The IRS requires the information to
ensure compliance with the tax credit bond credit coupon stripping
requirements, including ensuring that no excess tax credit is taken
by holders of bonds and coupons strips. The information is required
in order to inform holders of qualified tax credit bonds whether
the credit coupons relating to those bonds may be stripped as
provided under §54A(i). The respondents are issuers of tax credit
bonds, including states and local governments and other eligible
issuers.
Section 15316(a) of the
Food, Conservation, and Energy Act of 2008 (the Act) added new §
54A providing for tax credits to holders of tax credit bonds
(bondholders). The Economic Stabilization Act of 2008 and the
American Recovery and Reinvestment Act of 2009 expanded the
authority to issue qualified tax credit bonds by adding new types
of bonds and increasing the volume cap for existing qualified tax
credit bonds. Tax credit bonds under § 54A are bonds issued by
states and local governments (and certain other eligible issuers)
the proceeds of which are used to finance specified purposes such
as education, energy conservation, and production of renewable
energy. In lieu of paying interest, tax credit bonds provide tax
credits (credit coupons) that bondholders can use against their
federal income tax liability. Section 54A(i) provides that, under
regulations (or other guidance) provided by Treasury, there may be
a separation of ownership (stripping) of the credit coupons from
the tax credit bond. Tax credits are direct claims against the
Federal government. When a tax credit bond is not stripped, the
claim can be tracked to the taxpayer receiving the principal
payment on the bond, but with great difficulty. When a tax credit
bond is stripped, the credit coupon is transferred to a party other
than the bondholder. This significantly increases the difficulty of
verifying that the taxpayer claiming a credit with respect to a
stripped credit coupon is entitled to claim the credit. The goal of
the qualified tax credit bond program is to provide support to
certain specific state and local government activities by allowing
states and local governments to finance these activities with bonds
that pay no interest or that pay a very low interest rate. The
purpose in allowing qualified tax credit bonds to be stripped is to
increase the marketability of qualified tax credit bonds, further
ensuring that states and local government pay little or no interest
on these bonds. Because no guidance has been released on the
stripping of qualified tax credit bonds, states and local
governments have been either unable to issue qualified tax credit
bonds or have been forced to pay a higher interest rate on
qualified tax credit bonds that they issue. Any delay in preparing
this guidance should not be interpreted as an indication that this
guidance is not needed immediately. Rather, the complexity of the
issues raised by the statutory provision allowing stripping of tax
credit bonds required the drafters of this guidance to answer
certain very difficult legal questions and to coordinate the answer
among several offices in Treasury, the IRS, and Office of Chief
Counsel. The emergency treatment of the OMB number request is
necessary to quickly implement the stripping provisions of the Act
so that the provisions of the Economic Stabilization Act of 2008
and the American Recovery and Reinvestment Act of 2009 relating to
Federal support of state and local government activities can be
made even more effective. We have taken all practicable steps to
consult with interested agencies and members of the public in order
to minimize the burden of the collection of information. Thus, we
are requesting an emergency Paperwork Reduction Act review by
February 22, 2010.
US Code:
26
USC 54A Name of Law: Credit to Holders of Qualified Tax Credit
Bonds
PL:
Pub.L. 110 - 234 15316(a) Name of Law: Food, Conservation, and
Energy Act of 2008
US Code: 26 USC 54A Name of Law: Credit to
Holders of Qualified Tax Credit Bonds
PL: Pub.L. 110 - 234 15316(a) Name of Law: Food, Conservation, and
Energy Act of 2008
On behalf of this Federal agency, I certify that
the collection of information encompassed by this request complies
with 5 CFR 1320.9 and the related provisions of 5 CFR
1320.8(b)(3).
The following is a summary of the topics, regarding
the proposed collection of information, that the certification
covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a
benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control
number;
If you are unable to certify compliance with any of
these provisions, identify the item by leaving the box unchecked
and explain the reason in the Supporting Statement.
Notice 2010-XX, Stripping Transactions for Qualified Tax Credit Bonds