H.R.1 was introduced in Congress this morning. The provisions of the bill, specifically Section 3601 will terminate the exemption from federal income taxation of interest paid on private activity bonds if the bonds are issued after December 31, 2017. Examples of the bonds that will lose exemption include various private activities such as exempt facility bonds, qualified mortgage bonds, qualified small issue manufacturing bonds, qualified redevelopment bonds and qualified 501c3 bonds.
This will also be of concern to a state or local government that might issue tax exempt “governmental bonds.” If the bonds are issued to finance the capital expenditures for a professional sports stadium, they would need to be issued by November 2, 2017 to remain exempt from federal income taxation, otherwise the bonds will lose this exemption. A professional sports stadium is any facility that is used for professional sports expeditions, games or training for at least five days in any calendar year.
If you have any questions or need Fennemore Craig to provide any assistance, please contact James Wadhams, head of the Fennemore Craig Government Relations Committee, Senator Richard Bryan, a former member of the United States Senate Finance Committee, or Richard Jost, in the firm’s tax exempt finance group.