United States: Post-Issuance Tax Compliance And Continuing Disclosure Responsibilities For Issuers And Borrowers Of Tax-Exempt Bonds


Introduction: Why Post-Issuance Compliance?

Over the past few years, the tax-exempt bond market has been under heightened scrutiny by various regulators, including the Internal Revenue Service ("IRS"), the United States Securities and Exchange Commission and the Municipal Securities Rulemaking Board. These regulators have called for increased regulation as well as transparency, with a large part of their focus on post-issuance compliance. The purpose of this booklet is to introduce interested parties to the topic of post-issuance compliance. It is intended to assist:

  • treasurers, finance directors, comptrollers and other responsible officials of state and local government issuers of tax-exempt bonds ("Issuers") and
  • private, non-governmental conduit borrowers (such as nonprofit institutions providing health care and higher education and for-profit developers of exempt facilities) which are allowed to borrow at tax-exempt rates from Issuers ("Borrowers"),

in developing policies, procedures and systems to ensure that (i) the interest on their bonds will remain tax-exempt, (ii) they are in compliance with their ongoing continuing disclosure obligations, and (iii) they are in compliance with their covenants under their bond documentation so that no event of default will occur on account of technical noncompliance. The authors are members of the Public Finance Bond and Tax Groups at Orrick, Herrington & Sutcliffe LLP ("Orrick"). Orrick is the nation's premier bond counsel firm, ranked number one (in dollar volume) for more than a decade, with experience in virtually every form of debt offering. Together, Orrick and BLX Group LLC (a wholly owned subsidiary of Orrick), are the nation's leading providers in post-issuance compliance services.

Due to its complex nature, post-issuance tax compliance takes up the majority of this booklet—Chapters 2 through 7. Chapter 8 addresses compliance with continuing disclosure obligations. Lastly, Chapter 9 focuses on compliance with the underlying bond documentation in a financing. For further information about any of the topics discussed, please contact one of the people listed at the end of the booklet. We hope that you find this booklet to be useful and informative.


What is Post-Issuance Tax Compliance?

The closing date of a tax-exempt bond issue is the culmination of weeks of review, due diligence and planning. The process includes extensive fact gathering and analysis by bond counsel to ensure that the bonds will be in compliance with federal tax law requirements as of the date of issue. On the issue date various documents will be executed, including a document (generally referred to as a "Tax Certificate"), which describes the financing and the federal tax rules applicable thereto. At the time the bonds are issued, bond counsel delivers an unqualified opinion that the interest on the bonds is excluded from federal gross income of the bondholders. That opinion is based upon covenants and representations by the Issuer (and Borrower in the case of a conduit financing), that the applicable federal tax law requirements will be complied with throughout the time the bonds remain outstanding.

Primary Post-Issuance Tax Compliance Responsibilities

Post-issuance tax compliance begins with the debt issuance and entails a range of responsibilities to comply with the federal tax rules over the life of the bonds. Post-issuance tax compliance requirements generally fall into two broad categories: (1) qualified use of bond proceeds and bond-financed property, and (2) arbitrage rebate and yield restriction. The qualified use requirements include monitoring the uses of bond-financed property over the life of the bonds in order to comply with applicable use rules. The arbitrage requirements include monitoring certain investments over the life of the bonds to determine the yield on investments acquired with bond proceeds and whether a rebate payment is required to be made to the U.S. Treasury.

Post-Issuance Tax Compliance – Conduit Bonds

Bonds that are issued for the purpose of making loans are commonly referred to as "conduit bonds" and Issuers that issue these bonds are generally referred to as "conduit issuers." Generally, in order for the obligations to be tax-exempt, bonds issued by conduit issuers must be either governmental bonds or qualified private activity bonds, such as qualified 501(c)(3) bonds. Under applicable tax rules, the Issuer is legally responsible for the tax-exempt status of the bonds. However, in conduit financings, the bond documents usually provide for the delegation of certain responsibilities to the Borrower. For example, under the bond documents, the Borrower will also be obligated to maintain the tax-exempt status of the bonds. In reality, post-issuance tax responsibilities are generally shared between the Issuer and the Borrower.

