IRS Launches Compliance Check Questionnaire on Qualified School Construction Bond Issues
Tax Exempt Bonds (TEB) initiated a questionnaire project to evaluate the compliance and record retention policies, procedures, and practices of issuers of qualified school construction bonds (QSCBs). TEB sent out notices to 111 issuers of QSCBs selected to complete the questionnaire. For the first time ever, completion of a TEB questionnaire is completely online. Paper copies of the questionnaire are not available. Issuers that received a letter to complete the questionnaire also received instructions on how to access and complete the online questionnaire. While access to the online questionnaire is restricted to only those issuers selected for the project, others may view the questions here.
What is a Compliance Check?
A compliance check is a review conducted by the IRS, under Title 26 of the Internal Revenue Code, which is neither an audit or an investigation under section 7605(b) nor is it an audit under section 530 of the Revenue Act of 1978.
What is a Qualified School Construction Bond?
A QSCB is a bond issued for the construction, rehabilitation, or repair of a public school facility as well as for the acquisition of land on which such a facility is to be constructed. QSCBs are bonds issued by a State, local, or tribal government within the jurisdiction where the school is located. The issuer of these bonds must designate them as QSCBs on the date of issuance. The tax-advantaged status of QSCBs remains throughout the life of the bonds if all applicable federal tax laws are satisfied while the bonds are outstanding. Section 54F of the Code provides a description of QSCBs.
The QSCB Questionnaire Project
If an issuer received a letter requesting them to complete the questionnaire, they can click here to go to the questionnaire. (Only those receiving a letter can access the questionnaire.) The link to the questionnaire is also on the Tax Exempt Bond Community webpage at the bottom of the right hand column on the lower half of the page.
The QSCB questionnaire project is the fifth time TEB has used a compliance check questionnaire to measure and promote tax compliance in the municipal bond community. Previous projects included exempt organization borrowers of qualified 501(c)(3) bonds, governmental issuers of tax-exempt governmental bonds, issuers of direct pay build America bonds, and issuers of advance refunding bonds.
The QSCB project expects to evaluate several aspects of issuers’ tax compliance policies, procedures, and practices including:
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Debt management policies and procedures;
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Volume cap allocation policies and procedures;
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Procedures related to the determination of issue price;
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Record retention procedures; and
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Procedures related to the timely identification and correction of tax violations.
Issuers select an answer to each question from the choices provided by the online questionnaire. In addition, based upon their responses to prior questions, the intuitively based questionnaire omits subsequent questions that are irrelevant to that issuer.
Questions Included in the Questionnaire
Click here to view the questions included in the online questionnaire. Due to space limitations, there are no response choices shown.
