February 25, 2016
IRS Releases Proposed Political Subdivision Regulations
On February 23, 2016, the Internal Revenue Service issued proposed regulations (REG-129067-15, the “Proposed Regulations”) revising the definition of political subdivision for the purpose of tax-exempt bonds. The Proposed Regulations follow a controversial 2013 IRS Technical Advice Memorandum (the “TAM”) that concluded that bonds issued by a Florida community development district were not tax-exempt because the district was not a political subdivision eligible to issue tax-exempt bonds. Like the TAM, the Proposed Regulations adopt a narrower definition of political subdivision than has typically been used by the tax-exempt bond community.