Issuers who have adopted written post-issuance compliance procedures will now receive more favorable treatment from the Internal Revenue Service (IRS) if the bond issue is examined and the issuer enters the IRS Voluntary Closing Agreement Program (VCAP). Under VCAP, issuers may enter into an agreement with the IRS to resolve violations of federal tax law with respect to its bonds. If the issuer enters VCAP, the new IRS procedures permit a reduced settlement amount when an issuer submits a timely VCAP request after identifying a violation through its post-issuance compliance procedures. Additionally, a closing agreement protects bondholders from including in their gross income any interest on bonds during the time period specified in the agreement. Although written post-issuance compliance procedures are not required, the updated IRS procedures formally state for the first time that the agency will give more favorable treatment to issuers if they adopt a written post-issuance compliance policy.

Our attorneys have assisted all types of Arizona’s governmental entities since 1921, and our public finance expertise is nationally-recognized. If you would like to adopt a post-issuance compliance policy or review or modify existing policies to take advantage of the IRS’ recent rule changes, please call any of our public finance attorneys listed below.

For More Information

James T. Giel – 602-257-7495 – jgiel@gustlaw.com
Fred H. Rosenfeld – 602-257-7413 – rosenfeld@gustlaw.com