Let our professionals help you navigate the challenges and compliance issues surrounding federal tax law regulations.
Engagement Scope of Methodology
Review of Debt Terms and Components
Post-Issuance analysis of fixed and variable rate debt structures, derivative products and credit enhancements.
Review of Investment Cashflow and Investment Yield Computation
Post-Issuance analysis of the portfolio of investments purchased with all types of gross proceeds subject to rebate, including par amount, principal, purchase and sale prices, interest, accruals and valuations. We provide a schedule which identifies the pertinent data including the historical yield on investment for each security in the proceeds portfolio.
Computation of Rebate Amount
The rebate amount is computed under Section 148 of the Internal Revenue Code of 1986 (the “Tax Code”) using the yield on the issue. Supporting schedules identify the rebate amount in whole as well as the amount per investment and per fund.
Yield Restriction and Yield Reduction Payment Analysis
Yield restriction is a compliance requirement under the Tax Code in addition to rebate. We identify which funds and investments are yield restricted and perform calculations to determine if this requirement is being satisfied.
Spending Exception Analysis
Spending exceptions to rebate provided in the Tax Code are available in some form to most bond issues. We assess which exceptions are potentially applicable, determine if the issue has met the requirements, and finally, determine if the exception should be applied. The exceptions are generally optional, and in many circumstances, the rebate amount is lowered by the inclusion of proceeds which could be exempted. We analyze each issue to determine which tax option produces the lowest rebate amount.
Calculation Date Monitoring
Knowledge of key dates for filing with the IRS is critical to maintaining compliance with the Tax Code. We track all dates related to calculation schedules and inform you of them in advance to allow for timely computations and filings.
Ongoing Compliance Monitoring
After sale and investment proceeds are spent, it is important for borrowers to be vigilant in confirming that neither transferred proceeds nor replacement proceeds exist. Our professionals can assist you with confirmation that they remain in compliance during these periods.
Commingled Fund Analysis/Allocation Services
When proceeds and non-proceeds are commingled, it is critical to identify which amounts are subject to rebate. Using our vast experience working with commingled funds, we review allocation methodologies identified in the tax documents and/or arbitrage regulations to deliver positive results for our clients.
Overpayment Refund Submissions
Amounts paid for rebate or yield reduction in excess of what is required may be refunded to the payor. Members of the Integrity team have successfully assisted dozens of clients in their pursuit of overpayment refunds. We are familiar with the processes as well as the agents reviewing the requests. This combination results in a high success rate for our clients.
Assistance with IRS Audits
We maintain excellent relationships with IRS professionals, and are available to assist issuers and their bond counsel with audits, closing agreements and other issues with the Service.
Post-Issuance Compliance Procedures
The development and implementation of policies and procedures for consistent review of outstanding debt and financed assets are critical to borrowers in the tax-exempt market. Integrity can tailor checklists and procedures to your entity to help you identify non-compliance and understand how to resolve matters, if they arise.
IRS record retention requirements for tax-exempt bonds are onerous. We provide advice for records management and ease of tracing proceeds. We can work with you to set processes in place to increase effectiveness in this area.
Verification of the mathematical accuracy of certain numerical components of a refunding transaction. The verification typically includes verification of numbers provided by an underwriter or financial advisor confirming the sufficiency of escrow cashflows to fund debt service requirements of the refunded issue, verification of the yield on the bonds, and verification of the yield(s) on any yield restricted escrow funds.