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Tax Guidance to Slow Under Trump. Even More Emphasis on Letter Rulings in Bond Transactions?

As the Trump Administration attempts to substantially reduce the amount of federal regulations, both the Deputy Tax Legislative Counsel of the Treasury Department and an Associate Chief Counsel at the Internal Revenue Service indicated this week that we are likely to see a virtual halt to formal tax law “guidance” for the foreseeable future.  Such guidance includes regulations, revenue rulings, and revenue procedures, the principal means by which Treasury and IRS provide interpretations of tax statutes.  However, both officials stated that the IRS will continue to provide taxpayer-specific private letter rulings (PLRs). 

In addition to more PLRs being requested to resolve ambiguities in connection with particular transactions, the freezing of the formal guidance process could result in PLRs being given more weight than ever in the analysis of other transactions.  Not only will bond attorneys have more incentive to read and rely upon the only available tea leaves as to the IRS’s position, but IRS attorneys may write more substantive letter rulings with the expectation that they will guide practice beyond the particular transactions being ruled upon.  While officially non-precedential, PLRs have long been of particular importance in the tax-exempt bond practice, where formal guidance is slow and case law is almost nonexistent. 

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About this Author

Maxwell Solet, Tax attorney, Mintz Levin, Law firm
Member

Mike has tax responsibility in connection with the firm’s role as bond counsel, underwriter’s counsel, and purchaser’s counsel on numerous state and local bond issues. The firm has served as bond counsel for the Commonwealth of Massachusetts, the Massachusetts Educational Financing Authority, the Massachusetts Bay Transportation Authority, the Massachusetts School Building Authority, the Massachusetts State College Building Authority, the Massachusetts Turnpike Authority, the New York Liberty Development Corporation, and the Vermont Bond Bank, as well as in many school and hospital...

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Christie L. Martin, Mintz Levin, Tax Revenue lawyer, Government Agency Attorney
Member

Christie counsels government entities and 501(c)(3) organizations as well as investment bankers and banks in connection with the tax-exempt financing of projects for public and nonprofit organizations. Her practice focuses on municipal finance–related federal tax law relevant to the issuance of general obligation bonds, qualified 501(c)(3) private activity bonds, exempt facility bonds, tax revenue anticipation, and other working capital bonds and tax credit bonds.

Christie often acts as counsel to issuers and borrowers in connection with IRS bond examinations and the IRS voluntary closing agreement program. She also works with borrowers and issuers to develop written post-issuance compliance procedures. In addition, Christie currently serves as editor-in-chief of the Federal Taxation of Municipal Bonds Deskbook, published by the National Association of Bond Lawyers.

617.348.1769