26 U.S. Code § 149 - Bonds must be registered to be tax exempt; other requirements
Nothing in section 103(a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any registration-required bond unless such bond is in registered form.
The Secretary shall prescribe such regulations as may be necessary to carry out the purpose of paragraph (1) where there is a nominee or chain of nominees.
Section 103(a) shall not apply to any State or local bond if such bond is federally guaranteed.
Clause (i) shall not apply to any bond which is federally guaranteed within the meaning of paragraph (2)(B)(ii).
Except as provided in paragraph (2)(B)(ii), a bond which is issued as part of an issue shall not be treated as federally guaranteed merely by reason of the fact that the proceeds of such issue are used in making loans to a financial institution or there is a guarantee by a financial institution unless such guarantee constitutes a federally insured deposit or account.
Clause (iv) of subparagraph (A) shall not apply to any guarantee by a Federal home loan bank unless such bank meets safety and soundness collateral requirements for such guarantees which are at least as stringent as such requirements which apply under regulations applicable to such guarantees by Federal home loan banks as in effect on April 9, 2008.
To the extent provided in regulations prescribed by the Secretary, any entity with statutory authority to borrow from the United States shall be treated as an instrumentality of the United States. Except in the case of an exempt facility bond, a qualified small issue bond, and a qualified student loan bond, nothing in the preceding sentence shall be construed as treating the District of Columbia or any possession of the United States as an instrumentality of the United States.
The term “federally insured deposit or account” means any deposit or account in a financial institution to the extent such deposit or account is insured under Federal law by the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance Corporation, the National Credit Union Administration, or any similar federally chartered corporation.
For purposes of this title, notwithstanding any provision of this part, any bond the interest on which is exempt from taxation under this title by reason of any provision of law (other than a provision of this title) which is in effect on January 6, 1983, shall be treated as a bond described in section 103(a).
Nothing in section 103(a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond issued to advance refund another bond.
The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.
Nothing in section 103(a) or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any bond unless such bond satisfies the requirements of paragraph (2).
The Secretary may grant an extension of time for the filing of any statement required under paragraph (2) if the failure to file in a timely fashion is not due to willful neglect.
Section 103(a) shall not apply to any pooled financing bond unless, with respect to the issue of which such bond is a part, the requirements of paragraphs (2), (3), (4), and (5) are met.
Expectations as to changes in interest rates or in the provisions of this title (or in the regulations or rulings thereunder) may not be taken into account in determining whether expectations are reasonable for purposes of this paragraph.
For purposes of subparagraph (A), the term “net proceeds” has the meaning given such term by section 150 but shall not include proceeds used to finance issuance costs and shall not include proceeds necessary to pay interest (during such period) on the bonds which are part of the issue.
The term “pooled financing bond” means any bond issued as part of an issue more than $5,000,000 of the proceeds of which are reasonably expected (at the time of the issuance of the bonds) to be used (or are intentionally used) directly or indirectly to make or finance loans to 2 or more ultimate borrowers.
If only a portion of the proceeds of an issue is reasonably expected (at the time of issuance of the bond) to be used (or is intentionally used) as described in paragraph (6)(A), such portion and the other portion of such issue shall be treated as separate issues for purposes of determining whether such portion meets the requirements of this subsection.
Amounts in a bona fide debt service fund shall be treated as invested in bonds described in clause (i).
The Secretary may, at the request of any issuer, provide that the requirement of paragraph (2) shall be treated as met with respect to the portion of the spendable proceeds of an issue which is to be used for any construction project having a construction period in excess of 5 years if it is reasonably expected that such proceeds will be spent over a reasonable construction schedule specified in such request.
The Secretary may prescribe regulations to prevent the avoidance of the rules of this subsection, including through the aggregation of projects within a single issue.
The Northwest Power Act, referred to in subsecs. (b)(3)(A)(iii) and (c)(2)(C)(i), probably means the Pacific Northwest Electric Power Planning and Conservation Act, Pub. L. 96–501, Dec. 5, 1980, 94 Stat 2697, which is classified principally to chapter 12H (§ 839 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Short Title note set out under section 839 of Title 16 and Tables.
The date of the enactment of this clause, referred to in subsec. (b)(3)(A)(iv), is the date of enactment of Pub. L. 110–289, which was approved July 30, 2008.
2017—Subsec. (d)(1). Pub. L. 115–97, § 13532(a), substituted “to advance refund another bond.” for “as part of an issue described in paragraph (2), (3), or (4).”
