MINNESOTA STATE SENATOR ASKS FOR TREASURY'S OPINION OF STATE PLAN TO AVOID ARBITRAGE REBATE RULES.

SUMMARY: Ember Reichgott, Chairman of the Economic Development Tax Committee of the Minnesota Senate's Tax Committee, has written to Treasury regarding a recently enacted program that allows municipalities in Minnesota to avoid the arbitrage rebate rules. Reichgott said he opposed the measure and would like to know Treasury's position on it.

I read with interest the article in the May 14, 1989, issue of The Bond Buyer, which stated that Treasury and Internal Revenue Service officials have expressed concern about a recently-enacted program enabling municipalities in Minnesota to avoid arbitrage rebate rules. A copy of that article is enclosed. As Chair of the Economic Development Tax Subcommittee of the Minnesota Senate Tax Committee, I opposed inclusion of the provisions establishing this program in the public finance bill that was enacted during the 1989 legislative session.

I would be most interested in learning more from you about the Treasury Department's position on this issue, and would like to be apprised of any ruling made or position taken on this matter.

Sincerely,