The Treasury Department and IRS today released for publication in the Federal Register a notice of proposed rulemaking (REG-129067-15) concerning the definition of a “political subdivision” for purposes of tax-exempt bonds issued by state and local governments.
The proposed regulations [PDF 228 KB] are being issued to specify the elements of a "political subdivision." State and local governments that issue tax-exempt bonds and users of property financed with tax-exempt bonds will be affected by this guidance. However, under certain transition rules, the proposed definition of political subdivision will not apply for purposes of determining whether outstanding bonds are obligations of a political subdivision and will not apply to existing entities for a transition period.
The proposed regulations clarify and further develop the eligibility requirements for a political subdivision. To qualify as a political subdivision under the proposed regulations, an entity must meet three requirements (taking into account all of the facts and circumstances):
The regulations are proposed to be effective 90 days after final regulations are published. As briefly noted above, there are numerous transition rules listed in the proposed regulations.
For more information, contact the Managing Director-in-Charge of KPMG's Washington National Tax Exempt Organizations Tax group
D. Greg Goller | +1 (703) 286- 8391 | firstname.lastname@example.org
© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.