WASHINGTON -- A state bond issuing authority has been allowed to correct the error-ridden form that it submitted to the Internal Revenue Service to carry forward unused private-activity bond volume from 1992 to 1993, the IRS said in a recently published ruling.
Private letter ruling 9332012, which did not identify the state authority, concluded that the authority had shown "good cause" for obtaining relief, and said that it could file the corrected form within 30 days.
The authority maintained that inadvertent "clerical errors" had been made in the form that was filed with the IRS earlier this year.
If the errors could not be corrected, the authority would not be able to carry forward all of its unused private activity bond volume.
According to the letter ruling, the errors occurred when the authority was allocated a portion of the state's private-activity bond volume in January 1992 and then was given another allocation in December 1992.
The tax law limits the amount of private-activity bonds that each state can issue yearly, based on population figures.
The volume limits -- which apply to most private activity-bonds. with the exception of 501(c)(3) bonds -- are $50 per resident or $150 million per state, whichever is greater. States typically allocate portions of their annual permitted volume to their bond-issuing authorities.
An authority may carry forward for up to three years the unused portion of allocated volume that remains at the end of each year. However, it must notify the IRS of its intent to do so in Form 8328, which must be filed by Feb. 15 of the following year.
In this case, the authority reported in Form 8328 only the intent to carry forward the unused volume allocation from December 1992, and not the unused allocation from January 1992.
In addition, the authority misreported both the total amount of volume cap allocated to it for 1992 and the total amount of private activity bonds that it had issued during the year.
The authority wanted to correct the mistakes, but needed to have the IRS approve the correction, since the new version of the form would have to be filed after the Feb. 15 deadline.
The IRS agreed to the correction after finding that the authority had acted reasonably and in good faith, despite the mistaken in the form, and that the corrected form would not prejudice the interests of the government.