pollution control bond

pollution control bond

A municipal revenue bond in which debt service is secured by payments from a private firm using pollution control equipment that the bond was used to finance. Thus, the guarantee of repayment is made by the private firm rather than by the municipal issuer. For pollution control bonds issued before August 8, 1986, interest is free from federal taxation. Tax reform passed in 1986 eliminated this exemption. Interest on pollution control bonds issued on or after August 8, 1986, is fully taxable.

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pollution control bond

A tax-exempt security issued by a state,certain agencies or authorities,a local government,or a development corporation in order to finance the construction of air or water pollution control facilities or sewage or solid waste disposal facilities in accordance with federal law. These bonds are backed by the credit of the pollution control entity,not the issuer.