Status of Legislation and Regulations
Of Interest to the Municipal Market
(As of July 13, 1992)
Bill or Regulation Background and Current
Status
Urban Aid Legislation (HR 11, In the wake of unrest in
HR 3040) Los Angeles and other
cities, Congress as been
trying to craft
legislation to provide
financial aid tax relief
to urban areas. The House
version, passed on July
2, is HR 11, which would
create urban enterprise
zones. The plan would
allow tax-exempt,
qualified redevelopment
bonds to be issued in the
zones for a number of
uses, including loans to
small businesses. The
bill would also
permanently extend the
mortgage revenue bonds
and small-issue
industrial development
bonds, and the low-income
housing tax credit, all
of which expired June 30.
In addition, the bill
contains several
tax-simplification
provisions that would
ease the arbitrage rebate
requirement and other tax
law bond curbs. But the
bill also includes a
provision, widely
criticized by the
securities industry, that
would require
mark-to-market accounting
of municipal bonds and
other securities.
The Senate has not yet
drafted an urban aid
package, though the
Senate Finance Committee
has approved legislation,
HR 3040, that would
extend the mortgage bond
and IDB exemption and the
housing credit for 18.
months. Committee
Chairman Lloyd Bentsen,
D-Tex., has said his
panel will probably draft
an enterprise zone bill
the week of July 20.
Energy Bill (HR 776) A comprehensive energy
bill passed by the House
on May 27 contains two
provisions added by the
House Ways and Means
Committee that would
affect the tax-exempt
bond market. One would
remove investment
restrictions on nuclear
decommissioning trust
funds, which under
current law invest only
in U.S.Treasury
securities and tax-exempt
municipal bonds. That
provision would also
lower the funds' 34% tax
rate to 20%.
Another provision,
sponsored by Rep. Beryl
F. Anthony, D-ark.,
would increase the supply
of bank-qualified bonds.
It was designed to
offset any negative
impact on demand for
municipals that the
nuclear trust fund
measure might cause.
Under current law, banks
may deduct 80% of the
cost of carrying
municipal bonds if they
are bought from issuers
who expect to sell no
more than $10 million
annually. Rep Anthony's
provision would raise
that amount to 20$
million.
On June 17, the Senate
Finance Committee
approved its version of
energy legislation, which
proposed removing
investment restrictions
on nuclear
decommissioning funds but
did not propose lowering
the tax rate. The bill
also does not include the
provision on
bank-qualified bonds.
The bill has yet to be
voted on in the full
Senate, where it faces
objections from senators
on energy matters
unrelated to the tax
items.
Waxman Bill (HR 4848) Introduced on April 10
by Rep. Henry A. Waxman,
D-Calif., this
legislation would hurt
the municipal bond
market by imposing a
2.5% tax on unearned
income, including
interest from tax-exempt
bonds, to fund a new
long-term health-care
program for the
chronically ill and
disabled. Congress is
not expected to pass any
health-care legislation
this year, but hearings
may be held on
health-care reform later
this year. Rep. Waxman's
bill is expected to be
at the center of the
discussion.
Mortgage Bond Extension (HR Rep Barbara B. Kennelly,
1067 and S 167) D-Conn., and Sen. Donald
W. Riegle, D-Mich.,
introduced legislation
last year to permanently
extend the tax exemption
for mortgage revenue
bonds, which is set to
expire June 30. Congress
is considered likely to
pass a bill later this
year that would grant a
short-term extension for
the mortgage bond
exemption.
Small-issue Industrial Rep. William J. Coyne,
Development Bond Extension D-Pa., and Sen. John B.
(HR 1186 and S 1357) Breaux, D-La.,
introduced legislation
last year to extend the
tax exemption for
small-issue IDBs, which
is to set expire June
30. Rep. Coyne's bill
would extend use of such
bonds through 1996, and
Sen. Breaux's bill would
make it permanent.
Congress is considered
likely to pass a bill
later this year that
would grant a short-term
extension for the
industrial development
bond exemption.
Bond Simplification (HR 2775, Rep. Dan Rostenkowski,
HR 2777 and S 1394) D-III., and Sen. Lloyd
Bentsen, D-Tex., teamed
up last year to offer
broad tax-simplication
legislation, HR 2777 and
S 1394, that includes a
number of minor
provisions to make bond
rules more workable. In
addition, Rep,
Rostenkowski introduced
HR 2775, which included
a few major bond
simplification
provisions, such as
increasing the
small-issuer arbitrage
exemption to $10
million. Some of the
provisions in all three
bills were included in
the urban aid bill
passed by the House.