Post-Issuance Tax Compliance – Risk Management

Although perhaps not obvious, post-issuance tax compliance should be near the forefront of an organization's risk management considerations for a variety of reasons. One, defending the tax-exempt status of bonds in an IRS audit is stressful, time consuming and expensive. Two, having a significant tax compliance problem raises the prospects of market disclosure and adverse publicity. Three, most IRS audits are settled by either the Issuer or Borrower agreeing to make a payment to the IRS to protect the interests of existing bond holders. Depending on the severity of the compliance problem, the settlement amount can be significant. As further described in this booklet, a credible post-issuance tax compliance program will require the adoption of written post-issuance procedures, proper reporting systems and identifying people responsible for such matters. Although the focus for each Issuer and Borrower will differ, the need for effective policies, procedures and systems to ensure tax compliance will not.


IRS Enforcement and Tax-Exempt Bonds

Tax-exempt bonds finance the majority of infrastructure in the United States. Thomson Financial reports that in 2011, the amount of outstanding tax-exempt bonds was nearly three trillion dollars. The benefit of borrowing through the tax-exempt market is significant. Issuers (as well as certain eligible Borrowers), may borrow at a lower interest rate than they otherwise would realize on the taxable market because the interest on tax-exempt bonds is not subject to federal income tax. The benefit derived from the ability to borrow on a tax-exempt basis comes with a price. The Congressional Research Service estimates that up to $309 billion in federal taxes will be forgone for fiscal years 2012 through 2016 due to the federal income tax exclusion on municipal bonds. Accordingly, the Treasury Department and the IRS have a strong incentive to limit the volume of tax-exempt debt on the market and to monitor that all applicable federal tax rules are followed over the life of the obligations. Created in 1999 as part of the IRS's reorganization efforts, the Tax-Exempt Bond office of the Tax-Exempt and Government Entities Division of the IRS is responsible for, among other things, ensuring that tax-exempt bonds are in compliance with the Internal Revenue Code of 1986 (the "Code"). Through bond audits, tax compliance check questionnaires and IRS information returns, the IRS continually gauges levels of compliance among various sectors and targets areas of concern. The consequence of noncompliance with federal tax law requirements could result in the loss of the tax-exempt status of the bonds.

IRS Audits of Tax-Exempt Bonds

The IRS's primary method of ensuring that tax-exempt bonds are in compliance with the Code is through its examination process. Generally, the first stages of an audit begin with a request of the bond transcript and investment records. After this initial review, a wide range of additional information may be requested by the IRS, including, but not limited to: (a) management/service contracts involving the use of bond-financed property, (b) arbitrage rebate analysis, (c) interest rate hedges relating to the bonds, (d) information regarding the users of the bond-financed property, and (e) cancelled checks and invoices regarding the expenditure of the bond proceeds. In the event of an audit, Issuers and Borrowers have the burden of convincing the IRS that the targeted bonds satisfy the applicable federal tax rules. Issuers and Borrowers that do not have adequate post-issuance tax compliance practices will often struggle to provide credible responses to the IRS within the permitted response time frame. On average, there are approximately 400 tax-exempt bond audits initiated by the IRS each year. According to recent statistics, IRS monetary sanctions imposed on Issuers and Borrowers for noncompliance was approximately $85 million for fiscal years 2005 through 2010. The typical term of the average tax-exempt bond issue often exceeds 20 years. Given this long compliance period, the IRS has focused its resources on post-issuance tax compliance given the high probability for foot faults and mistakes.

Tax Compliance Check Questionnaires

A tax compliance check questionnaire is a review conducted by the IRS that is neither an audit nor an investigation. To date, compliance check questionnaires have been sent to a range of Issuers and Borrowers. The IRS uses compliance check questionnaires to monitor compliance with federal tax law requirements by gathering information from different segments of the municipal market. Compliance check questionnaires generally ask simple, yes/no questions. Although a recipient is technically not required to respond to a compliance check questionnaire, the IRS does warn that failure to do so may result in an audit. In addition, compliance check questionnaires that raise questions about compliance may be referred for audit. Accordingly, Issuers and Borrowers may want to contact outside tax professionals to advise them on how best to respond to a compliance check questionnaire.

A list of recent IRS tax compliance check questionnaires is set forth below:

  • IRS Form 13907 was sent to over 200 section 501(c)(3) organizations that have borrowed on a conduit loan basis;
  • IRS Form 14002 was sent to over 200 governmental bond issuers that have issued tax-exempt bonds;
  • IRS Form 14127 was sent to over 50 governmental bond issuers that issued direct-pay Build America Bonds;
  • IRS Form 14246 was sent to over 270 governmental issuers and section 501(c)(3) organizations benefitting from advance refunding bonds; and
  • An online questionnaire was sent to over 100 governmental issuers of qualified school construction bonds.

