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House Tax Bill Would Eliminate Advance Refundings and Private Activity Bonds

Public Finance Update

Earlier today, the House Republican leadership released its draft tax bill, which contains provisions restricting the ability of State, governmental, and municipal entities to issue certain types of bonds on a tax-exempt basis. 

The draft bill would eliminate any tax-exemption for advance refunding bonds (bonds issued more than 90 days in advance of the call date of the refunded bonds). The draft bill would also eliminate the tax-exemption for all private activity bonds (including 501(c)(3) bonds), such as industrial revenue bonds, and bonds issued to finance facilities owned or operated by nonprofit entities. These two provisions would apply to bonds issued after December 31, 2017. 

The draft bill would also eliminate tax-exempt financings or refinancings of professional sports stadiums or arenas for any bonds issued after November 2, 2017. 

The draft bill would also eliminate tax credit bonds and terminate the New Market Tax Credit.

For more information, the complete draft tax bill is available here, and a section by section description is available here (see Subtitle G for bond-related provisions).

If you have any questions regarding the above information, please contact any member of the Quarles & Brady LLP Public Finance team.