Tax News Update    Email this document    Print this document  

May 10, 2023

IRS outlines yet-to-be proposed regulations affecting arbitrage investment restrictions for exempt bonds

In Notice 2023-39, the IRS describes proposed amendments to regulations under IRC Section 148 that the IRS plans to issue regarding an exception to the arbitrage investment restrictions for certain tax-exempt bonds. The amendments will affect a provision in the regulations that addresses whether certain perpetual trust funds created and controlled by states, and pledged as credit enhancements to guarantee tax-exempt bonds, will be treated as replacement proceeds for purposes of the arbitrage investment restrictions. Taxpayers may rely on Notice 2023-39 for bonds sold on or after May 10, 2023.

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor