WASHINGTON -- The short-term tax-exempt note market would have been hurt by a recently discovered change in tax rules if the IRS had not acted to fix the problem, market sources said yesterday.

The problem, which lawyers from Orrick, Herrington & Sutcliffe discovered last week in connection with a California note issue, occurred when the IRS dropped a cross-reference in its final original-issue discount rules that would have assured certain provisions would not apply to tax-exempt notes with maturities of less than a year.

Limited Time Offer

Save $400 off your subscription. Special offer ends April 30, 2017.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.