing post-issuance compliance responsibilities, BLX offers a wide range of post-issuance services, including:
- Comprehensive review of the expenditure and use of bond proceeds
- Periodic review of all contracts, leases and arrangements with private parties relating to the use of bond financed facilities
- Annual private business use review and calculation
- Assistance with and completion of IRS Schedule-K, applicable to nonprofit corporations
- Development and review of written post-issuance tax compliance policies and procedures
2022 BLX-Orrick PIC Workshop Highlights Video
The Orrick Public Finance Green Book Series – Post-Issuance Tax Compliance and Continuing Disclosure Responsibilities for Issuers and Borrowers of Tax-Exempt Bonds Second Edition
Please contact us to request further information:
212 506 5275
212 506 5262
BLX Institute Topic
Post-Issuance / Private Use Compliance