The IRS released two new private letter rulings. Neither of them is earth-shattering.
In the first, PLR 201445002, the IRS ruled that an authority created by a tribal government is a political subdivision so that it can issue tax-advantaged bonds.
In the second, PLR 201445007, the IRS granted a school district extra time beyond the 3-year deadline to spend the available project proceeds of an issue of Qualified School Construction Bonds. The school district needed extra time because “[a]ll bids received [for construction of the bond-financed project] were well in excess of original cost estimates,” and the school district “thus determined that School design plans should be redesigned to better fit the original budget expectations for the School.” The IRS excused this delay, ruling that the school district couldn’t have foreseen this, and noting that the school district had and would continue with the project with due diligence.
This ruling is consistent with at 7 other similar extensions of time that the IRS has granted under its authority in Code Section 54A(d)(2)(B)(iii) to give issuers an extension of the 3-year deadline under Code Section 54A(d)(2)(A) to spend available project proceeds that applies to all qualified tax credit bonds. The IRS has thankfully been flexible. (The other rulings are PLRs 201309012, 201326001, 201330003, 201332001, 201420016, 201426022, and 201428001.)
One point to keep in mind – to get the extension of the deadline, you do actually have to submit a ruling request to the IRS – you can’t just look at the rationale of these rulings and say “our facts are similar; we don’t have to redeem bonds with our excess proceeds after 3 years.”
Treasury also released final arbitrage rebate overpayment regulations, available here. (More about these later.)
Naomi Jagoda has more on these rulings in The Bond Buyer ($).