Law Article: Guidelines for Tribal Economic Development Bonds

"On July 16, 2012, the IRS released Notice 2012-48, which solicits applications for the allocation of available amounts of national bond issuance authority limitation (volume cap) for Tribal Economic Development Bonds (TEDBs) under Internal Revenue Code Section 7871(f). The Notice provides guidance on the application requirements and forms for requests for volume cap allocations, the general process that will be used by the IRS to allocate the volume cap, and information reporting to the IRS concerning various aspects of the allocation process and the issuance of TEDBs.

TEDBs were authorized as part of the American Recovery and Reinvestment Act of 2009. TEDBs allow Indian tribal governments to issue bonds without having to satisfy the "essential governmental function" test and provide relief from the general prohibition on tribal issuances of private activity bonds. However, tribes had to apply for a TEDB allocation, as the legislation contained a $2 billion limitation that was allocated in two tranches.

Notwithstanding IRS notices extending the initial deadlines for tribes to issue their allocation of TEDBs authorized in both the 2009 allocation tranche and 2010 allocation tranche, as of March 31, 2012, $1,802,846,643 of volume cap previously allocated had been forfeited and has now been made available for reallocation under the Notice."

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Randolph A. "Randy" DelFranco, Kathleen Nilles and Allyson G. Saunders: Expanded tribal bond-issuing authority: IRS issues new guidelines on Tribal Economic Development Bonds (Lexology 7/19)
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