The I.R.S. Provides Temporary Guidance on Public Hearing Requirements

On November 4, 2020, the Internal Revenue Service issued Revenue Procedure 2020-49, which provides temporary guidance regarding the public approval requirement under §147(f) of the Internal Revenue Code for tax-exempt qualified private activity bonds, which, among other, mandates that certain hearings must be held in-person.

Earlier this year (May 2020), the IRS announced that the public approval requirement under Section 147(f) could be met by having telephonic hearings, due the Coronavirus Disease 2019 (COVID-19) pandemic.  Recently, the IRS issued Revenue Procedure 2020-49 which extends the ability to have telephonic hearings to September 30, 2021 due to the COVID-19 Pandemic.

Qualified tax-exempt private activity bonds are subject to public approval.  The bonds must not only be approved by the governmental unit issuing the bonds but must also be approved by the governmental unit having jurisdiction over the area in which the facility (to be financed by the bonds) will be located. Treasury Reg Section 1.147(f)-1(d)(1) provides that there must be a public hearing that gives a reasonable opportunity for interested persons to express their views with respect to the proposed bond(s).  Rev Procedure 2020-49 extends the IRS’s May 2020 guidance that hearings held by teleconference that are accessible to the residents of the approving governmental unit by calling a toll-free telephone number will be treated as held in a location that, based on the facts and circumstances, is convenient for residents of the approving governmental unit for purposes of § 1.147(f)-1(d)(2).

Victoria S. Byerly is an attorney in KAV’s Public Finance Group. A specialist in Section 103 of the Internal Revenue Code, her practice is exclusively dedicated to state and federal tax matters related to the issuance of tax-exempt debt obligations.

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