Client Services / Tax / Tax Exempt Bonds

Tax Exempt Bonds

McDermott Will & Emery lawyers represent issuers and conduit borrowers using tax-exempt bonds in structuring their borrowings and other transactions to achieve and maintain the tax exempt status of interest on such bonds.  In addition, we render opinions on the federal income tax treatment of interest payments on the bonds.  We also advise purchasers and holders of tax-exempt municipal obligations (including lease purchase agreements) on federal income tax issues related to the acquisition and holding of, and enforcement of rights and structuring of remedies (including defaults and workouts) with respect to, such obligations.

Issuer Representation

We represent municipal issuers of tax-exempt bonds in structuring their transactions, in reviewing the tax aspects of bond documents and in rendering our opinion on the tax-exempt status of interest paid under the bonds.  We also represent issuers in structuring, and render opinions on, management arrangements and changes in the use of bond‑financed facilities that have the potential of causing interest on the bonds to be taxable.

Conduit Borrower Representation

We represent conduit borrowers in conduit financing transactions (i.e., private users in exempt or manufacturing facility bond transactions, or exempt organizations in Section 501(c)(3) bond transactions).  Our services cover the entire range of issues confronting conduit borrowers, from structuring new financings, through assessing the impact of operational changes on existing bonds, to refundings.  Issues include permissible uses of Section 501(c)(3) bonds (unrelated trade or business issues and allocations), private business use (management contracts), working capital financings, use of reimbursement bonds, changes in use and remedial actions and reissuances under the debt modification regulations.  We also help conduit borrowers to develop and implement plans for monitoring compliance with tax-exempt bond restrictions.

Bondholder and Credit Enhancer Representation

We represent purchasers and holders of tax-exempt municipal obligations and insurers and companies that provide credit enhancement for such obligations.  We represent acquirers of municipal lease purchase agreements, where manufacturers sell property to municipalities under agreements treated as leases for municipal law purposes but as tax-exempt obligations for federal income tax purposes.  We represent bondholders and credit enhancers in connection with troubled tax‑exempt financings, focusing on maintaining the tax-exempt status of interest through the course of defaults, restructurings and work-outs.

Controversy

Our bond tax practice is complemented by our tax controversy experience.  We have extensive experience in teaming substantive area experts (e.g., bond tax lawyers) with former government tax litigators who concentrate their practice in tax litigation.  Two tax attorneys who practice extensively in the tax-exempt bond area also have substantial experience representing taxpayers in controversies with the Internal Revenue Service.  This experience is essential as the IRS expands its tax-exempt bond enforcement action.

Contacts

Tax Client Services

McDermott Will & Emery

McDermott Will and Emery