IRS WON'T RULE ON WHETHER INTEREST ON STATE AND LOCAL GOVERNMENT OBLIGATIONS IS EXCLUDABLE IF PROCEEDS ARE PLACED IN ESCROW FOR AN EXTENDED PERIOD

Rev. Proc. 85-28

SECTION 1. BACKGROUND

Rev. Proc. 85-22, 1985-12 I.R.B. 13, sets forth areas in which advance rulings or determination letters will not be issued by the Internal Revenue Service. Section 4 of Rev. Proc. 85-22 is entitled "Areas in Which Rulings or Determination Letters Will Not Ordinarily Be Issued."

SEC. 2. PROCEDURE

Rev. Proc. 85-22 is amplified to include the following under section 4.01:

Section 103.--Interest on Certain Governmental Obligations. Whether the interest on state and local governmental obligations will be excludable from gross income under section 103(a) of the Internal Revenue Code if the proceeds of issues of obligations (other than advance refunding issues) are placed in escrow or otherwise not expended for a governmental purpose for an extended period of time even though the proceeds are invested at a yield that will not exceed the yield on the governmental obligations prior to their expenditure.

SEC. 3. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 85-22 is amplified.

SEC. 4. EFFECTIVE DATE

This revenue procedure will apply to all ruling requests on hand in the National Office on May 6, 1985, the date of publication of this revenue procedure in the Internal Revenue Bulletin, as well as to requests received thereafter.