TEB Updates Voluntary Compliance Administrative Procedures
The Internal Revenue Service has released to the public its newly updated operating procedures for the Tax Exempt Bonds Voluntary Closing Agreement Program (TEB VCAP) under Section 7.2.3 of the Internal Revenue Manual. New to this release are detailed procedures on the resolution standards available to governmental issuers requesting to correct certain types of identified violations promptly following the occurrence of the violation. “I appreciate the recent work of the Advisory Committee on Tax Exempt and Government Entities and all the comments we received in response to Notice 2008-31 that contributed to the development of these resolution standards,” said Clifford J. Gannett, Director, Tax Exempt Bonds.
TEB VCAP is intended to encourage issuers and other parties to a tax-exempt bond or tax credit bond transaction to exercise due diligence in complying with applicable federal tax laws and to provide a vehicle to correct violations as expeditiously as possible. “Through greater transparency of our voluntary resolution methodologies, we hope to promote increased due diligence reviews by issuers and other parties to ensure that violations are timely identified and resolved,” said Steven A. Chamberlin, Manager, Tax Exempt Bonds Compliance and Program Management.
The new standards provide resolution terms and methodologies to correct eight different violations, including excessive nonqualified use, impermissible advance refundings, and arbitrage violations due to failures to timely reinvest proceeds into U.S. Treasury Securities - State and Local Government Series. TEB expects to periodically release resolution standards for additional types of violations over time.
The updated TEB VCAP procedures also include administrative updates reflecting organizational changes, the expansion of TEB VCAP to encompass violations relating to tax credit bonds, and the streamlining of the case development process to increase overall case processing efficiencies.
TEB has also recently updated its operating procedures for classification, examination, bondholder referrals, quality review, and customer education and outreach programs. These procedures will be publicly released in the near future as revisions to the IRM.