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Final Report From the IRS Tax Exempt Bonds Division 

July 15, 2011

The Tax Exempt Bonds function of the IRS Tax Exempt and Government Entities Division has published the final report on its Tax-Exempt Charitable Financings Compliance Check Questionnaire and Governmental Bond Financings Compliance Check Questionnaire projects. The projects focused on determining whether § 501(c)(3) organizations and governmental bond issuers generally have a sufficient level of knowledge related to post-issuance compliance requirements and records retention applicable to their tax-exempt bonds. The questionnaires also asked governmental issuers and § 501(c)(3) organizations about their compliance training programs for individuals responsible for post-issuance compliance.

The report summarizes the responses received from a study of 200 governmental issuers and 200 501(c)(3) organizations that issued bonds in the 2005 calendar year. IRS received responses from 175 governmental issuers and 192 from 501(c)(3) organizations. Those not responding have been “referred for follow up.”

The compliance questionnaires concentrated on policies, practices, and record keeping of the exempt and governmental issuers in key areas such as use of proceeds, use of property, arbitrage, expenditures, and other areas.

According to the report, responding exempt organizations and governmental issuers generally recognized the importance of post-issuance compliance procedures, though there were some substantial gaps in how such procedures were implemented throughout those market segments. Almost all survey respondents reported having written policies and practices in key areas of compliance. However, when asked to describe those policies, nearly half of respondents neglected to do so.

The report states the Tax Exempt Bonds division plans to continue promoting post-issuance compliance while exploring ways to reduce taxpayer burden.

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Mary Bachinger
Director, Tax Policy
202.861.2581
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