Reissuance of State or Local Bonds, 67701-67705 [2018-28370]
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67701
Proposed Rules
Federal Register
Vol. 83, No. 249
Monday, December 31, 2018
SMALL BUSINESS ADMINISTRATION
Attn: Arthur E. Collins, Jr., Deputy
Director, HUBZone Program, 409 Third
Street SW, 8th Floor, Washington, DC
20416. Highlight the information that
you consider to be CBI and explain why
you believe this information should be
held confidential. SBA will make a final
determination as to whether the
information will be published or not.
13 CFR Parts 115, 121, 125, and 126
FOR FURTHER INFORMATION CONTACT:
This section of the FEDERAL REGISTER
contains notices to the public of the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
Arthur E. Collins, Jr., Deputy Director,
HUBZone Program, 409 Third Street
SW, 8th Floor, Washington, DC 20416;
telephone: 202–205–6285; email:
hubzone@sba.gov.
RIN 3245–AG38
Small Business HUBZone Program;
Government Contracting Programs
U.S. Small Business
Administration.
ACTION: Proposed rule; extension of
comment period.
AGENCY:
On October 31, 2018, the U.S.
Small Business Administration (SBA or
Agency) published a notice of proposed
rulemaking in the Federal Register to
solicit public comments on proposed
comprehensive revisions to the
regulations governing the Historically
Underutilized Business Zone
(HUBZone) Program. This document
announces the extension of the current
comment period until February 14,
2019.
DATES: The comment period for the
notice of proposed rulemaking
published on October 31, 2018 (83 FR
54812) is extended until February 14,
2019.
ADDRESSES: You may submit comments,
identified by RIN 3245–AG38, by any of
the following methods:
• Federal eRulemaking Portal: https://
www.regulations.gov; follow the
instructions for submitting comments;
or
• Mail/Hand Delivery/Courier: U.S.
Small Business Administration, Attn:
Arthur E. Collins, Jr., Deputy Director,
HUBZone Program, 409 Third Street
SW, 8th Floor, Washington, DC 20416.
Instructions: All submissions received
must include the Agency name and
Regulatory Information Number (RIN)
for this rulemaking. SBA will post all
comments to this notice of proposed
rulemaking on https://
www.regulations.gov. If you wish to
submit confidential business
information (CBI) as defined in the User
Notice at https://www.regulations.gov,
please submit such information to the
U.S. Small Business Administration,
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SUMMARY:
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On
October 31, 2018, SBA published a
notice of proposed rulemaking at 83 FR
54812 to solicit comments on its
proposal to amend its regulations for the
HUBZone Program to reduce the
regulatory burdens imposed on
HUBZone small business concerns and
government agencies, to implement new
statutory provisions, and to eliminate
ambiguities in the regulations. SBA also
proposed comprehensive revisions to
the HUBZone regulations to clarify
current HUBZone Program policies and
procedures and to make changes that
will benefit the small business
community by making the HUBZone
program more efficient and effective.
This proposed rulemaking, which is
identified by RIN 3245–AG38, is also
available at https://
www.regulations.gov/document?D=SBA2018-0005-0001.
The Agency requested comments on
specific approaches for the changes
contemplated in the proposed
rulemaking. Initially, SBA established a
60-day comment period for the
proposed rule, with a closing date of
December 31, 2018. Due to the scope
and significance of the changes
contemplated by the proposed rule, SBA
believes that affected businesses need
more time to review the changes and
prepare their comments. The Agency is
therefore extending the comment period
until February 14, 2019.
SUPPLEMENTARY INFORMATION:
Robb N. Wong,
Associate Administrator, Government
Contracting and Business Development.
[FR Doc. 2018–28320 Filed 12–28–18; 8:45 am]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG–141739–08]
RIN 1545–BI22
Reissuance of State or Local Bonds
Internal Revenue Service (IRS),
Treasury.
ACTION: Notice of proposed rulemaking.
AGENCY:
This document contains
proposed regulations that address when
tax-exempt bonds are treated as retired
for purposes of section 103 and sections
141 through 150 of the Internal Revenue
Code (Code). The proposed regulations
are necessary to unify and to clarify
existing guidance on this subject. The
proposed regulations affect State and
local governments that issue tax-exempt
bonds.
DATES: Comments and requests for a
public hearing must be received by
March 1, 2019.
ADDRESSES: Send submissions to:
CC:PA:LPD:PR (REG–141739–08), Room
5203, Internal Revenue Service, P.O.
Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions
may be hand-delivered Monday through
Friday between the hours of 8 a.m. and
4 p.m. to CC:PA:LPD:PR (REG–141739–
08), Courier’s Desk, Internal Revenue
Service, 1111 Constitution Avenue NW,
Washington, DC 20224, or sent
electronically via the Federal
eRulemaking Portal at
www.regulations.gov (REG–141739–08).
FOR FURTHER INFORMATION CONTACT:
Concerning the proposed regulations,
Spence Hanemann, (202) 317–6980;
concerning submissions of comments
and requesting a hearing, Regina
Johnson, (202) 317–6901 (not toll-free
numbers).
SUMMARY:
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed
amendments to 26 CFR part 1 under
sections 150 and 1001 of the Code
(Proposed Regulations).
1. In General
In general, under section 103, interest
received by the holders of certain bonds
issued by State and local governments is
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exempt from Federal income tax. To
qualify for the tax exemption, a bond
issued by a State or local government
must satisfy various eligibility
requirements under sections 141
through 150 at the time of issuance of
the bond. If the issuer and holder agree
after issuance to modify the terms of a
tax-exempt bond significantly, the
original bond may be treated as having
been retired and exchanged for a newly
issued, modified bond. Similarly, if the
issuer or its agent acquires and resells
the bond, the bond may be treated as
having been retired upon acquisition
and replaced upon resale with a newly
issued bond.
The term ‘‘reissuance’’ commonly
refers to the effect of a transaction in
which a new debt instrument replaces
an old debt instrument as a result of
retirement of the old debt instrument
pursuant to such an exchange or
extinguishment. In the case of a
reissuance, the reissued bond must be
retested for qualification under sections
103 and 141 through 150. The
reissuance of an issue of tax-exempt
bonds may result in various negative
consequences to the issuer, such as
changes in yield for purposes of the
arbitrage investment yield restrictions
under section 148(a), acceleration of
arbitrage rebate payment obligations
under section 148(f), and change-in-law
risk.
