SERVICE EXTENDS DEADLINE FOR ELECTING TO CARRY FORWARD UNUSED PRIVATE ACTIVITY BOND VOLUME CAP.

Notice 89-12

This notice describes forthcoming regulations regarding the date by which issuers of state and local bonds must file Form 8328, Carryforward Election of Unused Private Activity Bond Volume Cap.

BACKGROUND

Section 146(a) of the Internal Revenue Code provides that the aggregate face amount of private activity bonds issued during a calendar year must not exceed the volume cap of the issuing authority for that calendar year.

Section 146(f)(1) of the Code provides, in general, that if an issuing authority's volume cap for any calendar year exceeds the aggregate amount of tax-exempt private activity bonds it issues during the calendar year, the authority can elect to carry forward the excess amount.

Section 1.103(n)-4T of the Temporary Income Tax Regulations, which was issued under the predecessor of section 146 of the Code, requires the issuer to file the carry forward election with the Internal Revenue Service prior to the end of the calendar year in which the excess amount arises. The instructions to the current (March 1987) version of Form 8328 repeat this requirement that the form be filed by the end of the calendar year.

FORTHCOMING REGULATIONS

Regulations under section 146 of the Code will give the issuer of tax-exempt private activity bonds additional time to file the carryforward election. The regulations will require the issuer to file the carryforward election with the Internal Revenue Service by the earlier of (1) February 15 of the calendar year following the year in which the excess amount arises, or (2) the date of issue of bonds issued pursuant to the carryforward election. Accordingly, issuers may file their 1988 carryforward elections with the Internal Revenue Service on or before February 15, 1989 (or the date of issuance, if earlier), notwithstanding the due date stated in the instructions to Form 8328.

The regulations will also provide that the issuer will be bound by the carryforward amounts stated on the election form and will not be allowed to change those amounts (unless the change is merely to correct a clerical error).

COMMENTS

Comments regarding this notice should be sent to: Internal Revenue Service, Associate Chief Counsel, Attention: CC:FI&P, P.O. Box 7604, Ben Franklin Station, Washington, D.C. 20044.

ADMINISTRATIVE PRONOUNCEMENT

This document serves as an "administrative pronouncement" as that term is described in section 1.6661-3(b)(2) of the regulations and may be relied upon to the same extent as a revenue ruling or revenue procedure.

DRAFTING INFORMATION

The principal author of this notice is David Selig, Office of the Assistant Chief Counsel (Financial Institutions & Products), Internal Revenue Service. For further information, contact Mr. Selig on (202)566-4545 (not a toll-free call).