WASHINGTON -- The effective date of the rules governing tax-exempt bond reimbursements is being postponed from Sept. 8 until 30 days after the rules are issued in final form, the Internal Revenue Service announced Friday.

The announcement, made in IRS Notice 91-28, said the final rules would be issued "as quickly as possible," but did not give a date.

The IRS originally set the Sept. 8 effective date for the rules when they were proposed on April 25, but an IRS official said Friday the date was being delayed to give the agency time to consider revisions designed to overcome problems with the rules identified by members of the bond community both in written comments and during the IRS's Aug. 8 public hearing.

"We are delaying the effective date because we want to carefully consider suggestions to simplify the regulations and to reduce their administrative burden to the extent that this is appropriate and that is consistent with federal tax policy," said John J. Cross 3d, assistant to the assistant chief counsel for the financial institutions and products division of the IRS.

The rules, which generally apply to governmental and 501(c)(3) bonds, were proposed to discourage state and local governments from using tax-exempt bond reimbursements to avoid arbitrage restrictions.

In a reimbursement deal, bonds are issued to finance the reimbursement of expenditures previously made with other funds. The bond proceeds are treated as spent the day the bonds are issued and can therefore be invested freely without regard to arbitrage restrictions.

Lawyers and state and local officials have complained that the proposed rules are too restrictive and overly complex. They have said the rules would force state and local governments to reorient their budgetary and accounting systems at great expense and disruption to capital programs.

One major problem is that the rules are project-oriented and do not take into account the fact that many state and local budgets and accounting systems are focused on programs and do not get into the level of detail that would be required for compliance. Treasury and IRS officials have said they recognize this problem and plan to correct it.

The rules as proposed in April contain four basic requirements. The issuer must declare a "reasonable official intent" to reimburse. That intent generally must be declared within the two-year period before expenditures are made. The reimbursement must occur either one year after the expenditures were made or one year after the facility being financed was placed in service, whichever is later. And the expenditure being reimbursed must be used for property that has a "reasonably expected" economic life of at least one year. The rules contain additional requirements that issuers find troublesome. For example, the declaration of intent is to describe the facility being financed and to identify the sources of funds that will be used to pay the expenditures to be reimbursed.

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