2. Tender Option Bonds
Tender option bonds and variable rate
demand bonds (collectively, tender
option bonds) have special features that
present reissuance questions.
Specifically, tender option bonds have
original terms that provide for a tender
option interest rate mode, as described
in this paragraph. Issuers of tax-exempt
bonds often preauthorize several
different interest rate modes in the bond
documents and retain an option to
switch interest rate modes under
parameters set forth in the bond
documents. During a tender option
mode, tender option bonds have shortterm interest rates that are reset
periodically at various short-term
intervals (typically, every seven days)
based on the current market rate
necessary to remarket the bonds at par.
In connection with each resetting of the
interest rate, the holder of a tender
option bond has a right or requirement
to tender the bond back to the issuer or
its agent for purchase at par. Tender
option bonds also may have interest rate
mode conversion options that permit
the issuer or conduit borrower to change
the interest rate mode on the bonds from
a tender option mode to another shortterm interest rate mode or to a fixed
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interest rate to maturity. At the time of
a conversion to another interest rate
mode, the holder of a tender option
bond typically has the right or
requirement to tender the bond for
purchase at par.
Tender option bonds generally have
third-party liquidity facilities from
banks or other liquidity providers to
ensure that there is sufficient cash to
repurchase the bonds upon a holder’s
tender, and they also commonly have
credit enhancement from bond insurers
or other third-party guarantors. Upon a
holder’s exercise of its tender rights in
connection with either a resetting of the
interest rate during a tender option
mode or a conversion to another interest
rate mode, a remarketing agent or a
liquidity provider typically will acquire
the bonds subject to the tender and
resell the bonds either to the same
bondholders or to others willing to
purchase such bonds.
3. Existing Guidance
To address reissuance questions
related to tax-exempt bonds, on
December 27, 1988, the IRS published
Notice 88–130, 1988–2 CB 543, which
provides rules for determining when a
tax-exempt bond is retired for purposes
of sections 103 and 141 through 150.
Notice 88–130 provides in part that a
tax-exempt bond is retired when there is
a change to the terms of the bond that
results in a disposition of the bond for
purposes of section 1001. In addition,
Notice 88–130 provides special rules for
retirement of certain tender option
bonds that meet a definition of the term
‘‘qualified tender bond.’’
On June 26, 1996, the Department of
the Treasury (Treasury Department) and
the IRS published final regulations
under § 1.1001–3 (1996 Final
Regulations) in the Federal Register (61
FR 32926). These regulations provide
rules for determining whether a
modification of the terms of a debt
instrument, including a tax-exempt
bond, results in an exchange for
purposes of section 1001. In recognition
of a need to coordinate the interaction
of the prior guidance in Notice 88–130
with the subsequent final regulations
under § 1.1001–3 for particular taxexempt bond purposes, the Treasury
Department and the IRS stated their
intention to issue regulations under
section 150 on this subject in the
Federal Register (61 FR 32930).
On April 14, 2008, the IRS published
Notice 2008–41, 2008–1 CB 742. Like
Notice 88–130, Notice 2008–41 provides
rules for determining when a taxexempt bond is retired for purposes of
sections 103 and 141 through 150 and
includes special rules for qualified
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tender bonds. While the retirement
standards provided in these two notices
are similar, Notice 2008–41 was
intended to coordinate the retirement
standards for tax-exempt bond purposes
with the 1996 Final Regulations on
modifications of debt instruments under
§ 1.1001–3 and to be more administrable
than Notice 88–130. In order to preserve
flexibility and to limit potential
unintended consequences during the
2008 financial crisis, Notice 2008–41
permitted issuers to apply either notice.
Generally, under Notice 2008–41, a taxexempt bond is retired when a
significant modification to the terms of
the bond occurs under § 1.1001–3, the
bond is acquired by or on behalf of its
issuer, or the bond is otherwise
redeemed or retired. The notice clarifies
that, for purposes of these retirement
standards, the purchase of a tax-exempt
bond by a third-party guarantor or thirdparty liquidity facility provider
pursuant to the terms of the guarantee
or liquidity facility is not treated as a
purchase or other acquisition by or on
behalf of a governmental issuer.
Although these general rules apply to a
qualified tender bond, Notice 2008–41
also provides that certain features of
qualified tender bonds will not result in
a retirement. In Notice 2008–41, the
Treasury Department and the IRS
reiterated their intention to provide
guidance on the retirement of taxexempt bonds in regulations under
section 150.
The Proposed Regulations provide
rules for determining when tax-exempt
bonds are treated as retired for purposes
of sections 103 and 141 through 150.
The Proposed Regulations also amend
§ 1.1001–3(a)(2) to conform that section
to the special rules in the Proposed
Regulations for retirement of qualified
tender bonds.
Explanation of Provisions
1. Section 1.150–3: Retirement of TaxExempt Bonds
A. General Rules for Retirement of a
Tax-Exempt Bond
The Proposed Regulations generally
provide retirement standards that apply
to tax-exempt bonds for purposes of
sections 103 and 141 through 150.
These retirement standards follow the
guidance in Notice 2008–41 with
technical refinements. The Proposed
Regulations provide that a tax-exempt
bond is retired if a significant
modification to the terms of the bond
occurs under § 1.1001–3, if the issuer or
an agent acting on its behalf acquires the
bond in a manner that liquidates or
extinguishes the bondholder’s
investment in the bond, or if the bond
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is otherwise redeemed (for example,
redeemed at maturity).
For this purpose, the Proposed
Regulations define the term ‘‘issuer’’ to
mean the State or local governmental
unit that actually issues the bonds and
any related party (as defined in § 1.150–
1(b)) to that actual issuer. In the case of
a governmental unit, the applicable
related party definition under § 1.150–
1(b) applies a controlled group test
under § 1.150–1(e) to determine related
party status, based generally on all of
the facts and circumstances. This
controlled group test includes special
rules which specifically treat control
over the governing board of a
governmental unit and control over use
of funds or assets of a governmental unit
as giving rise to controlled group status.
By focusing on the actual issuer rather
than on a conduit borrower, this
definition of issuer maintains and
respects the essential legal construct
necessary for issuance of many taxexempt bonds, such as qualified private
activity bonds under section 141(e), that
the actual issuer be treated as the
obligor in conduit financings. Thus,
under the Proposed Regulations, the
acquisition of a tax-exempt bond by a
conduit borrower that is not a related
party to the actual issuer does not result
in the retirement of that bond.