Additional Information Gathering – IRS Form 8038

When a tax-exempt bond is issued, the Issuer is required to file an information return with the IRS. In the case of governmental bonds, the Issuer is required to file Form 8038-G and, in the case of a qualified private activity bond, the Issuer is required to file Form 8038. Similar to tax compliance check questionnaires, information reporting forms have been revised in recent years to focus on the level and scope of the Issuer's post-issuance compliance program. Both IRS Forms direct the Issuer to check a box if they have established the following:

  • written procedures to ensure that all nonqualified bonds of the issue are remediated according to the Code and regulations; and
  • written procedures to monitor the arbitrage requirements.

Given that these forms are frequently revised, it is expected that the range of questions addressing post-issuance tax compliance matters will grow and become more detailed. Moreover, 8038 Forms are closely reviewed by IRS staff and serve as a tool in the IRS audit program.


Federal Tax Rules Applicable to Tax-Exempt Bonds

The federal tax rules applicable to tax-exempt bonds are technical and complex. Tax-exempt bonds are generally divided into two broad categories – governmental bonds and qualified private activity bonds. Qualified private activity bonds can be further divided into three sub-categories: (i) qualified section 501(c)(3) bonds (bonds issued for the benefit of section 501(c)(3) organizations), (ii) exempt facility bonds (bonds issued for specific purposes for the benefit of for-profit entities), and (iii) bonds to finance loans to certain eligible borrowers, such as single-family mortgage bonds and student loan bonds.

Governmental Bonds

The term "governmental bond" generally means a bond issued as part of an issue, the majority of the proceeds of which are used to finance facilities for governmental use or general public use. Examples of governmental bonds include bonds issued for schools, roads, libraries, bridges, courthouses and similar municipal improvements.

Generally, the federal tax rules for governmental bonds are intended to limit "private business use." Private business use generally occurs when a nongovernmental entity (such as a private trade or business), has a special legal entitlement to use bond-financed property ("Private Business Use"). Examples of a special legal entitlement include leases, licenses, certain management and sponsored research contracts and similar use agreements. Aside from limits on making loans to nongovernmental entities, a bond will be a governmental bond if either: (a) ten percent or less of the proceeds of the bond issue are used directly or indirectly in a Private Business Use (the "Private Business Use Test"), or (b) the amount of revenues derived (directly or indirectly) from a Private Business Use and payments or property used in a Private Business Use that secures the bond issue is ten percent or less of the present value of debt service on the bond issue (the "Private Payment/Security Test").

Importantly, the use of bond-financed property pursuant to management or sponsored research contracts with nongovernmental entities will not violate the Private Business Use Test if the agreement meets the IRS safe harbor rules set forth in Revenue Procedure 97-13 and Revenue Procedure 2007-47, respectively, set forth in the Appendix hereto (collectively, the "IRS Safe Harbor Contract Rules").

501(c)(3) Bonds

501(c)(3) bonds are tax-exempt qualified private activity bonds issued by state and local governments, the proceeds of which are loaned to section 501(c)(3) organizations to further their charitable purposes. Section 501(c)(3) organizations that benefit from tax-exempt financing include a wide range of exempt organizations such as hospitals, museums and universities.

Similar to governmental bonds, the federal tax rules applicable to qualified 501(c)(3) bonds are intended to limit Private Business Use and "unrelated trade or business use." Private Business Use in this context generally occurs when an entity other than a section 501(c)(3) organization or a state or local governmental entity has a special legal entitlement to use bond-financed property. Unrelated trade or business use generally occurs when a section 501(c)(3) organization uses bond-financed property in a manner that is not related to its charitable/exempt function.

Generally, a bond will be a qualified 501(c)(3) bond if either: (a) five percent or less of the net proceeds of the bond issue are used directly or indirectly in a Private Business Use or an unrelated trade or business use, or (b) the amount of revenues derived (directly or indirectly) from such Private Business Use or unrelated trade or business use or property used for such purposes that secure the bond issue is five percent or less of the present value of debt service on the bond issue.

Like governmental bonds, the use of property financed with qualified 501(c)(3) bonds pursuant to management or sponsored research contracts will not give rise to Private Business Use if such agreement meets the IRS Safe Harbor Contract Rules.

