On August 21, 2007 the IRS announced a project designed to determine whether 501(c)(3) organizations with outstanding tax-exempt bonds have in place the policies and procedures necessary to ensure post-issuance compliance. A compliance check questionnaire will be sent to more than 200 exempt organizations which have indicated an outstanding balance of tax-exempt bonds on their 2005 Form 990. A cover letter explaining the questionnaire will be mailed to the taxpayers selected for the project.

See below for links to the cover letter and questionnaire for your review.

Cover letter

Compliance questionnaire

The topics covered by the questionnaire include the following:

  • Record retention requirements
  • Qualified use of bond-financed property requirements
  • Arbitrage yield restriction and rebate requirements
  • Debt management policies and procedures
  • Awareness of voluntary compliance and educational resources

Once the questionnaires are returned to the IRS, it will analyze the data and issue a report of its findings, describing any recommendations for follow-up outreach or compliance initiatives.

If your organization has an outstanding bond issue, you should review the compliance check questionnaire in order to be prepared in the event your organization is selected for the project. Even if you are not selected for the project, the questionnaire provides a useful tool to assess compliance.