The Proposed Regulations also
prescribe certain consequences for a
bond that is retired pursuant to a
deemed exchange under § 1.1001–3 or
following the acquisition of the bond by
the issuer or the issuer’s agent. In the
former case, the bond is treated as a new
bond issued at the time of the
modification as determined under
§ 1.1001–3. In the latter case, if the
issuer resells the bond, the bond is
treated as a new bond issued at the time
of resale. If the issuer does not resell the
acquired bond, the acquired bond is
simply retired. In either case in which
a retired bond is treated as a newly
issued bond, the issuer must consider
whether the new bond refunds the
retired bond. For this purpose, the rules
regarding the definition of a refunding
issue under § 1.150–1(d) apply. For
example, if the issuer of the bond retired
pursuant to § 1.1001–3 is the same as
the issuer (or a related party to the
issuer) of the newly issued bond, the
newly issued bond will be part of a
current refunding issue that refunds the
retired bond.
B. Exceptions to Retirement of a TaxExempt Bond
The Proposed Regulations provide
three exceptions that limit retirements
resulting from the operation of the
general rules. Two of these exceptions
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are intended to prevent the special
features of tender option bonds from
resulting in a retirement. A third
exception applies to all tax-exempt
bonds.
The first two exceptions in the
Proposed Regulations apply to qualified
tender bonds, a defined term that is
essentially a tender option bond
meeting certain requirements.
Specifically, a qualified tender bond is
a tax-exempt bond that, pursuant to the
terms of its governing contract, bears
interest during each interest rate mode
at a fixed rate, a qualified floating rate
under § 1.1275–5, or an objective rate
that is permitted for a tax-exempt bond
under § 1.1275–5(c)(5). Furthermore,
interest on a qualified tender bond must
be unconditionally payable at periodic
intervals of no more than a year. Finally,
a qualified tender bond may not have a
stated maturity date later than 40 years
after its issue date and must include a
qualified tender right. This definition is
similar to the definition of qualified
tender bond provided in Notice 2008–
41.
The Proposed Regulations define a
qualified tender right required for a
qualified tender bond in terms of the
mechanics by which the tender right
operates. The Proposed Regulations
define a qualified tender right to include
either a tender right that arises
periodically during a tender option
mode or a tender right that arises upon
the exercise of the issuer’s option under
the original terms of the bond to change
the interest rate mode.
A qualified tender bond has two
features that otherwise could result in
retirement of the bond under the general
rules for retirement in the Proposed
Regulations. First, when accompanied
by a qualified tender right, an exercise
of the issuer’s option to change the
interest rate mode might, in some
circumstances, qualify as a modification
under the rule in § 1.1001–3(c)(2)(iii) for
alterations that result from the exercise
of an option. Thus, absent the exception
in the Proposed Regulations, a qualified
tender right might result in a
modification that, if significant, would
cause the qualified tender bond to be
retired. To address this circumstance,
the Proposed Regulations provide an
exception that avoids retirement by
disregarding a qualified tender right for
purposes of determining whether a
significant modification of a qualified
tender bond under § 1.1001–3 results in
retirement of the bond. Consequently,
the issuer’s option to change the interest
rate mode typically would qualify as a
unilateral option and the change of
interest rate mode resulting from
exercise of that option would not be a
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modification of the qualified tender
bond.
The second feature of a qualified
tender bond that could result in
retirement of the bond under the general
rules for retirement in the Proposed
Regulations is the financing structure
feature that may require the issuer or its
agent to acquire the bond upon exercise
of the qualified tender right. To address
this circumstance, the Proposed
Regulations provide another exception
under which an acquisition of a
qualified tender bond pursuant to the
exercise of a qualified tender right will
not result in retirement, provided that
neither the issuer nor its agent holds the
bond for longer than 90 days. This 90day period is intended to provide the
issuer or its remarketing agent with
sufficient time to resell a tendered bond
to a new holder.
The Proposed Regulations also
provide an exception to the general
rules of retirement for all tax-exempt
bonds. This exception, carried forward
from Notice 2008–41, provides that
acquisition of a tax-exempt bond by a
guarantor or liquidity facility provider
acting as the issuer’s agent does not
result in retirement of the bond if the
acquisition is pursuant to the terms of
the guarantee or liquidity facility and
the guarantor or liquidity facility
provider is not a related party (as
defined in § 1.150–1(b)) to the issuer.
2. Applicability Dates
The rules in § 1.150–3 of the Proposed
Regulations are proposed to apply to
events and actions taken with respect to
bonds that occur on or after the date that
is 90 days after the date of publication
of the Treasury decision adopting these
rules as final regulations in the Federal
Register. Issuers may apply these
regulations to events and actions taken
with respect to bonds that occur before
that date. The Treasury Department and
the IRS expect that the final regulations
will obsolete Notice 88–130 and Notice
2008–41.
Special Analyses
This regulation is not subject to
review under section 6(b) of Executive
Order 12866 pursuant to the
Memorandum of Agreement (April 11,
2018) between the Department of the
Treasury and the Office of Management
and Budget regarding review of tax
regulations. Because these regulations
do not impose a collection of
information on small entities, the
Regulatory Flexibility Act (5 U.S.C.
chapter 6) does not apply. Pursuant to
section 7805(f) of the Code, this notice
of proposed rulemaking will be
submitted to the Chief Counsel for
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Advocacy of the Small Business
Administration for comment on its
impact on small entities.
Comments and Requests for Public
Hearing
Before the Proposed Regulations are
adopted as final regulations,
consideration will be given to any
comments that are submitted timely to
the IRS as prescribed in this preamble
under the ADDRESSES heading. The
Treasury Department and the IRS
request comments on all aspects of the
proposed rules. All comments will be
available at www.regulations.gov or
upon request. A public hearing will be
scheduled if requested in writing by any
person that timely submits written
comments. If a public hearing is
scheduled, notice of the date, time, and
place for the hearing will be published
in the Federal Register.
Drafting Information
The principal authors of these
regulations are Spence Hanemann of the
Office of Associate Chief Counsel
(Financial Institutions and Products)
and Vicky Tsilas, formerly of the Office
of Associate Chief Counsel (Financial
Institutions and Products). However,
other personnel from the Treasury
Department and the IRS participated in
their development.
