In an eagerly-awaited decision, the United States Supreme Court struck down today the “physical presence” standard in Quill Corp. v. North Dakota, 504 U.S. 298 (1992). Quill had long hamstrung states’ efforts to collect sales and use taxes on purchases by in-state residents of products sold by internet-only retailers. With Quill now history, states are

On April 11, 2018, the Internal Revenue Service published Revenue Procedure 2018-26, a copy of which can be accessed here, which provides new guidance to issuers on the availability of remedial actions to preserve the tax-advantaged status of their bonds in the face of a violation of the tax rules. Rev. Proc. 2018-26 applies to tax-advantaged bonds generally, i.e. traditional tax-exempt bonds under section 103 of the Code, as well as federally taxable bonds that carry with them tax credit or direct pay subsidy benefits.
Continue Reading IRS Issues Guidance on Remedial Actions for Tax-Advantaged Bonds

On March 29, 2018, the National Association of Bond Lawyers (NABL) formally requested guidance from the IRS regarding the ability of municipal issuers to issue tax-exempt advance refunding bonds to refund taxable bonds after the enactment of the Tax Cuts and Jobs Act (TCJA). The request comes on the heels of public statements by Treasury and IRS representatives regarding their belief that notwithstanding the passage of TCJA, municipal issuers may continue to issue tax-exempt advance refunding bonds to refund taxable bonds, so long as the taxable bonds to be refunded are not tax-advantaged bonds such as Build America Bonds, and the refunding otherwise complies with the requirements of section 149 of the Code and the regulations thereto.
Continue Reading NABL Requests IRS Guidance on Tax-Exempt Advance Refundings of Taxable Bonds

On December 20, 2017 Congress passed the Tax Cuts and Jobs Act (TCJA).  The legislation was signed by President Trump on December 22, 2017 and many key provisions of the law became effective on December 31, 2017.

The purpose of the TCJA was to stimulate economic growth through a major overhaul of the Internal Revenue Code.  One of the signature elements of the TCJA is the reduction of the federal corporate tax rate from 35% to 21%.  While this may be good news to the business community generally, the rate reduction presents potential unique problems for conduit borrowers, such as 501(c)(3) organizations, and lenders under tax-exempt bank loan structures.
Continue Reading Review and Analysis of Tax-Exempt Loan Documents Following Tax Cuts and Jobs Act

2018 will be a year of monumental tax law changes following the recent approval by the House and Senate of the Tax Cuts and Jobs Act. President Donald Trump is expected to sign the bill into law in the coming days. While the Act in its final form contains some provisions that hurt the tax-exempt municipal bond industry, many detrimental provisions included in prior versions of the bill were dropped.
Continue Reading House, Senate Pass Tax Cuts and Jobs Act; Private Activity Bonds Saved

In a Notice of Proposed Rule Making published September 28, 2017, the IRS announced new proposed regulations on the public approval requirement of section 147(f) of the Internal Revenue Code, 26 U.S.C. §147(f). A copy of the Notice can be accessed here. The announcement should not come as a surprise – IRS representatives announced earlier this year at the annual Tax and Securities Law Institute sponsored by the National Association of Bond Lawyers that the finalization of regulations interpreting section 147(f) was a regulatory priority for the agency.
Continue Reading IRS Proposes New Regulations on Public Approval Requirement for Private Activity Bonds