Information on Tax Exempt Bonds

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Information on Tax Exempt Bonds

The office of Federal, State and Local Governments (FSLG) strives to provide all government entities with Federal tax information that may be relevant to their situations. We are providing the information below on behalf of the IRS Tax Exempt Bonds office, for the attention of governmental officials who are involved in the tax exempt bond process and in the sale/liquidation of assets that were financed with bond proceeds.

Sale of Assets Financed with Tax-Exempt Bonds by State and Local Governments and 501(c)(3) Organizations

To raise needed funds, state and local governments may plan to sell property financed with tax-exempt bonds.  The sale of such property could cause the bond issue to become taxable.  A timely remedial action, if necessary, will help ensure that the interest on the bond issue remains tax-exempt. 

Tax Exempt Bonds (TEB) focuses on providing assistance to bond issuers in understanding their tax responsibilities. TEB has initiated an outreach and educational services program to increase understanding and compliance with tax law applicable to tax-exempt bonds.  As part of this service TEB is providing this article concerning the sale of property financed by tax-exempt bonds. Governmental issuers may use this information to establish practices to monitor tax compliance throughout the period that their bonds are outstanding. For more information please visit the Tax Exempt Bond website.