Availability of IRS Documents
The IRS notices cited in this preamble
are published in the Internal Revenue
Bulletin (or Cumulative Bulletin) and
are available from the Superintendent of
Documents, U.S. Government
Publishing Office, Washington, DC
20402, or by visiting the IRS website at
www.irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and
recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, 26 CFR part 1 is
proposed to be amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as
follows:
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■
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.150–3 is added to
read as follows:
■
§ 1.150–3 Retirement standards for state
and local bonds.
(a) General purpose and scope. This
section provides rules to determine
when a tax-exempt bond is retired for
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purposes of sections 103 and 141
through 150.
(b) General rules for retirement of a
tax-exempt bond. Except as otherwise
provided in paragraph (c) of this
section, a tax-exempt bond is retired
when:
(1) A significant modification of the
bond occurs under § 1.1001–3;
(2) The issuer or its agent acquires the
bond in a manner that liquidates or
extinguishes the bondholder’s
investment in the bond; or
(3) The bond is otherwise redeemed
(for example, redeemed at maturity).
(c) Exceptions to retirement of a taxexempt bond—(1) Qualified tender right
does not result in a modification. In
applying § 1.1001–3 to a qualified
tender bond for purposes of paragraph
(b)(1) of this section, both the existence
and exercise of a qualified tender right
are disregarded. Thus, a change in the
interest rate mode made in connection
with the exercise of a qualified tender
right generally is not a modification
because the change occurs by operation
of the terms of the bond and the holder’s
resulting right to put the bond to the
issuer or its agent does not prevent the
issuer’s option from being a unilateral
option.
(2) Acquisition pursuant to a qualified
tender right. Acquisition of a qualified
tender bond by the issuer or its agent
does not result in retirement of the bond
under paragraph (b)(2) of this section if
the acquisition is pursuant to the
operation of a qualified tender right and
neither the issuer nor its agent
continues to hold the bond after the
close of the 90-day period beginning on
the date of the tender.
(3) Acquisition of a tax-exempt bond
by a guarantor or liquidity facility
provider. Acquisition of a tax-exempt
bond by a guarantor or liquidity facility
provider acting on the issuer’s behalf
does not result in retirement of the bond
under paragraph (b)(2) of this section if
the acquisition is pursuant to the terms
of the guarantee or liquidity facility and
the guarantor or liquidity facility
provider is not a related party (as
defined in § 1.150–1(b)) to the issuer.
(d) Effect of retirement. If a bond is
retired pursuant to paragraph (b)(1) of
this section (that is, in a transaction
treated as an exchange of the bond for
a bond with modified terms), the bond
is treated as a new bond issued at the
time of the modification as determined
under § 1.1001–3. If the issuer or its
agent resells a bond retired pursuant to
paragraph (b)(2) of this section, the bond
is treated as a new bond issued on the
date of resale. In both cases, the rules of
§ 1.150–1(d) apply to determine if the
new bond is part of a refunding issue.
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(e) Definitions. For purposes of this
section, the following definitions apply:
(1) Issuer means the State or local
governmental unit (as defined in
§ 1.103–1) that actually issues the taxexempt bond and any related party (as
defined in § 1.150–1(b)) to the actual
issuer (as distinguished, for example,
from a conduit borrower that is not a
related party to the actual issuer).
(2) Qualified tender bond means a taxexempt bond that, pursuant to the terms
of its governing contract, has all of the
features described in this paragraph
(e)(2). During each authorized interest
rate mode, the bond bears interest at a
fixed interest rate, a qualified floating
rate under § 1.1275–5(b), or an objective
rate for a tax-exempt bond under
§ 1.1275–5(c)(5). Interest on the bond is
unconditionally payable at periodic
intervals of no more than one year. The
bond has a stated maturity date that is
not later than 40 years after the issue
date of the bond. The bond includes a
qualified tender right.
(3) Qualified tender right means a
right or obligation of a holder of the
bond to tender the bond for purchase as
described in this paragraph (e)(3). The
purchaser under the tender may be the
issuer, its agent, or another party. The
tender right is available on at least one
date before the stated maturity date. For
each such tender, the purchase price of
the bond is equal to par (plus any
accrued interest). Following each such
tender, the issuer or its remarketing
agent either redeems the bond or uses
reasonable best efforts to resell the bond
within the 90-day period beginning on
the date of the tender. Upon any such
resale, the purchase price of the bond is
equal to par (plus any accrued interest).
(f) Applicability date. This section
applies to events and actions taken with
respect to bonds that occur on or after
the date that is 90 days after the date of
publication of the Treasury decision
adopting these rules as final regulations
in the Federal Register.
■ Par. 3. Section 1.1001–3 is amended
by:
■ 1. Revising paragraph (a)(2).
■ 2. Revising the paragraph (h) subject
heading.
■ 3. Revising the first sentence of
paragraph (h)(1).
■ 4. Revising the paragraph (h)(2)
subject heading.
■ 5. Adding paragraph (h)(3).
The revisions and addition read as
follows:
§ 1.1001–3 Modifications of debt
instruments.
(a) * * *
(2) Qualified tender bonds. For
special rules governing whether tax-
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exempt bonds that are qualified tender
bonds are retired for purposes of
sections 103 and 141 through 150, see
§ 1.150–3.
*
*
*
*
*
(h) Applicability date. * * *
(1) * * * Except as otherwise
provided in paragraphs (h)(2) and (3) of
this section, this section applies to
alterations of the terms of a debt
instrument on or after September 24,
1996. * * *
(2) Alteration or modification results
in an instrument or property right that
is not debt. * * *
(3) Qualified tender bonds. Paragraph
(a)(2) of this section applies to events
and actions taken with respect to
qualified tender bonds that occur on or
after the date that is 90 days after the
date of publication of the Treasury
decision adopting these rules as final
regulations in the Federal Register.
Kirsten Wielobob,
Deputy Commissioner for Services and
Enforcement.
[FR Doc. 2018–28370 Filed 12–28–18; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF TRANSPORTATION
Federal Motor Carrier Safety
Administration
49 CFR Part 385
[Docket No. FMCSA–2018–0165]
RIN 2126–AC01
Incorporation by Reference; North
American Standard Out-of-Service
Criteria; Hazardous Materials Safety
Permits
Federal Motor Carrier Safety
Administration (FMCSA), DOT.
ACTION: Notice of Proposed Rulemaking.
