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U.S. House Passes Tax Bill Drastically Curtailing Tax-Exempt Financing Next Year

Today, the U.S. House of Representatives passed a tax bill that would curtail tax-exempt financing used by States and municipalities and eliminates all tax-exempt private activity bonds (such as 501(c)(3), housing, certain airport and utilities, student loans and many public-private partnerships) beginning next year.  It also severely restricts the ability to refinance ALL OUTSTANDING tax-exempt debt by eliminating advance refunding bonds.  The House Tax Bill applies to ALL TAX-EXEMPT DEBT issued after 2017, and therefore impacts refinancing or remarketing of existing tax-exempt debt as well as financings for new projects.

This legislation is on an accelerated time schedule having been passed by the U.S. House two weeks after being introduced in the House Ways and Means Committee. With passage of the House Tax Bill, the focus now moves to the Senate for consideration of the tax bill.

The Senate Finance Committee is working on its own version of the tax bill that currently has significant differences from the House Tax Bill.  The Senate Tax Bill retains the ability to issue tax-exempt private activity bonds (such as 501(c)(3), housing, certain airport and utilities, student loans, and many public-private partnerships); however, the Senate Tax Bill tracks the House Tax Bill in eliminating the ability to issue tax-exempt advance refunding bonds after 2017.

The Senate Finance Committee is expected to vote on its version of the tax bill tomorrow with the full Senate expected to vote after Thanksgiving.  An identical bill must pass both the House and the Senate before being sent to the President for consideration.
We urge you to immediately contact your Senator, especially members of the Senate Finance Committee, which include Senator Roberts of Kansas, Senator McCaskill of Missouri, and Senator Hatch of Utah.   A list of all members of the Senate Finance Committee can be found at https://www.finance.senate.gov/about/membership.  A copy of a letter that can be used for this purpose is available here.

The full text of the House Tax Bill can be found at: https://www.congress.gov/bill/115th-congress/house-bill/1/text.

The description of the Senate Tax Bill can be found here.

Please contact your Gilmore & Bell lawyer if you have any questions or would like to discuss potential impact relating to your tax-exempt bonds.

Posted: Nov 16, 2017

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