WASHINGTON -- Issuers of governmental and 501(c)(3) bonds should be eligible for arbitrage rebate relief under a 1989 law if they reasonably expect to spend 75% of their bond proceeds on construction, an American Bar Association subcommittee told the Treasury Department last week.

The group of lawyers, who are members of the association's committee on tax-exempt financing, urged the Treasury to adopt the reasonable expectations standard in a 26-page paper that contained recommendations for the Treasury to consider in writing rules for compliance with the two-year rebate relief law. The Treasury is expected to propose the rules later this month.

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