AGENCY:
FMCSA proposes to amend its
Hazardous Materials Safety Permits
regulations to incorporate by reference
the updated Commercial Vehicle Safety
Alliance (CVSA) handbook. The Out-ofService Criteria provide uniform
enforcement tolerances for roadside
inspections to enforcement personnel
nationwide, including FMCSA’s State
partners. Currently, the regulations
reference the April 1, 2016, edition of
the handbook. Through this notice,
FMCSA proposes to incorporate by
reference the April 1, 2018, edition.
DATES: Comments on this document
must be received on or before January
30, 2019.
ADDRESSES: You may submit comments
identified by Docket Number FMCSA-
khammond on DSK30JT082PROD with PROPOSAL
SUMMARY:
VerDate Sep<11>2014
16:06 Dec 28, 2018
Jkt 247001
2018–0165 using any of the following
methods:
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the online
instructions for submitting comments.
• Mail: Docket Management Facility,
U.S. Department of Transportation, 1200
New Jersey Avenue SE, West Building,
Ground Floor, Room W12–140,
Washington, DC 20590–0001.
• Hand Delivery or Courier: West
Building, Ground Floor, Room W12–
140, 1200 New Jersey Avenue SE,
Washington, DC, between 9 a.m. and 5
p.m., Monday through Friday, except
Federal holidays.
• Fax: 202–493–2251.
To avoid duplication, please use only
one of these four methods. See the
‘‘Public Participation and Request for
Comments’’ portion of the
SUPPLEMENTARY INFORMATION section for
instructions on submitting comments,
including collection of information
comments for the Office of Information
and Regulatory Affairs, OMB.
FOR FURTHER INFORMATION CONTACT: Mr.
Michael Huntley, Chief, Vehicle and
Roadside Operations Division, Federal
Motor Carrier Safety Administration,
1200 New Jersey Avenue SE,
Washington, DC 20590–0001 by
telephone at (202) 366–9209 or by email
at michael.huntley@dot.gov. If you have
questions on viewing or submitting
material to the docket, contact Docket
Services, telephone (202) 366–9826.
SUPPLEMENTARY INFORMATION: This
notice of proposed rulemaking (NPRM)
is organized as follows:
I. Public Participation and Request for
Comments
A. Submitting Comments
B. Viewing Comments and Documents
C. Privacy Act
D. Advance Notice of Proposed
Rulemaking Not Required
II. Executive Summary
III. Legal Basis for the Rulemaking
IV. Background
V. Discussion of Proposed Rulemaking
VI. International Impacts
VII. Section-by-Section Analysis
VIII. Regulatory Analyses
A. E.O. 12866 (Regulatory Planning and
Review), E.O. 13563 (Improving
Regulation and Regulatory Review), and
DOT Regulatory Policies and Procedures
B. E.O. 13771 Reducing Regulation and
Controlling Costs
C. Regulatory Flexibility Act (Small
Entities)
D. Assistance for Small Entities
E. Unfunded Mandates Reform Act of 1995
F. Paperwork Reduction Act
G. E.O. 13132 (Federalism)
H. E.O. 12988 (Civil Justice Reform)
I. E.O. 13045 (Protection of Children)
J. E.O. 12630 (Taking of Private Property)
K. Privacy
L. E.O. 12372 (Intergovernmental Review)
PO 00000
Frm 00005
Fmt 4702
Sfmt 4702
67705
M. E.O. 13211 (Energy Supply,
Distribution, or Use)
N. E.O. 13175 (Indian Tribal Governments)
O. National Technology Transfer and
Advancement Act (Technical Standards)
P. Environment (National Environmental
Policy Act)
I. Public Participation and Request for
Comments
A. Submitting Comments
If you submit a comment, please
include the docket number for this
NPRM (Docket No. FMCSA–2018–
0165), indicate the specific section of
this document to which each comment
applies, and provide a reason for each
suggestion or recommendation. You
may submit your comments and
material online or by fax, mail, or hand
delivery, but please use only one of
these means. FMCSA recommends that
you include your name and a mailing
address, an email address, or a phone
number in the body of your document
so that FMCSA can contact you if there
are questions regarding your
submission.
To submit your comment online, go to
https://www.regulations.gov, put the
docket number, FMCSA–2018–0165, in
the keyword box, and click ‘‘Search.’’
When the new screen appears, click on
the ‘‘Comment Now!’’ button and type
your comment into the text box on the
following screen. Choose whether you
are submitting your comment as an
individual or on behalf of a third party
and then submit.
If you submit your comments by mail
or hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit
comments by mail and would like to
know that they reached the facility,
please enclose a stamped, self-addressed
postcard or envelope.
FMCSA will consider all comments
and material received during the
comment period and may change this
proposed rule based on your comments.
FMCSA may issue a final rule at any
time after the close of the comment
period.
Confidential Business Information
Confidential Business Information
(CBI) is commercial or financial
information that is customarily not
made available to the general public by
the submitter. Under the Freedom of
Information Act, CBI is eligible for
protection from public disclosure. If you
have CBI that is relevant or responsive
to this NPRM, it is important that you
clearly designate the submitted
comments as CBI. Accordingly, please
mark each page of your submission as
E:\FR\FM\31DEP1.SGM
31DEP1
]]>Agencies
[Federal Register Volume 83, Number 249 (Monday, December 31, 2018)]
[Proposed Rules]
[Pages 67701-67705]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28370]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[REG-141739-08]
RIN 1545-BI22
Reissuance of State or Local Bonds
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains proposed regulations that address when
tax-exempt bonds are treated as retired for purposes of section 103 and
sections 141 through 150 of the Internal Revenue Code (Code). The
proposed regulations are necessary to unify and to clarify existing
guidance on this subject. The proposed regulations affect State and
local governments that issue tax-exempt bonds.
DATES: Comments and requests for a public hearing must be received by
March 1, 2019.
ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-141739-08), Room
5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station,
Washington, DC 20044. Submissions may be hand-delivered Monday through
Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-
141739-08), Courier's Desk, Internal Revenue Service, 1111 Constitution
Avenue NW, Washington, DC 20224, or sent electronically via the Federal
eRulemaking Portal at www.regulations.gov (REG-141739-08).
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Spence Hanemann, (202) 317-6980; concerning submissions of comments and
requesting a hearing, Regina Johnson, (202) 317-6901 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Background
This document contains proposed amendments to 26 CFR part 1 under
sections 150 and 1001 of the Code (Proposed Regulations).
