SECTION 3. INTERIM GUIDANCE

AND RELIANCE

.01 GENERALLY

Pending the promulgation and effective date of future administrative or regulatory guidance, taxpayers may rely on the interim guidance provided in this notice.

.02 CREDIT RATE

For QSCBs issued under §§ 54A and 54F, the maximum maturity and the credit rate are determined as of the date that there is a binding, written contract for the sale or exchange of the bond. The applicable maximum maturity, the discount rate for determining the maturity, and QSCB credit rate are published for that date by the Bureau of Public Debt on its Internet site for State and Local Government Series securities at: https://www.treasurydirect.gov . For further information regarding the methodology and procedures that the Treasury uses to determine these credit rates, see Notice 2009–15, 2009–6 I.R.B. 449 (February 9, 2009).

.03 SINKING FUND YIELD

Section 54A(d)(4)(C) provides that an issue shall not be treated as failing to meet the requirements of § 148 by reason of any fund that is expected to be used to repay the issue if: (i) the fund is funded at a rate not more rapid than equal annual installments; (ii) the fund is funded in a manner reasonably expected to result in an amount not greater than an amount necessary to repay the issue; and (iii) the yield on such fund is not greater than the discount rate determined under § 54A(d)(5)(B) (the “permitted sinking fund yield”).

The permitted sinking fund yield is determined under § 54A(d)(5)(B) by using a rate equal to 110 percent of the longterm adjusted federal rate (“AFR”), compounded semiannually, for the month in which the bond is sold. The IRS publishes the long-term adjusted AFR, compounded semiannually, each month in a revenue ruling published in the Internal Revenue Bulletin. The Bureau of Public Debt publishes the permitted sinking fund yield for each month on its Internet site for State and Local Government Series securities at: https://www.treasurydirect.gov .

.04 INFORMATION REPORTING

Section 54A(d)(3) requires issuers of QSCBs to submit information reporting returns to the IRS similar to those required to be submitted under § 149(e) for tax-exempt State or local governmental bonds. These information reporting returns are required to be submitted at the same time and in the same manner as those under § 149(e) on such forms as shall be prescribed by the IRS for such purpose. Pending further guidance from the IRS regarding the applicable forms to be used for such information reporting for QSCBs, in the case of an issue of QSCBs, the issuer must submit to the IRS an information return on Form 8038, at the same time and in the same manner as required under § 149(e), with modifications as described below. Issuers of QSCBs should complete Part II of Form 8038 by checking Line 20c (Other), writing “QSCBs” in the space provided for the bond description, and entering the issue price of the QSCBs in the Issue Price column on Line 20c. For purposes of this notice, the term “issue” has the meaning used for tax-exempt bond purposes in § 1.150–1(c) of the Income Tax Regulations.

.05 CERTAIN ELIGIBLE EXPENDITURES FOR EQUIPMENT

For purposes of the § 54F(a)(1) requirement that all available proceeds of QSCBs be spent on construction, rehabilitation, or repair of a public school facility or for the acquisition of land on which such a facility is to be constructed with part of the proceeds of such issue, eligible expenditures include, among other things, expenditures for costs of acquisition of equipment to be used in such portion or portions of the public school facility that is being constructed, rehabilitated, or repaired with the proceeds of QSCBs.

.06 ELIGIBLE ISSUERS

Eligible issuers of QSCBs include States, political subdivisions as defined for purposes of § 103, large local educational agencies that are State or local governmental entities, and entities empowered to issue bonds on behalf of any such entity under rules similar to those for determining whether a bond issued on behalf of a State or political subdivision constitutes

2009–17 I.R.B. 878 April 27, 2009

2009 calendar year volume cap for QSCBs to large local educational agencies.

2009 Allocations to States of Volume Cap for
Qualified School Construction Bonds
(Net of Allocations to Large Local Educational Agencies)

April 27, 2009 879 2009–17 I.R.B.

2009 Allocations to Large Local Educational Agencies of Volume Cap for
Qualified School Construction Bonds

2009–17 I.R.B. 880 April 27, 2009

April 27, 2009 881 2009–17 I.R.B.

2009–17 I.R.B. 882 April 27, 2009