Easing of Bond Curbs (HR 710 Along with easing the
and S 913) arbitrage requirement
and limits on bank
deductibility, the
legislation introduced
last year by Rep. Beryl
F. Anthony, D-Ark., and
Sen. Max Baucus, D-Mont.
would modify several
other tax-law bond curbs
such as repealing the 5%
unrelated and
disproportionate use
test. Some of the
provisions in this
legislation found their
way into Rep.
Rostenkowski's
simplification bill, HR
2775, and into the House
urban aid bill.
Expanding Demand for Rep. C. Thomas McMillen,
Municipals (HR 5154) D-Md., introduced
legislation on May 14
designed to increase
purchases of municipal
bonds in two areas:
pension funds and
individual retirement
accounts. Under Rep.
McMillen's plan, pension
funds and IRAs would
receive 43 cents in
federal subsidies for
every dollar earned in
interest income from
investments in
tax-exempt bonds. Rep.
McMillen is not a member
of the House Ways and
Means Committee, and
Congress has taken no
action yet on his
measure. Capitol
Hill watchers have said
chances for passage of
his bill are slim,
because it would be
difficult for Congress
to find the money needed
to pay the subsidies.
Environmental Finance (S 90 Sen. Pete Domenici, R-N.
and HR 2172 M., is the author of S
90, which would reduce
restrictions on
tax-exempt bonds used to
help clean up the
environment. These
bonds, which benefit
private firms, would be
classified as
"governmental,"
exempting them from the
private-activity volume
cap and permitting
accelerated depreciation
for all privately owned
infrastructure
facilities financed with
tax-exempt bonds.
Rep. Frank J. Guarini,
D-N.J., is the author of
HR 2172, which also
reduces curbs on
private-activity bonds
used for environmental
facilities but does not
permit expanded
depreciation. Neither
measure is expected to
be considered seriously
this year, especially
in light of the current
stalemate over enacting
a tax bill.
HHS Regulations on Medicaid Regulations are due out
Financing Oct. 1 implementing
changes to the Medicaid
program. Originally, the
Department of Health and
Human Services proposed
rules Sept. 12, 1991,
that were slated to go
into effect Jan. 1, 1992,
but they caused so much
controversy that Congress
passed legislation
delaying the rules until
October. The rules are
designed to prevent a
state from counting
certain tax revenues or
donations from hospitals
toward the contributions
it makes to the Medical
program that are
eligible for federal
matching funds.
Department officials
have been meeting with
state and local lobbyists
to craft the upcoming
rules.
HOME Program Legislation and The National Affordable
Regulations Housing Act of 1990,
known as the HOME
program, is up for
reauthorization this
year. Under the program,
the federal government
matches contributions
that state and local
government make to
rental housing and home
ownership programs for
low-income people. One
of the key issue during
the reauthorization
debate will be whether
all forms of tax-exempt
debt should count
toward the match. The
1990 law is vague in
this area, and the
Department of Housing
and Urban Development
has taken the position
that only general
obligation bonds should
be eligible for matching
funds. Housing industry
officials, meanwhile, say
private-activity bonds
also should count.
On June 10, the House
Banking Committee
approved its version of
the reauthorization,
which would allow 100%
of the value of
private-activity bond
issuances to be counted
toward the match, and
would fund HOME at a
level of $2.1 billion
for fiscal 1993. The
Senate Banking Committee
approved a Bill June 22
that would allow only
25% of the value of
the private-activity
bond issuances to be
eligible for federal
matching funds. HUD,
meanwhile, is still
drafting the regulations
for the two-year-old
program, and is expected
to publish them later
this year.
Student Loan Bonds (HR 3553 Congress gave final
Regulations approval in early July to
a comprehensive bill that
would reauthorize the
Higher Education Act of
1965. The bill contains
a provision that would
set up a pilot program
to test the idea of
having colleges be
directly responsible for
making and servicing
student loans. Under
present law the federal
government guarantees
loans made to students by
commercial banks, which
in turn sell the loans to
state higher education
authorities that often
finance their purchases
with tax-exempt bonds.
Education officials
have warned that a
direct-loan program
would obviate the need
for those authorities
and, in turn, for
tax-exempt student loan
bonds.