1. In General
In general, under section 103, interest received by the holders of
certain bonds issued by State and local governments is
[[Page 67702]]
exempt from Federal income tax. To qualify for the tax exemption, a
bond issued by a State or local government must satisfy various
eligibility requirements under sections 141 through 150 at the time of
issuance of the bond. If the issuer and holder agree after issuance to
modify the terms of a tax-exempt bond significantly, the original bond
may be treated as having been retired and exchanged for a newly issued,
modified bond. Similarly, if the issuer or its agent acquires and
resells the bond, the bond may be treated as having been retired upon
acquisition and replaced upon resale with a newly issued bond.
The term ``reissuance'' commonly refers to the effect of a
transaction in which a new debt instrument replaces an old debt
instrument as a result of retirement of the old debt instrument
pursuant to such an exchange or extinguishment. In the case of a
reissuance, the reissued bond must be retested for qualification under
sections 103 and 141 through 150. The reissuance of an issue of tax-
exempt bonds may result in various negative consequences to the issuer,
such as changes in yield for purposes of the arbitrage investment yield
restrictions under section 148(a), acceleration of arbitrage rebate
payment obligations under section 148(f), and change-in-law risk.
2. Tender Option Bonds
Tender option bonds and variable rate demand bonds (collectively,
tender option bonds) have special features that present reissuance
questions. Specifically, tender option bonds have original terms that
provide for a tender option interest rate mode, as described in this
paragraph. Issuers of tax-exempt bonds often preauthorize several
different interest rate modes in the bond documents and retain an
option to switch interest rate modes under parameters set forth in the
bond documents. During a tender option mode, tender option bonds have
short-term interest rates that are reset periodically at various short-
term intervals (typically, every seven days) based on the current
market rate necessary to remarket the bonds at par. In connection with
each resetting of the interest rate, the holder of a tender option bond
has a right or requirement to tender the bond back to the issuer or its
agent for purchase at par. Tender option bonds also may have interest
rate mode conversion options that permit the issuer or conduit borrower
to change the interest rate mode on the bonds from a tender option mode
to another short-term interest rate mode or to a fixed interest rate to
maturity. At the time of a conversion to another interest rate mode,
the holder of a tender option bond typically has the right or
requirement to tender the bond for purchase at par.
Tender option bonds generally have third-party liquidity facilities
from banks or other liquidity providers to ensure that there is
sufficient cash to repurchase the bonds upon a holder's tender, and
they also commonly have credit enhancement from bond insurers or other
third-party guarantors. Upon a holder's exercise of its tender rights
in connection with either a resetting of the interest rate during a
tender option mode or a conversion to another interest rate mode, a
remarketing agent or a liquidity provider typically will acquire the
bonds subject to the tender and resell the bonds either to the same
bondholders or to others willing to purchase such bonds.
3. Existing Guidance
To address reissuance questions related to tax-exempt bonds, on
December 27, 1988, the IRS published Notice 88-130, 1988-2 CB 543,
which provides rules for determining when a tax-exempt bond is retired
for purposes of sections 103 and 141 through 150. Notice 88-130
provides in part that a tax-exempt bond is retired when there is a
change to the terms of the bond that results in a disposition of the
bond for purposes of section 1001. In addition, Notice 88-130 provides
special rules for retirement of certain tender option bonds that meet a
definition of the term ``qualified tender bond.''
On June 26, 1996, the Department of the Treasury (Treasury
Department) and the IRS published final regulations under Sec. 1.1001-
3 (1996 Final Regulations) in the Federal Register (61 FR 32926). These
regulations provide rules for determining whether a modification of the
terms of a debt instrument, including a tax-exempt bond, results in an
exchange for purposes of section 1001. In recognition of a need to
coordinate the interaction of the prior guidance in Notice 88-130 with
the subsequent final regulations under Sec. 1.1001-3 for particular
tax-exempt bond purposes, the Treasury Department and the IRS stated
their intention to issue regulations under section 150 on this subject
in the Federal Register (61 FR 32930).
On April 14, 2008, the IRS published Notice 2008-41, 2008-1 CB 742.
Like Notice 88-130, Notice 2008-41 provides rules for determining when
a tax-exempt bond is retired for purposes of sections 103 and 141
through 150 and includes special rules for qualified tender bonds.
While the retirement standards provided in these two notices are
similar, Notice 2008-41 was intended to coordinate the retirement
standards for tax-exempt bond purposes with the 1996 Final Regulations
on modifications of debt instruments under Sec. 1.1001-3 and to be
more administrable than Notice 88-130. In order to preserve flexibility
and to limit potential unintended consequences during the 2008
financial crisis, Notice 2008-41 permitted issuers to apply either
notice. Generally, under Notice 2008-41, a tax-exempt bond is retired
when a significant modification to the terms of the bond occurs under
Sec. 1.1001-3, the bond is acquired by or on behalf of its issuer, or
the bond is otherwise redeemed or retired. The notice clarifies that,
for purposes of these retirement standards, the purchase of a tax-
exempt bond by a third-party guarantor or third-party liquidity
facility provider pursuant to the terms of the guarantee or liquidity
facility is not treated as a purchase or other acquisition by or on
behalf of a governmental issuer. Although these general rules apply to
a qualified tender bond, Notice 2008-41 also provides that certain
features of qualified tender bonds will not result in a retirement. In
Notice 2008-41, the Treasury Department and the IRS reiterated their
intention to provide guidance on the retirement of tax-exempt bonds in
regulations under section 150.
The Proposed Regulations provide rules for determining when tax-
exempt bonds are treated as retired for purposes of sections 103 and
141 through 150. The Proposed Regulations also amend Sec. 1.1001-
3(a)(2) to conform that section to the special rules in the Proposed
Regulations for retirement of qualified tender bonds.
Explanation of Provisions
1. Section 1.150-3: Retirement of Tax-Exempt Bonds
A. General Rules for Retirement of a Tax-Exempt Bond
The Proposed Regulations generally provide retirement standards
that apply to tax-exempt bonds for purposes of sections 103 and 141
through 150. These retirement standards follow the guidance in Notice
2008-41 with technical refinements. The Proposed Regulations provide
that a tax-exempt bond is retired if a significant modification to the
terms of the bond occurs under Sec. 1.1001-3, if the issuer or an
agent acting on its behalf acquires the bond in a manner that
liquidates or extinguishes the bondholder's investment in the bond, or
if the bond
[[Page 67703]]
is otherwise redeemed (for example, redeemed at maturity).
