NABL Looks for Deadline Relief for Tax-Advantaged Bonds

August 11, 2021

Krishna Vallabhaneni
Tax Legislative Counsel
United States Department of the Treasury
1500 Pennsylvania Avenue, NW, Room 3044
Washington, DC 20220

Andrew Keaton
General Attorney
Office of Chief Counsel
Internal Revenue Service
1111 Constitution Avenue, NW
Washington, DC 20224

Re: Requests for Additions to Section 16 of Revenue Procedure 2018-58 (Regarding the Postponement of Time-Sensitive Acts under Code Sections 7508 and 7508A) Relating to Tax-Advantaged Bond Issues

Messrs. Vallabhaneni and Keaton:

The National Association of Bond Lawyers (NABL) is a non-profit corporation and specialty bar association of approximately 2,500 lawyers. NABL exists to promote the integrity of the municipal bond market by advancing the understanding of, and compliance with, the laws affecting public finance. NABL members and their firms are involved every year in a significant portion of the municipal financings by U.S. state and local governments.

In 2018, the IRS released Rev. Proc. 2018-58, which provides a lengthy list of “time-sensitive acts” that are to be performed by certain persons in connection with tax compliance, which the IRS may, through additional guidance, suspend in the case of a federally declared disaster or a terroristic or military action. The IRS's authority to postpone these acts comes from Sections 7508 and 7508A of the Internal Revenue Code of 1986, as amended. As an example, on April 9, 2020, the IRS released Notice 2020-23, which provided, among other things, that any person performing a time-sensitive act described in Rev. Proc. 2018-58 that was due to be performed on or after April 1, 2020, and before July 15, 2020, would have until July 15, 2020 to perform that act.

Section 16 of Rev. Proc. 2018-58 describes a number of time-sensitive acts that relate to tax-advantaged bonds. While that section includes many of the important time-sensitive acts that issuers and conduit borrowers of tax-advantaged bonds must perform to comply with federal tax law, the section excludes many others. For example, Rev. Proc. 2018-58 includes the filing of certain information returns and the payment of required arbitrage rebate as time-sensitive acts to be postponed, but it excludes actions relating to the required periods during which issuers of tax-advantaged bonds must (i) invest proceeds of the bonds in certain ways, (ii) allocate those proceeds to expenditures within certain time periods, and (iii) document those allocations in its records. Like the time-sensitive acts already listed in Rev. Proc. 2018-58, disasters may impact compliance with the deadlines for these acts, and noncompliance may jeopardize the tax-advantaged status of the bonds through no fault of the issuer or the conduit borrower. NABL accordingly requests that the IRS broaden Section 16 of Rev. Proc. 2018-58 to include the additional items noted in the comments attached to this letter. While NABL believes that each of the additional items should be included, the bolded items represent those items that are of particular importance.

This letter was prepared by an ad hoc task force comprising of the individuals listed in Appendix A and was approved by the NABL Board of Directors. NABL will be happy to make itself available for a discussion on the matters we describe below.

If NABL can provide further assistance, please do not hesitate to contact Brian Egan, Director of Governmental Affairs in our Washington DC office, at (518) 469-1565 or at began@nabl.org.

Sincerely,

Teri M. Guarnaccia
President, National Association of Bond Lawyers
Washington, DC

cc:
Helen M. Hubbard, Associate Chief Counsel, Financial Institutions & Products, Internal Revenue Service
Jian Grant, Branch Chief, Internal Revenue Service