***ARCHIVED CONTENT*** IRS Announces Updated Procedures and Educational Resources for the TEB VCAP
The Internal Revenue Service (IRS) released its updated administrative procedures for the Tax Exempt Bonds Voluntary Closing Agreement Program (TEB VCAP) under Section 7.2.3 of the Internal Revenue Manual (IRM). New procedures include additional resolution standards for certain types of violations pertaining to tax-exempt bonds and direct pay bonds. Also new to the procedures is a provision permitting a reduced settlement amount when an issuer timely submits a TEB VCAP request following the identification of a violation pursuant to due diligence monitoring processes established in the issuer’s written post-issuance compliance procedures.
The IRS also released an update of IRM Section 4.81.6, TEB Closing Agreements. This IRM updates administrative procedures under which TEB generally enters into closing agreements with governmental issuers of bonds to conclusively resolve compliance failures.
Additionally, TEB released web-based educational resources providing basic information about post-issuance and voluntary compliance programs to assist issuers and conduit borrowers with understanding their on-going tax responsibilities and their available options to resolve noncompliance, on a timely basis, in order to preserve the preferential tax status of their bonds. Links to these new resources are in the Tax Exempt Bonds Community on IRS.gov.
These IRM updates reflect certain recommendations previously provided by the Advisory Committee on Tax Exempt and Government Entities, including specific recommendations provided in their June 2009 report entitled Tax Exempt Bonds: Improvements to the Voluntary Closing Agreement Program for Tax-Exempt, Tax Credit and Direct Pay Bonds.