For this purpose, the Proposed Regulations define the term
``issuer'' to mean the State or local governmental unit that actually
issues the bonds and any related party (as defined in Sec. 1.150-1(b))
to that actual issuer. In the case of a governmental unit, the
applicable related party definition under Sec. 1.150-1(b) applies a
controlled group test under Sec. 1.150-1(e) to determine related party
status, based generally on all of the facts and circumstances. This
controlled group test includes special rules which specifically treat
control over the governing board of a governmental unit and control
over use of funds or assets of a governmental unit as giving rise to
controlled group status.
By focusing on the actual issuer rather than on a conduit borrower,
this definition of issuer maintains and respects the essential legal
construct necessary for issuance of many tax-exempt bonds, such as
qualified private activity bonds under section 141(e), that the actual
issuer be treated as the obligor in conduit financings. Thus, under the
Proposed Regulations, the acquisition of a tax-exempt bond by a conduit
borrower that is not a related party to the actual issuer does not
result in the retirement of that bond.
The Proposed Regulations also prescribe certain consequences for a
bond that is retired pursuant to a deemed exchange under Sec. 1.1001-3
or following the acquisition of the bond by the issuer or the issuer's
agent. In the former case, the bond is treated as a new bond issued at
the time of the modification as determined under Sec. 1.1001-3. In the
latter case, if the issuer resells the bond, the bond is treated as a
new bond issued at the time of resale. If the issuer does not resell
the acquired bond, the acquired bond is simply retired. In either case
in which a retired bond is treated as a newly issued bond, the issuer
must consider whether the new bond refunds the retired bond. For this
purpose, the rules regarding the definition of a refunding issue under
Sec. 1.150-1(d) apply. For example, if the issuer of the bond retired
pursuant to Sec. 1.1001-3 is the same as the issuer (or a related
party to the issuer) of the newly issued bond, the newly issued bond
will be part of a current refunding issue that refunds the retired
bond.
B. Exceptions to Retirement of a Tax-Exempt Bond
The Proposed Regulations provide three exceptions that limit
retirements resulting from the operation of the general rules. Two of
these exceptions are intended to prevent the special features of tender
option bonds from resulting in a retirement. A third exception applies
to all tax-exempt bonds.
The first two exceptions in the Proposed Regulations apply to
qualified tender bonds, a defined term that is essentially a tender
option bond meeting certain requirements. Specifically, a qualified
tender bond is a tax-exempt bond that, pursuant to the terms of its
governing contract, bears interest during each interest rate mode at a
fixed rate, a qualified floating rate under Sec. 1.1275-5, or an
objective rate that is permitted for a tax-exempt bond under Sec.
1.1275-5(c)(5). Furthermore, interest on a qualified tender bond must
be unconditionally payable at periodic intervals of no more than a
year. Finally, a qualified tender bond may not have a stated maturity
date later than 40 years after its issue date and must include a
qualified tender right. This definition is similar to the definition of
qualified tender bond provided in Notice 2008-41.
The Proposed Regulations define a qualified tender right required
for a qualified tender bond in terms of the mechanics by which the
tender right operates. The Proposed Regulations define a qualified
tender right to include either a tender right that arises periodically
during a tender option mode or a tender right that arises upon the
exercise of the issuer's option under the original terms of the bond to
change the interest rate mode.
A qualified tender bond has two features that otherwise could
result in retirement of the bond under the general rules for retirement
in the Proposed Regulations. First, when accompanied by a qualified
tender right, an exercise of the issuer's option to change the interest
rate mode might, in some circumstances, qualify as a modification under
the rule in Sec. 1.1001-3(c)(2)(iii) for alterations that result from
the exercise of an option. Thus, absent the exception in the Proposed
Regulations, a qualified tender right might result in a modification
that, if significant, would cause the qualified tender bond to be
retired. To address this circumstance, the Proposed Regulations provide
an exception that avoids retirement by disregarding a qualified tender
right for purposes of determining whether a significant modification of
a qualified tender bond under Sec. 1.1001-3 results in retirement of
the bond. Consequently, the issuer's option to change the interest rate
mode typically would qualify as a unilateral option and the change of
interest rate mode resulting from exercise of that option would not be
a modification of the qualified tender bond.
The second feature of a qualified tender bond that could result in
retirement of the bond under the general rules for retirement in the
Proposed Regulations is the financing structure feature that may
require the issuer or its agent to acquire the bond upon exercise of
the qualified tender right. To address this circumstance, the Proposed
Regulations provide another exception under which an acquisition of a
qualified tender bond pursuant to the exercise of a qualified tender
right will not result in retirement, provided that neither the issuer
nor its agent holds the bond for longer than 90 days. This 90-day
period is intended to provide the issuer or its remarketing agent with
sufficient time to resell a tendered bond to a new holder.
The Proposed Regulations also provide an exception to the general
rules of retirement for all tax-exempt bonds. This exception, carried
forward from Notice 2008-41, provides that acquisition of a tax-exempt
bond by a guarantor or liquidity facility provider acting as the
issuer's agent does not result in retirement of the bond if the
acquisition is pursuant to the terms of the guarantee or liquidity
facility and the guarantor or liquidity facility provider is not a
related party (as defined in Sec. 1.150-1(b)) to the issuer.
2. Applicability Dates
The rules in Sec. 1.150-3 of the Proposed Regulations are proposed
to apply to events and actions taken with respect to bonds that occur
on or after the date that is 90 days after the date of publication of
the Treasury decision adopting these rules as final regulations in the
Federal Register. Issuers may apply these regulations to events and
actions taken with respect to bonds that occur before that date. The
Treasury Department and the IRS expect that the final regulations will
obsolete Notice 88-130 and Notice 2008-41.
Special Analyses
This regulation is not subject to review under section 6(b) of
Executive Order 12866 pursuant to the Memorandum of Agreement (April
11, 2018) between the Department of the Treasury and the Office of
Management and Budget regarding review of tax regulations. Because
these regulations do not impose a collection of information on small
entities, the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not
apply. Pursuant to section 7805(f) of the Code, this notice of proposed
rulemaking will be submitted to the Chief Counsel for
[[Page 67704]]
Advocacy of the Small Business Administration for comment on its impact
on small entities.
Comments and Requests for Public Hearing
Before the Proposed Regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in this preamble under the ADDRESSES heading.
