Like the House proposal, the bill proposed by the Senate preserves the 9 percent credit and 4 percent credit, but unlike the House version, the Senate bill retains tax-exempt multifamily
private activity bonds.
A recovery zone exempt facility bond must be a qualified
private activity bond under IRC Section 142, the proceeds of which may be used to finance certain "recovery zone property." Recovery zone exempt facility bonds are allocated under a $15-billion national bond volume cap.
If one looks back to the section 103(a) and section 103(b) provisions, however, the tax-exempt treatment of interest on state and local loans occurs only if the
private activity bond qualifies.
Specifically, Code Section 145(a) provides that you will not create a
private activity bond if at least 95 percent of the net proceeds are spent for activities which are not part of an unrelated trade or business.
Statutory Overview: Tax-Exempt Qualified
Private Activity BondsFigures D and E present long-term, tax-exempt bond proceeds, by selected purpose, as well as type of issue for both governmental and
private activity bond issues.
Robert Menendez (D-N.J.) would remove issuances of
private activity bonds for water and wastewater projects from the annual state volume caps, allowing local communities to leverage private capital markets in combination with other financial mechanisms to finance water and wastewater infrastructure projects.
municipalities of "
private activity bonds" to encourage
Tax-exempt bond data presented here are based on the populations of Forms 8038, Information Return for Tax-Exempt
Private Activity Bond Issues, and Forms 8038-G, Information Return for Tax-Exempt Governmental Obligations, filed with the Internal Revenue Service (IRS) for bonds issued during 2010.
* Efforts to ease the credit crunch, including incentives for banks to purchase municipal bonds by allowing them to deduct the interest paid and a provision to exclude
private activity bond interest from the alternative minimum tax.