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Abstract: 

On September 23, 2002, the Internal Revenue Service (IRS) and the Department of Treasury published final regulations regarding the private business use of municipal output facilities. In addition, the IRS and Treasury issued an “advance notice of proposed rulemaking” on “mixed-use” output facilities. The scope of the general output regulations is limited to gas, electric, and water facilities that are owned by municipal governments, and are the culmination of several proposed and temporary regulatory guidance projects to deal with rather dramatic changes in the area of electric utility deregulation over a period of years. The proposals regarding mixed use, on the other hand, offer some perspective on how the IRS and Treasury may approach the broader problem of public facilities that are used by and financed from public and private entitities. This article summarizes both the major changes made by the final regulations and the proposals regarding mixed use.

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Affiliations:  1: Ballard Spahr, Andrews & Ingersoll, LLP.