The Treasury Department and the IRS request comments on all aspects of
the proposed rules. All comments will be available at
www.regulations.gov or upon request. A public hearing will be scheduled
if requested in writing by any person that timely submits written
comments. If a public hearing is scheduled, notice of the date, time,
and place for the hearing will be published in the Federal Register.
Drafting Information
The principal authors of these regulations are Spence Hanemann of
the Office of Associate Chief Counsel (Financial Institutions and
Products) and Vicky Tsilas, formerly of the Office of Associate Chief
Counsel (Financial Institutions and Products). However, other personnel
from the Treasury Department and the IRS participated in their
development.
Availability of IRS Documents
The IRS notices cited in this preamble are published in the
Internal Revenue Bulletin (or Cumulative Bulletin) and are available
from the Superintendent of Documents, U.S. Government Publishing
Office, Washington, DC 20402, or by visiting the IRS website at
www.irs.gov.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 1.150-3 is added to read as follows:
Sec. 1.150-3 Retirement standards for state and local bonds.
(a) General purpose and scope. This section provides rules to
determine when a tax-exempt bond is retired for purposes of sections
103 and 141 through 150.
(b) General rules for retirement of a tax-exempt bond. Except as
otherwise provided in paragraph (c) of this section, a tax-exempt bond
is retired when:
(1) A significant modification of the bond occurs under Sec.
1.1001-3;
(2) The issuer or its agent acquires the bond in a manner that
liquidates or extinguishes the bondholder's investment in the bond; or
(3) The bond is otherwise redeemed (for example, redeemed at
maturity).
(c) Exceptions to retirement of a tax-exempt bond--(1) Qualified
tender right does not result in a modification. In applying Sec.
1.1001-3 to a qualified tender bond for purposes of paragraph (b)(1) of
this section, both the existence and exercise of a qualified tender
right are disregarded. Thus, a change in the interest rate mode made in
connection with the exercise of a qualified tender right generally is
not a modification because the change occurs by operation of the terms
of the bond and the holder's resulting right to put the bond to the
issuer or its agent does not prevent the issuer's option from being a
unilateral option.
(2) Acquisition pursuant to a qualified tender right. Acquisition
of a qualified tender bond by the issuer or its agent does not result
in retirement of the bond under paragraph (b)(2) of this section if the
acquisition is pursuant to the operation of a qualified tender right
and neither the issuer nor its agent continues to hold the bond after
the close of the 90-day period beginning on the date of the tender.
(3) Acquisition of a tax-exempt bond by a guarantor or liquidity
facility provider. Acquisition of a tax-exempt bond by a guarantor or
liquidity facility provider acting on the issuer's behalf does not
result in retirement of the bond under paragraph (b)(2) of this section
if the acquisition is pursuant to the terms of the guarantee or
liquidity facility and the guarantor or liquidity facility provider is
not a related party (as defined in Sec. 1.150-1(b)) to the issuer.
(d) Effect of retirement. If a bond is retired pursuant to
paragraph (b)(1) of this section (that is, in a transaction treated as
an exchange of the bond for a bond with modified terms), the bond is
treated as a new bond issued at the time of the modification as
determined under Sec. 1.1001-3. If the issuer or its agent resells a
bond retired pursuant to paragraph (b)(2) of this section, the bond is
treated as a new bond issued on the date of resale. In both cases, the
rules of Sec. 1.150-1(d) apply to determine if the new bond is part of
a refunding issue.
(e) Definitions. For purposes of this section, the following
definitions apply:
(1) Issuer means the State or local governmental unit (as defined
in Sec. 1.103-1) that actually issues the tax-exempt bond and any
related party (as defined in Sec. 1.150-1(b)) to the actual issuer (as
distinguished, for example, from a conduit borrower that is not a
related party to the actual issuer).
(2) Qualified tender bond means a tax-exempt bond that, pursuant to
the terms of its governing contract, has all of the features described
in this paragraph (e)(2). During each authorized interest rate mode,
the bond bears interest at a fixed interest rate, a qualified floating
rate under Sec. 1.1275-5(b), or an objective rate for a tax-exempt
bond under Sec. 1.1275-5(c)(5). Interest on the bond is
unconditionally payable at periodic intervals of no more than one year.
The bond has a stated maturity date that is not later than 40 years
after the issue date of the bond. The bond includes a qualified tender
right.
(3) Qualified tender right means a right or obligation of a holder
of the bond to tender the bond for purchase as described in this
paragraph (e)(3). The purchaser under the tender may be the issuer, its
agent, or another party. The tender right is available on at least one
date before the stated maturity date. For each such tender, the
purchase price of the bond is equal to par (plus any accrued interest).
Following each such tender, the issuer or its remarketing agent either
redeems the bond or uses reasonable best efforts to resell the bond
within the 90-day period beginning on the date of the tender. Upon any
such resale, the purchase price of the bond is equal to par (plus any
accrued interest).
(f) Applicability date. This section applies to events and actions
taken with respect to bonds that occur on or after the date that is 90
days after the date of publication of the Treasury decision adopting
these rules as final regulations in the Federal Register.
0
Par. 3. Section 1.1001-3 is amended by:
0
1. Revising paragraph (a)(2).
0
2. Revising the paragraph (h) subject heading.
0
3. Revising the first sentence of paragraph (h)(1).
0
4. Revising the paragraph (h)(2) subject heading.
0
5. Adding paragraph (h)(3).
The revisions and addition read as follows:
Sec. 1.1001-3 Modifications of debt instruments.
(a) * * *
(2) Qualified tender bonds. For special rules governing whether
tax-
[[Page 67705]]
exempt bonds that are qualified tender bonds are retired for purposes
of sections 103 and 141 through 150, see Sec. 1.150-3.
* * * * *
(h) Applicability date. * * *
(1) * * * Except as otherwise provided in paragraphs (h)(2) and (3)
of this section, this section applies to alterations of the terms of a
debt instrument on or after September 24, 1996. * * *
(2) Alteration or modification results in an instrument or property
right that is not debt. * * *
(3) Qualified tender bonds. Paragraph (a)(2) of this section
applies to events and actions taken with respect to qualified tender
bonds that occur on or after the date that is 90 days after the date of
publication of the Treasury decision adopting these rules as final
regulations in the Federal Register.
Kirsten Wielobob,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2018-28370 Filed 12-28-18; 8:45 am]
BILLING CODE 4830-01-P
