• Advance Refunding Questionnaire
  • June 28, 2011 | Authors: Harold Altscher; Francina J. Critzman
  • Law Firm: Miles & Stockbridge P.C. - Baltimore Office
  • The Internal Revenue Service (IRS) recently launched a questionnaire project in connection with post-issuance compliance and record retention issues for advance refunding bonds.  Advance refunding bonds are bonds issued to refund tax-exempt bonds more than 90 days after the date of issuance of the refunding bonds.  Only governmental bonds and qualified 501(c)(3) bonds can be advance refunded, and only one advance refunding of a bond issue is permitted for bonds issued after 1985.  The IRS sent out 269 advance refunding questionnaires to governmental entities and 31 to 501(c)(3) organizations.  According to the IRS, the questionnaire is targeting advance refunding bonds issued from July 1, 2009 to June 30, 2010.

    The questionnaire covers the following topics:

    • Debt management policies and procedures for determining when to advance refund a bond issue;
    • Qualifying for an advance refunding;
    • Arbitrage requirements applicable to an advance refunding;
    • Procedures related to the determination of the issue price in an advance refunding;
    • Record retention procedures; and
      Procedures to assist with the timely identification and correction of tax violations.

    The questionnaire and the cover letter can be viewed at: http://www.irs.gov/pub/irs-tege/letter&under;&under;adv&under;ref&under;cover&under;letter.pdf and http://www.irs.gov/pub/irs-tege/f14246.pdf.