Other Private Activity Bonds

Qualified private activity bonds (other than qualified 501(c)(3) bonds) are tax-exempt bonds issued by state and local governments, the proceeds of which are used for defined purposes by other than the governmental entity issuing the bonds. For such private activity bonds, at least 95% or more of the net proceeds must be used for one or more qualified purposes which include: (i) facilities such as airports, solid waste disposal facilities, and multi-family housing facilities; (ii) qualified single-family mortgages; (iii) qualified small issue bonds; (iv) student loans; and (v) qualified enterprise and empowerment zone facilities among other purposes.

The chart below generally compares the primary tax restrictions applicable to each type of tax-exempt bond:

Private Business Use Test Generally, no more than 10% of the proceeds of the bonds may be used for a Private Business Use Generally, no more than 5% of the net proceeds of the bonds may be used for a Private Business Use Not Applicable
Private Payment/Security Test Generally, no more than 10% of the present value of debt service on the bonds may be privately paid or secured Generally, no more than 5% of the present value of debt service on the bonds may be privately paid or secured Not Applicable
Private Loan Test No more than the lesser of 5% of bond proceeds or $5 million may be loaned to nongovernmental entities Not Applicable Not Applicable
Ownership Not Applicable All property must be owned by 501(c)(3) organization or governmental entity For certain facilities, governmental ownership is required
Management Contracts/Sponsored Research Contracts Permitted only if IRS Safe Harbor Contract Rules are satisfied Permitted only if IRS Safe Harbor Contract Rules are satisfied Not Applicable
Arbitrage Rebate Generally, earnings on the investment of bond proceeds above the cost of funds need to be rebated to U.S. Treasury every 5 years Generally, earnings on the investment of bond proceeds above the cost of funds need to be rebated to U.S. Treasury every 5 years Generally, earnings on the investment of bond proceeds above the cost of funds need to be rebated to U.S. Treasury every 5 years
Yield Restriction Certain funds, such as pledge funds and project proceeds more than 3 years old are subject to yield restriction Certain funds, such as pledge funds and project proceeds more than 3 years old are subject to yield restriction Certain funds, such as pledge funds and project proceeds more than 3 years old are subject to yield restriction
Final Allocation of Bond Proceeds Generally, allocation is required no later than 18 months after the later of the date of expenditure or the placed in service date of the project Generally, allocation is required no later than 18 months after the later of the date of expenditure or the placed in service date of the project Generally, allocation is required no later than 18 months after the later of the date of expenditure or the placed in service date of the project
Costs of Issuance Not Applicable No more than 2% of the proceeds of the bonds may be used to finance costs of issuance No more than 2% of the proceeds of the bonds may be used to finance costs of issuance
Limits on Acquisition of Existing Property Not Applicable Not Applicable No portion of the bond proceeds may be spent on the acquisition of existing property absent rehabilitation


The Essentials of a Post-Issuance Tax Compliance Program

Every Issuer and Borrower needs a post-issuance tax compliance program. The consequence of noncompliance with federal tax law requirements could result in the loss of the tax-exempt status of the bonds. The implementation of a post-issuance tax compliance program requires a focus on hardware, software, policies, culture, staff and resources. Because most tax-exempt bonds will remain outstanding for many years, it is important to have reliable systems, procedures and policies that provide appropriate safeguards for tax compliance and provide accurate and timely data to those parties responsible for such matters. The particular appropriate procedures will vary, depending on the size of the Issuer or Borrower, the complexity of the financings, the number of bond issues to be monitored and the type of bond issue involved. An effective post-issuance program will significantly improve the ability of Issuers and Borrowers to both prevent and timely identify tax violations. Post-issuance tax compliance should be an integral part of an Issuer's or a Borrower's debt management process. In some organizations, compliance may be adequately supported by the efforts of a single individual. In the case of organizations which frequently issue or borrow on a tax-exempt basis, compliance may be adequately supported by adopting practices that are integrated within the day-to-day practices of such entity.

Elements of a Post-Issuance Tax Compliance Program

The elements of a post-issuance tax compliance program are as follows:

  • Designation of a tax compliance point person(s);
  • Ongoing communication with outside tax specialist and continuing education;
  • Tracking and allocating bond proceeds;
  • Monitoring the use of bond-financed property;
  • Monitoring investment income and arbitrage compliance;
  • Recordkeeping and retention;
  • Addressing changes in use of bond-financed property through self-help remediation and the IRS VCAP program;
  • Written post-issuance tax compliance procedures; and
  • Addressing conduit borrower tax compliance.

