IRS Inquiry Assistance
The tax-exempt bond division (“TEB”) of the IRS conducts inquiries of tax-exempt bond issues. The selection of a bond issue to be examined is based on a number of factors, including random selection.
Generally, the IRS will send notice of an examination request to the Authority as the issuer of the bonds. The Authority can work with the borrower school and the IRS to assist with an IRS inquiry. The IRS examination request will include a number of document requests to allow the IRS to determine if there has been any violation of tax-exempt bond rules.
For borrowers, often the greatest challenge is finding the information requested, however, the Authority often has much of the information in its files and can assist with document and data collection.
Typically, the IRS inquiries relate to post-sale compliance such as requiring reporting related to fund usage. Because of this, it is important to keep records of what facilities are used for when using tax-exempt funds.
The IRS has established a Voluntary Closing Agreement Program (“VCAP”) which allows for quicker resolution of any tax-exempt bond rule violations.