Government Securities Act The Senate last year
Reauthorization (S 1699, S 1247 passed two complementary
and HR 3927) and relatively simple
bills introduced by Sen.
Christopher J. Dodd,
D-Conn. S 1247 July 31,
1991 reauthorized the
Government Securities
Act of 1986 and
indefinitely extended
the Treasury's
rule-making authority. S
1699, passed Sept. 25,
1991, in the wake of the
Solomon Brothers bidding
scandal, extended the
Treasury's rule-making
authority for one year.
That bill made it
illegal to provide false
information in connection
with biding for
government securities,
and extended the
Securities and Exchange
Commission's antifraud
authority to the
government securities
market.
In the House, the
Energy and Commerce
Committee on June 2
approved HR 3927, a more
complex measure
containing several
provisions that trouble
the securities
industry. Among them is
a provisions that would
give the Treasury
authority identify large
trading positions in the
government securities
market, and the SEC
back-up authority to
monitor prices and audit
sales transactions. The
House version is opposed
by the Treasury, the
Federal Reserve, and
market participants. A
floor vote on the House
bill is not yet
scheduled.
Separately, House
Banking Committee
Chairman Henry
Gonzales, D-Tex., is
backing a bill, HR 4450,
that would require the
Federal Reserve to
experiment for two years
with a single-price
auction system for
Treasury notes and bonds
and a continuous market
for bills. It would also
require the borrowing
advisory committee of
the Public Securities
Association to conduct
its meetings in public.
Fed and Treasury
officials opposed a
mandatory approach when
they are already
experimenting with an
open, single-price
system that would be
fully automated.
Prospects this year are
doubtful.
Legislative prospects
in the House are
complicated by a
possible jurisdictional
disputes. Aides say
Rep. Gonzalez could
ask to have the Energy
and Commerce bill
referred to his
committee, a move that
could delay sending the
measure of the House
floor for final
approval. The Ways and
Means Committee, which
recently approved a
measure clarifying that
a violation of Treasury
securities auction rules
is a violation of
federal securities law,
also could assert
jurisdiction. A ruling
on how to handle the
legislation is expected
from the House
parliamentarian.
Fiscal 1993 Budget Resolution The House and Senate gave
(H Con.Res.287) final approval to the
fiscal 1993 budget plan
on May 21, but the vote
in each chamber was much
closer than expected. The
House vote was
209-to-207, while the
Senate approved it
52-to-41 after a
conference committee
approved the compromise
measure on May 20. The
new budget sets an
overall cap on domestic
spending of $225.3
billion, the level
called for in the 1990
budget agreement. To
comply with the cap, the
House and Senate
Appropriations Committees
will have to cut domestic
programs by $6.4 billion.
In addition, the budget
calls for cuts of $7
billion in defense
spending cuts.
Balanced Budget Amendment The amendment would
to the U.S. Constitution (HJ. require U.S. receipts to
Res. 290) equal outlays, unless
waived by a three-fifths
majority of both houses
of Congress. The House
defeated the amendment
by a vote of 280 to 153
on June 11, falling 9
votes short of the
two-thirds majority
needed to pass. The
Senate also buried the
amendment on July 1 when
it failed to break off a
filibuster being waged
by opponents. President
Bush and congressional
sponsors have vowed to
force another round of
votes early next year
when the new Congress
arrives, if the
President is re-elected.
Budget Fire Walls Bill (S2399, Both bills would have
HR 3732 eliminated one year
ahead of schedule the
fire walls between
defense, domestic and
international spending
established by the 1990
budget agreement. But the
bills are in limbo after
the Senate version failed
in a March 26 test vote
and the House defeated
its measure March 31.
Senate leaders have no
plans for further action
on their bill, but House
leaders say they may
bring the measure up
again later this year if
the political climate
improves.
Superconducting Super Collider The House on June 17
Energy and Water voted to strip the bill
Appropriations Bill (HR 5373) of nearly all the $483
million in federal
funding for the the
Superconducting Super
Collider science project
in Texas. The Senate
Appropriations
Committee's energy and
water development
subcommittee is expected
to take up legislation at
at the end of July.
MSRB Municipal Securities The primary market
Information Library Primary disclosure system of the
Market Disclosure System Municipal Securities
Rulemaking Board's
Municipal Securities
Information Library went
into operation the week
April 20, just over 10
months after it was
approved by the SEC.
