IRS Again Extends Deadline for Private Activity Bonds

The COVID-19 pandemic has remained a major health threat longer than many thought it would be after vaccinations were approved in 2020. Count the IRS in this group. As a result, the agency has again extended use of electronic hearings to meet a requirement for approval of private activity bonds.

Private activity bonds—sometimes called conduit bonds—are tax-exempt bonds issued by or on behalf of a local or state government to provide special financing of certain projects. Typically, the financing is issued to further the project of a private party, such as financing for a football stadium.

Under the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), tax-exempt private activity bonds are subject to a public approval requirement. Generally, the bond issue must be approved by the government unit issuing the bonds (or on behalf of which such bonds are issued) and by the unit having jurisdiction over the area where the facility will be located. An issue is treated as having been approved after a public hearing following reasonable public notice or by voter referendum of the governmental unit.

But the COVID-19 pandemic has thrown a monkey wrench into the works. In response to the crises, the IRS initially released guidance in Revenue Procedure 2020-21, which allows for remote telephonic hearings to qualify as “public hearings,” as required by TEFRA, for private activity bonds for the period beginning May 4, 2020, and ending December 31, 2020. Subsequently, the IRS released Revenue Procedure 2020-49, which extended the period until September 30, 2021.

Now Revenue Procedure 2021-39 further extends the period for using telephonic hearings until March 31, 2022. The latest reprieve came shortly before the October 1 deadline arrived. Hopefully, this will be the last extension required for this matter.