Subsec. (d)(2) to (7). Pub. L. 115–97, § 13532(b)(1), redesignated pars. (5) and (7) as (2) and (3), respectively, and struck out former pars. (2), (3), (4), and (6) which described issuing of certain private activity bonds, other refunding bonds, and bonds involved in abusive transactions and provided special rules for refunding occurring and for bonds issued before 1986.
2010—Subsec. (a)(2). Pub. L. 111–147 inserted “or” at end of subpar. (A), substituted period for “, or” in subpar. (B), and struck out subpar. (C) which read as follows: “is described in section 163(f)(2)(B).”
2008—Subsec. (b)(3)(A)(iv). Pub. L. 110–289, § 3023(a), added cl. (iv).
Subsec. (b)(3)(E). Pub. L. 110–289, § 3023(b), added subpar. (E).
2006—Subsec. (f)(1). Pub. L. 109–222, § 508(d)(1), substituted “paragraphs (2), (3), (4), and (5)” for “paragraphs (2) and (3)”.
Subsec. (f)(2)(A). Pub. L. 109–222, § 508(a), amended subpar. (A) generally. Prior to amendment, text read as follows: “The requirements of this paragraph are met with respect to an issue if the issuer reasonably expects that as of the close of the 3-year period beginning on the date of issuance of the issue, at least 95 percent of the net proceeds of the issue (as of the close of such period) will have been used directly or indirectly to make or finance loans to ultimate borrowers.”
Subsec. (f)(4) to (6). Pub. L. 109–222, § 508(b), added pars. (4) and (5) and redesignated former par. (4) as (6). Former par. (5) redesignated (7).
Subsec. (f)(7). Pub. L. 109–222, § 508(b), redesignated par. (5) as (7).
Subsec. (f)(7)(B). Pub. L. 109–222, § 508(d)(2), substituted “paragraph (6)(A)” for “paragraph (4)(A)”.
1996—Subsec. (g)(3)(B)(iii). Pub. L. 104–188 amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “Investment earnings held pending reinvestment.—Investment earnings held for not more than 30 days pending reinvestment shall be treated as invested in bonds described in clause (i).”
1989—Subsec. (g). Pub. L. 101–239 added subsec. (g).
1988—Subsec. (b)(3)(A)(iii). Pub. L. 100–647, § 1013(a)(20), struck out “with respect to any bond issued before July 1, 1989” after “1984”.
Subsec. (b)(4)(A). Pub. L. 100–647, § 1013(a)(21), substituted “and a qualified student loan bond” for “a qualified student loan bond, and a qualified redevelopment bond”.
Subsec. (e)(3). Pub. L. 100–647, § 1013(a)(22), substituted “the failure to file in a timely fashion is not due to willful neglect” for “there is reasonable cause for the failure to file such statement in a timely fashion”.
Subsec. (f). Pub. L. 100–647, § 5051(a), added subsec. (f).
Reference to Veterans’ Administration deemed to refer to Department of Veterans Affairs pursuant to section 10 of Pub. L. 100–527, set out as a Department of Veterans Affairs Act note under section 301 of Title 38, Veterans’ Benefits.
Amendment by section 1013(a)(20)–(22) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.
Written determinations for this section
These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. The collection is updated (at our end) daily. It appears that the IRS updates their listing every Friday.
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- Definitions and Special Rules : 2018-03-16
- Advance Refundings : 2018-03-16
- Registration Required Bond : 2018-02-09
- Advance Refundings : 2004-10-08
- Treatment of Hedge Bonds : 2004-05-28
- Advance Refundings : 2003-04-11
- Treatment of Certain Pooled Financing Bonds : 2003-04-11
- Private Business Tests : 2003-02-28
- Federally Guaranteed Bond Not Exempt : 2003-02-28
- Arbitrage : 2002-07-19
- Advance Refundings : 2002-07-19
- Advance Refundings : 2001-09-28
- General Rules : 2000-09-15
- Advance Refundings : 2000-09-15
- Arbitrage : 2000-07-28
- Federally Guaranteed Bond Not Exempt : 2000-07-28
- Federally Guaranteed Bond Not Exempt : 2000-06-09
- Private Business Tests : 1999-04-09
- Federally Guaranteed Bond Not Exempt : 1999-04-09
- Exceptions : 1999-01-29
- Federally Guaranteed Bond Not Exempt : 1999-01-29
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