Legal Alert: 11-8-17 The Impact of the Tax Cuts and Jobs Act Provisions on Tax-Exempt Bonds Rochester Chapter

LEGAL ALERT FROM RAC NYSCAR AFFILIATE MEMBER, HARRIS BEACH PLLC:  The Impact of the Tax Cuts and Jobs Act Provisions on Tax-Exempt Bonds

On November 2, 2017, the U.S. House of Representatives Ways and Means Committee released the Tax Cuts and Jobs Act (the "Bill"). Among what is being called the "biggest transformation of the tax code in more than thirty years" are the following proposed changes to the provisions of the tax law that pertain to tax-exempt bonds: (i) the termination of the ability to issue qualified private activity bonds; (ii) the elimination of the ability to issue advance refunding bonds; (iii) the repeal of the authorization to issue tax credit bonds; and (iv) a prohibition on issuing tax-exempt bonds to finance professional stadiums.

Termination of Ability to Issue Qualified Private Activity Bonds

Under current law, interest on "qualified private activity bonds" is excluded from gross income. However, as proposed under the Bill, no qualified private activity bond can be issued after December 31, 2017. This means that the following types of tax-exempt bonds could no longer be issued: (i) qualified 501(c)(3) bonds, which provide tax-exempt financing for qualifying capital projects undertaken by 501(c)(3) organizations, such as colleges, hospitals and other health-care facilities, senior housing facilities, libraries, private schools and museums, among others; (ii) exempt facility bonds, which provide tax-exempt financing for, among other types of projects, residential rental projects (e.g., affordable or low-income housing), airports, docks and wharves, mass commuting facilities, facilities for the furnishing of water, sewage facilities and solid waste disposal facilities; and (iii) qualified small issue bonds, which provide tax-exempt financing for manufacturing facilities.  Continue Reading ...