Internal Revenue Service officials reversed themselves on Friday and took pains to assure lawyers meeting in New York City that the loss of a charitable organization's tax-exempt status will not necessarily cause its municipal bonds to become taxable.

"I think its going to be fairly rare that there is going to be a situation where bonds are going to lose their tax-exempt status," Marcus Owens, director of the technical section of the IRS' exempt organizations branch, said at a meeting of the American Bar Association's exempt organizations committee.

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