Under the system,
official statements filed
with the board by
underwriters are put on
high-capacity digital
audio tapes that are sold
to information vendors
who can repackage the
information and resell it.
The system allows market
participants to obtain
picture-perfect images
of most of the official
statements produced in
the county. Bloomberg
Financial Markets became
the first vendor to
receive digital tapes in
early July. The Bond
Buyer, J.J. Kenney Co.,
Municipal Bond Investors
Assurance Co., and
entrepreneur Donald
Beatty plan to subscribe
to the tapes. Interactive
Data and AMBAC Indemnity
are considering
subscribing.
MSRB Continuing Disclosure The MSRB's 18 month
Pilot Program experimental Continuing
Disclosure Information
Pilot system, which is
the second major element
of the board's Municipal
Securities Information
Library, was approved by
the SEC April 6. The move
ended a two-year
roller-coaster effort by
the board to get the SEC
to endorse the system.
Once the voluntary pilot
program is launched in
November, bond trustees
will be able to file
three-page notices of
important events, such
as calls and draws on
escrow funds, that affect
bonds they oversee in the
secondary market. The
notices can be filed by
fax machine or mail. Six
months after the pilot
system is started,
issuers may voluntarily
start filing similar
notices. When the pilot
program ends about May
1994, the SEC and MSRB
will decide if they want
to make the program
permanent and whether and
how to expand it. The
board's MSIL facility,
including its public
access facility, will be
moved shortly from the
board's Washington,
D.C., headquarters to
nearby Alexandria, Va.,
at 1640 King St.
SEC Rule 2a-7 The unveiling of a new
SEC rule governing
tax-exempt money market
funds has been delayed
by President Bush's 1992
moratorium on rule-making
The SEC in January issued
new standards for both
taxable and tax-exempt
money market funds, but
most of the rigorous new
requirements governing
the kinds and variety of
securities that funds
can hold do not apply to
tax-exempts. Interest in
the new rule was
heightened last winter
when SEC Commissioner
Richard Roberts
recommended that the
agency restrict
tax-exempt money market
funds from investing in
short-term paper of
issuers that do not
pledge to make
secondary-market
disclosure. The
Investment Company
Institute, the industry
association representing
mutual funds, whole Mr.
Roberts Dec. 6 opposing
the proposal. The group
began work this spring
on disclosure guidelines
for tax-exempt money
market and mutual funds
in hopes of heading off
the commissioner's plan.
MSRB Rule on Fee Collection The Municipal Securities
Rulemaking Board on July
1 started streamlining
the way it collects
underwriting fees from
dealers. It will send
monthly bills to firms
rather than collecting
fees after each
underwriting. Dealers
will receive the first
bills at the end of July
for underwritings this
months and will have 30
days to file their
assessment fees.
The board on July 1
also began the process of
collecting fees from
firms doing note deals
with maturities over nine
months. The board
currently exempts notes
two years or under in
maturity. But it will
begin exempting private
placements from filing
fees. As for
variable-rate demand
notes, the board will
now require a fee when
any such notes over nine
months in maturity are
reissued. Notes under
nine months would be
exempt altogether from
fees. Currently, all
variable-rate demand
notes are treated like
long-term bonds and
assessed at a onetime
fee. Inquiries should be
directed to Christopher
Taylor, the MSRB's
executive director, at
202-223-9347.
MSRB Proposed Official The MSRB proposed in
Statement Collection Rule April expanding its
repository of official
statements by collecting
for the first time
documents for short-term
and variable-rate demand
note deals. The board
also said it may propose
collecting official
statements for private
placements. The whole
issue may be taken up at
the board's next meeting
in late July. The
expansion would mean
that official statements
for virtually all
municipal securities
issued in the United
States would be available
through the primary
market disclosure wing
of the board's Municipal
Securities Information
due June 1.
MSRB Interpretation on The MSRB issued an
Municipal CMOs interpretation in April
that yields do not have
to be stated on
confirmations for
transactions issued by
municipal issuers that
are structured like
collateralized mortgage
obligations. If a yield
is stated, the method
used to calculate it
must be clearly stated
on the confirmation, the
board said. The board
warned that dealers
executing muni CMOs must
meet board rules, such
as record keeping and
qualifications of dealers
selling the securities.
For further information,
contact MSRB Deputy
General Counsel Harold L.
Johnson.
