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Abstract: 

Issuers of tax-exempt bonds have few remedies when the Internal Revenue Service asserts that they have failed to comply with the conditions for maintaining tax-exempt status. In response, tax attorney Christopher S. Rizek suggests that an excise tax on issuers, computed as a proxy for the tax that would be paid by bondholders on interest payments they received, would preserve tax-exempt treatment for issuers and conduit borrowers without the corresponding market effects and litigation associated with an IRS adverse determination ruling.

Keywords: IRC §§ 141–147; Treas. Reg. §§ 1.150; private activity bonds; § 7478

Affiliations:  1: Caplin & Drysdale.