DALLAS - The Internal Revenue Service has notified the Tulsa, Okla., public schools that the district may owe as much as $1.6 million in interest and penalties on excessive arbitrage profits earned in a 1990 cash-flow borrowing, district officials confirmed.

Tulsa officials said they were notified by the IRS in February that the agency believed the district owed between $1 million and $1.6 million because it overestimated its cash-flow borrowing needs by selling $50 million of notes three years ago.

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