The IRS published a notice in the Federal Register soliciting comments regarding arbitrage restrictions on tax-exempt bonds. Specifically, the Internal Revenue Code requires issuers of tax-exempt bonds to rebate certain arbitrage profits earned on nonpurpose investments acquired with the bond proceeds. Under the proposed regulations, issuers are required to file a Form 8038″“T and remit the rebate. Issuers are also required to keep records of certain interest rate hedges so that the hedges are taken into account in determining arbitrage profits. Under the proposed regulations, the scope of interest rate hedging transactions covered by the arbitrage regulations was broadened by requiring that hedges entered into prior to the sale date of the bonds are covered as well. Written comments should be received on or before July 30, 2012.
Click here to read the notice.
