Receipt of bond proceeds at closing and delivery of the transcript of proceedings for the bond issuance may mark the end of the borrowing transaction but it is just the beginning of the process for ongoing compliance with the requirements for tax exempt and tax advantaged financing.
In recent years, the Internal Revenue Service (IRS) has placed increasing importance on the need to have written policies in place to monitor post-issuance compliance with the requirements for tax exempt and tax advantaged financing. Evidence of that increased emphasis can be seen in the current version of the Federal Information Return (Form 8038-G). That version asks issuers to indicate whether they have adopted written procedures for compliance with arbitrage rules and remedial action requirements. According to the IRS, an issuer that has such policies in place will receive more favorable treatment in the event that there is a tax problem with respect to one of its issues.
Given the increased importance the IRS has placed on the need
for issuers to have written post-issuance procedures for compliance
with tax requirements, it is advisable for issuers to adopt
post-issuance policies and procedures applicable to its tax-exempt
and tax-advantaged issues.
If you do not already have a post-issuance policy in place, we
recommend that you review the sample policy found
here and modify it as necessary to fit your particular
circumstances. The policy should then be approved by your governing
body and implemented by the Compliance Officer as identified in the
policy and his or her staff.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
