Advertisement

July 24, 2014

Fiscal Cliff Legislation's Impact on Tax-Exempt Bonds

The exclusion from gross income of interest paid on tax-exempt bonds, including both traditional governmental bonds and private activity bonds, is largely unaffected by the fiscal cliff legislation. In fact, except for the inclusion of some specific extender provisions regarding certain tax credit and private activity bonds, the legislation does not address tax-exempt bonds.

While that is good news for both issuers of, and investors in, tax-exempt bonds, the exclusion from gross income of interest paid on tax-exempt bonds could still be targeted if comprehensive tax reform becomes a reality. While the most likely change for tax-exempt bonds to surface recently is a proposed cap on overall deductions/tax benefits for wealthy taxpayers, other changes that have been suggested and might resurface in further negotiations include a reduction in the types of projects that could be financed with private activity bonds or a further limitation on advance refunding transactions.

For issuers of direct pay tax credit bonds, the fiscal cliff legislation postpones the threat to the federal subsidy payments that would have decreased had sequestration gone into effect. Under the fiscal cliff legislation, the sequester (including the federal subsidy payments to issuers) would be implemented on March 27, 2013 if Congress were not able to come to an agreement on a deficit reduction plan.

© 2014 Bracewell & Giuliani LLP

About the Author

Partner

Charles focuses his practice on federal taxation issues, including tax controversies and transactional planning, with an emphasis on the federal tax treatment of state and local government bonds of all types. He also has experience in federal income and excise tax matters in areas such as transactional planning, general federal tax advice and tax-controversy matters affecting business organizations, non-profit organizations, cooperative organizations, and state and local governments.

He regularly represents clients on federal income tax matters under...

713.221.1154

About the Author

Steven H. Gerdes, Tax Attorney, Bracewell & Giuliani Law Firm
Partner

Steve focuses his practice on the tax aspects of state and local government obligations. During his career, he has covered the full range of tax-exempt obligations appearing in the marketplace, including governmental new money, commercial paper and working capital financings, and current and advance refundings. These transactions also include exempt facility bond financings such as seaport and airport financings, student loan financings, solid waste and sewage financings, single- and multi- family housing financings, as well as professional sports facility and development district...

713-221-3321
R. Todd Greenwalt, Tax Attorney, Bracewell & Giuliani Law Firm
Partner

Todd's practice focuses on governmental entities and tax-exempt organizations, advising clients with regard to tax-exempt financings and other business transactions, and resolving tax-exempt status issues.

713-221-1138

About the Author

Victoria Ozimek, Tax Attorney, Bracewell Giuliani Law Firm
Partner

Victoria Ozimek's practice focuses on advising clients regarding the tax aspects of the issuance of tax-exempt and tax credit obligations. Victoria serves as tax counsel on governmental and conduit financings, where she works with issuers and borrowers to review and structure proposed new money and refunding obligations. She also assists issuers with post-issuance compliance matters.

512.542.2103

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.