SERVICE WILL NO LONGER RULE ON WHETHER CERTAIN PRIVATE-ACTIVITY BONDS QUALIFY AS EXEMPT-FACILITY BONDS.

Rev. Proc. 90-35

SECTION 1. PURPOSE

This revenue procedure provides that the Internal Revenue Service ordinarily will not issue rulings or determination letters regarding whether an issue of private activity bonds meets the requirements of section 142 or 144(a) of the Code if the sum of the portions of the proceeds of the issue that are used for certain purposes equals more than 5 percent of the net proceeds of the issue. This revenue procedure thus modifies section 4.01(5) of Rev. Proc. 90-3, 1990-1 I.R.B. 54, to reflect changes resulting from the enactment of the Tax Reform Act of 1986, 1986-3 (Vol. 1) C.B. 519.

SEC. 2. BACKGROUND

Section 4 of Rev. Proc. 90-3 is entitled "AREAS IN WHICH RULINGS OR DETERMINATION LETTERS WILL NOT ORDINARILY BE ISSUED."

SEC. 3. PROCEDURE

Rev. Proc. 90-3 is modified by deleting paragraph 5 of section 4.01 and substituting in its place the following new paragraph:

5. Sections 142 and 144. -- Certain Exempt Facility Bonds; Qualified Small Issue Bonds. -- Whether an issue of private activity bonds meets the requirements of section 142 or 144(a) of the Code, if the sum of --

(1) the portion of the proceeds used to finance a facility in which an owner (or a related person) or a lessee (or a related person) is a user of the facility both after the bonds are issued and at any time before the bonds were issued, and

(2) the portion used to pay issuance costs and non-qualified costs equals more than 5 percent of the net proceeds, as defined in section 150(a)(3).

SEC. 4. EFFECTIVE DATE

This revenue procedure is effective June 25, 1990, the date of its publication in the Internal Revenue Bulletin.

SEC. 5. EFFECT ON OTHER REVENUE PROCEDURES

Rev. Proc. 90-3 is modified.

DRAFTING INFORMATION

The principal author of this revenue procedure is Hervey H. Kornegay of the Office of Assistant Chief Counsel (Financial Institutions & Products). For further information regarding this revenue procedure contact Mr. Kornegay on (202) 566-3458 (not a toll- free call).