SECTION 3. Scope and Application

3.1 Expanded Temporary Rule Allow- ing Governmental Issuers to Purchase Their Own Tax-Exempt Bonds . Solely for purposes of § 103 and §§ 141 through 150, the Treasury Department and the IRS will treat a tax-exempt “qualified tender bond” (as defined in Notice 2008–41) or “tax-exempt commercial paper” (as defined in § 2 of this notice) that is purchased by its “governmental issuer” (as defined in Notice 2008–41) on a temporary basis as continuing in effect without resulting in a reissuance or retirement of the purchased tax-exempt bond if, irrespective of when the governmental issuer purchases the bond (including a purchase of a bond before October 1, 2008), the governmental issuer holds the bond until not later than December 31, 2009. Subsequent to the end of this period, a governmental issuer generally may not hold its own bond without causing a reissuance or retirement of such bond under the general rules in § 3.1 of Notice 2008–41 and other applicable law.

Thus, recognizing that the purchased bond is treated as continuing in effect without resulting in a reissuance or retirement of that bond solely for purposes of § 103 and §§ 141 through 150 during the permitted holding period until not later than

December 31, 2009 (“permitted holding period”), the governmental issuer may refund the purchased bond with a refunding bond, tender the purchased bond for purchase in a qualified tender right in its capacity as a bondholder, or otherwise resell the purchased bond during this permitted holding period. Further, in the case of the purchase of any particular obligation of tax-exempt commercial paper, including a purchase of such a particular obligation at maturity, a refinancing of that purchased tax-exempt commercial paper during the permitted holding period will be treated as part of the same issue as the issue of which the purchased tax-exempt commercial paper was a part. After the end of this permitted holding period, however, a governmental issuer generally may not hold its own bond without causing a reissuance or retirement of such bond under the general rules in Notice 2008–41 and other applicable law.

3.2 Extension of Certain Other Time Limits for Special Rules in Notice 2008–41 . Section 3.2(3)(b) of Notice 2008–41 regarding operating rules for qualified tender rights is amended to extend the final date for purchase of bonds pursuant to qualified tender rights for which the special 180-day holding period applies (in lieu of the general 90-day holding period rule for this purpose) from October 1, 2008 to December 31, 2009. Section 6.2 of Notice 2008–41 regarding the treatment of certain waivers of interest rate caps on tax-exempt auction rate bonds is amended to extend the final date on which covered waivers of interest rate caps are disregarded from October 1, 2008 to December 31, 2009.

3.3 No Inferences on Law . This notice provides administrative relief in furtherance of public policy to promote liquidity and stability in the short-term tax-exempt bond market. Except with respect to the administrative relief expressly provided in this notice, no inference should be drawn from this notice regarding any other Federal tax issues affecting tax-exempt bonds or any other security. In addition, this notice is not intended to address any other Federal tax issue implicated in the transactions described in this notice allowing governmental issuers to purchase their own tax-exempt bonds on a temporary basis in prescribed circumstances.

2008–42 I.R.B. 934 October 20, 2008

whether a plan provides for the deferral of compensation under § 1.409A–1(b).