Upon issuance of a tax-exempt bond, the issuer and borrower have several post issuance obligations required under federal tax rules. The intent of UCSFA is to ensure all charter school borrowers that issue tax-exempt bonds through the Authority are aware of and comply with these obligations.
IRS Recommended Actions
It is essential that borrowers develop and maintain a robust post issuance compliance program to track their compliance with all applicable requirements.
The Internal Revenue Service (IRS) recommends that material tax records be retained for the life of a bond issue, plus three years.
Borrowers that have effective post issuance tax compliance programs in place are more likely to be able to successfully respond to any possible IRS inquiry. In addition, borrowers with an established program will be well positioned to effectively judge the possible benefits of future refunding opportunities.
The most important step in a compliance monitoring program is to consult with members of the finance team, including bond counsel, at the time of bond issuance to determine the borrower’s obligations. Compliance responsibilities last, at minimum, for the length of the bond term.
Below are a number of useful links to various resources on the topic of post issuance compliance.
- Internal Revenue Service’s site for the tax-exempt bond community:
- Internal Revenue Service publication discussing the post issuance compliance responsibilities of borrowers:
- Post Issuance Compliance checklist provided by the Government Finance Officers Association (GFOA) and the National Association of Bond Lawyers (NABL):