Tax News

CCH (cch.taxgroup.com) reports:

  The IRS and Treasury Department have provided guidance on the maximum face amount of Recovery Zone Bonds, both Recovery Zone Economic Development Bonds and Recovery Zone Facility Bonds, that may be issued by each state and counties and large municipalities within each state before January 1, 2011, under Code Secs. 1400U-2 and
1400U-3, as provided in Code Sec. 1400U-1. The guidance also provides certain interim guidance for Recovery Zone Bonds that may be relied on pending the promulgation and effective date of future administrative or regulatory guidance.

 
Code Secs. 1400U-1,
1400U-2 and
1400U-3 were enacted under the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) (P.L. 111-5). Recovery Zone Bonds generally provide tax incentives for state and local governmental borrowing at lower borrowing costs to promote job creation and economic recovery that is targeted to areas particularly affected by job losses. The 2009 Recovery Act provides $25 billion for recovery zone bonds: $10 billion for Recovery Zone Economic Development Bonds and $15 billion for Recovery Zone Facility Bonds. The guidance includes a table showing the allocation among the states of national volume caps for both types of Recovery Zone Bonds.

  The guidance also contains interim rules providing that the Code Sec. 148(d) definition of "reasonably required reserve or replacement Fund" shall apply, specifying necessary information reporting associated with Recovery Zone Bonds and defining issuers of Recovery Zone Bonds and entities authorized to allocate volume cap to the ultimate beneficiaries. Moreover, if, under Code Sec. 1400U-1(a)(3)(A), a county or large municipality waives any portion of a volume cap allocation received, it may reallocate the waived volume cap in any reasonable manner. Any state, county, or large municipality that receives a volume cap allocation for Recovery Zone Bonds may make designations of recovery zones in any reasonable manner.

  Allocations of national volume cap for Recovery Zone Bonds are effective for bonds issued on or after February 17, 2009.

Notice 2009-50, 2009FED ¶46,403

Treasury Department News Release, TDNR TG-168, 2009FED ¶46,405

Ways and Means News Release: State, Local Governments to Receive $25 Billion Under Recovery Zone Bond Program

Other References:

 
Code Sec. 1400U-1

  CCH Reference - 2009FED ¶32,520.01

 
Code Sec. 1400U-2

  CCH Reference - 2009FED ¶32,523.01

 
Code Sec. 1400U-3

  CCH Reference - 2009FED ¶32,526.01

  Tax Research Consultant

  CCH Reference - TRC BUSEXP: 57,350