Proposals for Streamlining A securities industry
Clearance and Settlement task force recommended
on May 26 that stock and
bond trades be settled
in three days instead of
the current five - a
recommendation that some
municipal market
participants say may be
hard to accomplish
quickly. However,
Securities and Exchange
Commission Chairman
Richard C. Breeden, who
originally recommended
the creation of the task
force, sought to allay
allay fears that the
so-called T plus 3
concept will disrupt the
securities industry. He
said it will probably
take two to three years
to shift to the faster
settlement system rather
than the original 1993
target. He also signaled
that that schedule could
slip even further for
municipal transactions.
The task force, headed
by John Bachmann,
managing principal of
St. Louis-based Edward
D. Jones & Co., was set
up in November 1991 as
an outgrowth of the
Group of 30, an
international panel
examining how to
streamline clearance and
settlement of securities
worldwide.
Registration of Rating Agencies SEC Commissioner Richard
Roberts urged in early
April in a series of
speeches that the agency
require rating agencies
to meet minimum operating
standards and to register
with the commission. The
commission might need
legislative authority to
do so. No formal action
has been taken by the
agency on the proposal.
Two SEC members, Chairman
Richard Breeden and
Commissioner J. Carter
Beese, stated
recently they oppose
Commissioner Robert's
recommendation. Chairman
Breeden was expected to
spell out his reasons in
a letter to Rep. John
Dingell, D-Mich.,
chairman of the House
Energy and Commerce
Committee, who wants to
introduce legislation to
implement Commissioner
Roberts's proposal.
Registration of Conduit Bonds Securities and Exchange
Commissioner Richard
Roberts proposed in a
speech Feb. 29 that
municipal bond brokers
be required to put in
writing why they think
their recommendations to
retail investors to buy
unrated conduit bonds
are suitable.
Broker-dealers currently
are required by law to
make suitability
determinations, but they
do not have to put such
determinations in
writing. The SEC's
market regulations
chief. William Heyman,
wrote the MSRB early
last month urging it to
take up the proposal or
consider other
solutions. The MSRB
touched on the subject
at its quarterly meeting
in mid-May and is
expected to begin
"thorough discussion" of
the issue at its summer
meeting at the end of
July. Mr. Roberts
outlined other options
for dealing with the
unrated, conduit bond
issue at a meeting of
the Bond Club of Virginia
last month.
Investment Advisers Legislation The Senate Banking
(S. 2266) Committee approved on
July 2 introduced by Sen.
Christopher Dodd,
D-Conn., that would
authorize the SEC to
collect annual fees from
investment advisers. The
added dollars would
allow the agency to beef
up considerably its
limited staff for
inspecting advisers. The
bill comes in the wake
of the indictment of
California Investment
adviser Steven Wymer,
who allegedly bilked
municipalities across the
country out of millions
of dollars of funds. In
the House, a draft bill
to be introduced by Rep.
Edward Markey, D-Mass,
has been circulating
since spring. Two
hearings on the measure
were held by the House
Energy and Commerce
Committee's
telecommunications and
finance subcommittee, of
which the lawmaker is
chairman. Like the
Senate measure, the draft
bill would permit the
SEC to expand its
inspection staff. But it
also specifies risk
factors to be applied to
firms, calls for
inspections for new
registrants within their
first year of operation,
urges follow-up
inspection of certain
firms, requires advisers
to determine the
suitability of certain
investments for clients,
and requires the SEC to
survey the field for
unregistered advisers.
The subcommittee hopes
to vote on a bill by the
end of August.
IRS Arbitrage Rebate The Internal Revenue
Regulations Service on May 12
(FI-91-86/1.148-0-to-9 and finalized arbitrage
1.149(d)(-1) and 1.150-0-1 and rebate rules that had
1.103-13T been published in
temporary in May 1989.
The IRS set a June 30,
1993 expiration date for
the final rules, however,
and announced it would
rewrite and simplify
them before that date.
The IRS said it would
integrate yield
restriction rebate
requirements in the
rewritten rules.
Meanwhile, the final
rules have the same
effective dates as the
1989 rules, which means
they are generally
effective for
governmental bonds
issued after Aug 31,
1986, and for some
nongovernmental bonds
issued after Aug. 15,
1986.
The IRS also extended
effective date of 1989
rules until June 17 so
that market
participants with bond
deals in the works could
elect to comply with
either the old or the
new rules during a
one-month period. The
final rules only
slightly modified the
1989 rules, mostly in
the area of refundings.