Designation of Tax Compliance Point Person

Issuers and Borrowers should designate an employee responsible for managing post-issuance tax compliance matters. Depending on the size of the organization and the volume of outstanding tax-exempt debt, such individual could directly address such matters or do so through a coordinated team or group. This designation and process should be memorialized in written post-issuance compliance procedures described below.

Ongoing Communication with a Tax Specialist and Continuing Education

The federal tax rules are complex and frequently change. Maintaining an ongoing relationship and dialogue with a specialist who is expert in federal tax law applicable to tax-exempt bonds, is a critical component of an effective compliance program. A tax specialist can provide information regarding changes in IRS filing requirements, policies, procedures and enforcement. See Chapter 7 regarding how an outside post-issuance service provider can assist with a wide range of tax compliance matters. In addition, Issuers and Borrowers should actively seek out education opportunities (appropriate to their circumstance), to keep abreast of changes and developments in federal tax law. Note, whether an organization provides training or educational resources to personnel that are responsible for post-issuance tax compliance has been a question in IRS tax compliance check questionnaires.

Tracking and Allocating Bond Proceeds

The process of allocating bond proceeds and developing an accurate summary of bond-financed property on an issue-by-issue basis is an essential element of a tax compliance program. Such process should include the following:

  • Identify at issuance the funds and accounts into which bond proceeds are to be deposited;
  • Document the reimbursement of any pre-issuance expenditures;
  • Monitor the expenditure of bond proceeds to ensure that bond proceeds are spent within applicable time frames; and
  • Upon project completion, make a final allocation of bond proceeds and other funds to bond-financed property. Such other funds could include fund-raising dollars, gifts and proceeds of a taxable issue. Such allocation should clearly reflect what portions of the project are treated as bond-financed property and, conversely, what portions are not bond-financed.

Monitoring the Use of Bond-Financed Property

At the core of a post-issuance tax compliance program is the periodic monitoring of bond-financed property to ensure that the use of such property does not violate the applicable federal tax law restrictions. Such process should include the following:

  • On no less than an annual basis, identify and review any bond-financed property subject to a lease, license, management contract, sponsored research contract or similar use agreement, in order to analyze and measure any Private Business Use or unrelated trade or business use impact;
  • Establish protocol for external tax review by outside tax professionals of management and sponsored research contracts involving bond-financed property on no less than an annual basis for compliance with IRS Safe Harbor Contract Rules;
  • Where appropriate, develop uniform management and sponsored research contracts for use in bond-financed property, which satisfy the IRS Safe Harbor Contract Rules; and
  • In the case of section 501(c)(3) organizations, establish a protocol for the calculation of Private Business Use and unrelated trade or business use as required by Part III of Schedule K, as more fully discussed in Chapter 6. With increasing frequency, this calculation is undertaken with the assistance of an outside service provider.

Monitoring Investment Income and Arbitrage Compliance

In addition to restrictions on the use of bond proceeds, the federal tax rules place limits on the investment of bond proceeds and require that Issuers periodically rebate earnings to the U.S. Treasury Department, unless one or more rebate exceptions are satisfied. Such process should include the following:

  • Monitor compliance with "temporary period" expectations for expenditure of project bond proceeds (typically three years for new money bonds), and provide for yield restriction of bond proceeds as necessary;
  • Monitor compliance with the 24-month, 18-month and 6-month rebate exceptions;
  • Establish procedures to ensure investments acquired with bond proceeds are purchased at fair market value;
  • Consult with outside tax counsel before engaging in post-issuance credit enhancement transactions (e.g., bond insurance, letter of credit) or hedging transactions (e.g., interest rate swap, cap);
  • Identify situations and establish procedures in which compliance with applicable yield restrictions depends upon later investments, e.g., purchase of 0% SLGS from U.S. Treasury, and monitor implementation;
  • Arrange for timely computation of rebate liability and, if rebate is payable, for timely filing of Form 8038-T and payment of rebate. Rebate is ordinarily due at 5-year intervals; and
  • Arrange for timely computation and payment of "yield reduction payments," if applicable.

Recordkeeping and Retention

The following documents should be retained for the life of the bonds and any refunding bonds (plus 3 years).

