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Tax Exempt Bonds Compliance Check Questionnaire on Advance Refunding Issues (July 2009)

The Tax Exempt Bonds (TEB) office of the Tax Exempt and Government Entities division conducted a questionnaire project to evaluate the post-issuance compliance and record retention policies, procedures and practices of issuers and conduit borrowers of tax-exempt advance refunding bonds. TEB sent a questionnaire to 269 governmental entities that issued advance refunding bonds between July 1, 2009, and June 30, 2010, to refinance governmental bonds. TEB also sent out a questionnaire to 31 exempt organizations benefitting from advance refunding bonds issued, between July 1, 2009, and June 30, 2010, to refinance qualified 501(c)(3) bonds. The questionnaires were distributed in May 2011.

The advance refunding bonds questionnaire project was designed to measure several aspects of issuers’ or borrowers’ tax compliance policies and procedures.  The questionnaire covered:

  • Debt management policies and procedures for determining when to advance refund a bond issue;
  • Qualification requirements applicable to advance refundings;
  • Arbitrage requirements applicable to advance refundings;
  • Procedures related to the determination of issue price;
  • Record retention procedures; and
  • Procedures related to the timely identification and correction of tax violations.

Copies of the questionnaire and cover letter are available at the links below:

Form 14246, Advance Refunding Bonds Compliance Check Questionnaire
Cover Letter for Advance Refunding Bonds Compliance Check Questionnaire
Publication 4386, Compliance Checks:  Examination, Audit or Compliance Check?

Advance refunding bonds are issued to refinance another outstanding bond issue prior to its redemption or retirement.  The proceeds of advance refunding bonds are deposited into an escrow which is pledged to pay the principal, interest or redemption price on the refunded bond issue on a date more than 90 days after the issue date of the advance refunding bonds.  Proceeds of advance refunding bonds may also finance certain other costs associated to the transaction.

The advance refunding bonds questionnaire project is the fourth time TEB has used compliance check questionnaires to measure and promote tax compliance in the municipal bond market.  Previous projects analyzed information from exempt organization borrowers of qualified 501(c)(3) bonds, governmental issuers of tax-exempt governmental bonds, and governmental issuers of direct pay build America bonds.