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Tax-Exempt Bond Voluntary Closing Agreement Program Announced - Emil Estafanous, CPA : Emil Estafanous, CPA

Tax-Exempt Bond Voluntary Closing Agreement Program Announced

On Feb 28, a IRS announced a module to yield certain issuers that squeeze and reason their possess tax-exempt holds service from debt extinguishment (Announcement 2011-19).

In 2008, during a financial crisis, a IRS released dual notices providing service from liquidity constraints in a tax-exempt bond market. The notices authorised state and internal governments to squeeze and reason their possess tax-exempt holds for proxy holding durations but ensuing in a retirement of a purchased tax-exempt bonds. The available holding duration finished Dec 31, 2010.

Some issuers who purchased their possess tax-exempt holds were incompetent to resell those holds before a Dec. 31, 2010, deadline. Therefore, a IRS is initiating a intentional shutting agreement module (VCAP) underneath that it will cruise requests for intentional shutting agreements from issuers of extinguished bonds.

Under a shutting agreement, extinguished holds would be treated as remaining superb until a beginning of (1) 180 days after a shutting agreement is executed by a IRS and issuer; (2) a date a holds are sole to a third party, (3) a date a holds are now refunded, or (4) a date a holds are canceled on a issuer’s books.

To validate for a shutting agreement, a issuer contingency adopt a fortitude of a vigilant to resell or now reinstate a extinguished holds as tax-exempt holds within a applicable shutting agreement period, accommodate other conditions, and compensate a fee.

The VCAP will accept requests by Dec 31, 2012.

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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