  • Transcript of bond transaction;
  • Form 8038, Form 8038-G or Form 8038-GC filed with IRS;
  • Documentation evidencing use of bond-financed property by general public and nongovernmental users, including copies of management contracts, leases and sponsored research agreements;
  • Documentation evidencing all sources of payment or security of the bonds;
  • Documentation pertaining to any investment of bond proceeds, including the purchase and sale of securities, SLG subscriptions, yield calculations for each class of investments, investment income received from the investment of proceeds, guaranteed investment contracts and rebate calculations and reports;
  • Documentation regarding the allocation of bond proceeds to expenditures (e.g., allocation of bond proceeds to expenditures for the construction, renovation, or purchase of facilities);
  • Documentation regarding allocations of bond proceeds to bond issuance costs;
  • Copies of requisitions, draw schedules, draw requests, invoices, bills and cancelled checks related to bond proceeds spent during the construction period;
  • Copies of all contracts entered into for the construction, renovation or purchase of bond-financed facilities;
  • Records of expenditure reimbursements incurred prior to issuing bonds for facilities financed with bond proceeds;
  • Asset list or schedule of all bond-financed facilities or equipment; and
  • Records regarding the purchases and sales of bond-financed assets.

Addressing Change in Use of Bond-Financed Property Through Self-Help Remediation and the IRS VCAP Program

Over the term of a bond issue, facts and circumstances can change and reasonable expectations formulated in good faith on the date of issuance turn out to be wrong. In order to preserve the tax-exempt status of the bonds in such circumstances, any tax violations, such as the sale of bond-financed property, must be quickly indentified and remedied. An effective post-issuance tax compliance program should incorporate and acknowledge the following resolution process:

  • If an Issuer or Borrower engages in an activity causing bond-financed property to be used in a manner that violates the applicable use limitations, an Issuer may take one or more "self-help" remedial actions. Possible remedial actions include defeasing the non-qualified portion of the outstanding bonds or using the amounts realized from the sale of the bond-financed property for another qualifying use; and
  • Issuers and Borrowers that fail to timely identify noncompliance early enough to qualify for self-help remedial actions or for matters in which self-help is not available, can approach the IRS under its VCAP program which is described in more detail in IRS Notice 2008-31 and Internal Revenue Manual Sections 7.2.3.

Written Post-Issuance Tax Compliance Procedures

Although not specifically required by the Code, written post-issuance tax compliance procedures have become a focus of the IRS in recent years. Recent updates of IRS bond information returns, Forms 8038, 8038-G, 8038-B, 8038TC and Schedule K (for section 501(c)(3) organizations, discussed in Chapter 6), each contain at least one question regarding whether the Issuer or Borrower has adopted written post-issuance procedures. Similar questions have appeared in a range of IRS tax compliance questionnaires sent to Issuers and Borrowers over the past couple of years and in IRS Information Document Requests sent to Issuers in connection with tax-exempt bond audits. In addition, the IRS recently amended their VCAP procedures to give more favorable treatment in settlements involving tax violations with Issuers who have adopted written procedures. At a minimum, written post-issuance procedures should contain the following:

  • Identification of the individual(s) with responsibility for monitoring post-issuance tax compliance;
  • A description of the training provided to such responsible individual(s) with regard to monitoring compliance;
  • The frequency of compliance checks (most being at least annually);
  • The nature of the compliance activities required to be undertaken;
  • The procedures used to timely identify and elevate the resolution of a violation when it occurs or is expected to occur;
  • Procedures for the retention of all records material to substantiate compliance with the federal tax law requirements; and
  • The acknowledgement of the availability of the IRS VCAP program and other self-help remedial actions.

Addressing Conduit Borrower Tax Compliance

Post-issuance tax compliance responsibilities are often shared between the Issuer and the Borrower. In connection with conduit financings, the Issuer should consider the following:

  • Designating a particular Issuer official(s) to assist Borrowers in post-issuance tax compliance;
  • Requiring Borrowers to identify a particular official or officials responsible for assisting the Issuer with post-issuance compliance monitoring;
  • Providing training or other technical support to designated official(s) of the Borrower;
  • Requiring the Borrower to demonstrate that it has adopted written post-issuance compliance monitoring procedures before the approval of a bond issue;
  • Designating time intervals within which tax compliance monitoring activities will be completed by Borrower; and
  • Requiring Borrowers to report and notify the Issuer of the completion of post-issuance compliance monitoring activities and results (including Schedule K results in the case of section 501(c)(3) organizations).

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A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.