IRS Allocation and Accounting On May 12 the IRS
Rules For Rebate Purposes issued final allocation
(FI-66-89/1.148-4) and accounting rules for
rebate purposes. The
rules, which tell
issuers how to allocate
the account for the
expenditures and
investments of their
bond proceeds, generally
took effect on June 17.
However, the IRS gave
market participants the
option of electing to
comply with the final
rules for bonds issued
after May 18, the date
the rules were published
in the Federal Register.
The final rules
contain many
modifications to the
rules that had been
proposed in January. The
final rules eliminate or
loosen many of the
restrictions that had
been proposed for
investments contracts.
but require fees paid to
investment contract
brokers to be added to
issuers' investment
income, even if the fees
are paid by contract
providers rather than
the issuers. The final
rules also ease
restrictions on
commingled bond and
nonbond funds.
IRS Transferred Proceeds On May 12 the IRS issued
Rules For Refundings final rules governing
(FI-90-91/1.148-11) transferred proceeds for
refundings. The rules
generally took effect
June 17, However the IRS
gave market participants
the option of electing
to comply with these
rules for bonds issued
after May 18, the date
the rules were published
in the Federal Register,
or retroactively to the
same dates the
transferred proceeds
provisions of the May
1989 arbitrage rebate
rules became effective.
Those 1989 provisions
generally became
effective for bonds sold
after May 15, 1989, or
issued after June 14,
1989.
There is one caveat:
the transferred proceeds
rules are applied to
bonds retroactively, the
the savings that are
associated with their
retroactive with their
applications must be
used to redeem the bonds
of the refunding issue.
The final rules make
few modifications to the
rules that had been
proposed in February to
simplify transferred
proceeds computations
and provide relief from
the so-called killer
suck-up requirements
that had discouraged
issuers from partially
refunding bond issues.
In one change in the
final rules, however,
IRS said it would allow
a 90-day temporary
period for current
refundings during which
proceeds are not subject
to yield restriction.
IRS Rules on the The IRS on May 12 issued
Two-Year Rebate Relief Law final rules telling
(FI-1-90/1.148-6) issuers how to comply
with the two-year rebate
relief law Congress
enacted in 1989 and
revised in 1990. The
rules were generally
effective on June 17.
The IRS, however, gave
issuers the option of
complying with these
rules for bonds issued
after May 18, the date
the rules were published
in the Federal Register.
The rules contain some
modifications of rules
that were proposed in
early February. The
rebate relief law
generally exempts
issuers of 501(c)(3)and
governmental bonds
financing construction
from arbitrage rebate
requirements if they
spend most of their bond
proceeds in two years,
according to six-month
spending targets. The
law applies only when
at least 75% of the bond
proceeds are used for
construction.
The final rules
clarify what kinds of
expenditures would
qualify as construction
expenditures and ease
definition of
construction to include
some kinds of software.
The rules also clarify
that an issuer must
reasonably expect to
spend, rather than
actually spend, 75% of
proceeds on construction
to qualify for rebate
relief under the law.
IRS Rule on Rebate and On May 12 the IRS issued
Yield Restriction Requirements a new temporary and
(FI-91-86/1.148-12T) proposed rule allowing
issuers subject to rebate
to be exempt from yield
restrictions under
certain circumstances.
The rule, which is
effective for bonds
issued after May 18 but
is also subject to
revision, generally
applies to bond issues
that are subject to both
yield restriction and
rebate requirements, but
do not qualify for an
exemption to rebate. The
rule does not apply to
certain bond proceeds
from refundings or pools
or to bonds that are
subject to a penalty
under the two-year
rebate relief law.
Requests for a public
hearing on the rule must
be submitted by July 17.
IRS Rule on Refunds The IRS on May 12 issued
of Overpayments of Arbitrage a new temporary and
(FI-67-89/1.148-13T) proposed rule allowing
issuers to obtain
refunds for legitimate
overpayments of arbitrage
that were rebated to the
federal government. The
rule is effective but
subject to revision. The
new rules say that
while issuers may request
such refunds now, the
IRS commissioner will
not be required to
consider the requests
until Sept 15. Agency
officials said the delay
will give them time to
issue procedures to
implement this rule.
IRS Arbitrage Rules The IRS on May 12 issued
on Student Loan Bonds final rules on arbitrage
(FI-75-89/1.148-10) restrictions for
student loan bonds. The
rules are effective for
students loan bonds
issued after Jan. 5,
1990.
