Tax-Exempt Issuers and Borrowers Need Written Post-Issuance Compliance PoliciesMay 20, 2013
ARE YOU A NON-PROFIT OR GOVERNMENTAL ENTITY WITH OUTSTANDING TAX-EXEMPT BONDS? ARE YOU CONSIDERING FINANCING A PROJECT USING TAX-EXEMPT BONDS? IF SO, YOU SHOULD HAVE A WRITTEN “POST-ISSUANCE COMPLIANCE POLICY” IN PLACE.
The status of an issuer or borrower as a governmental or 501(c)(3) entity, while often a prerequisite, is not itself sufficient to achieve the benefits of tax-exempt financing. Rather, there are many requirements for bonds to qualify as tax-exempt. Much effort is put into the initial structuring and documentation of an issuance of tax-exempt bonds to ensure that the bonds comply with the rules governing tax-exempt debt. Such rules include restrictions on how the borrowed funds can be used and invested, deadlines for spending the borrowed funds, and certain recordkeeping and reporting requirements.
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