As previously reported, on May 4, 2020, the Internal Revenue Service (IRS) issued Revenue Procedure 2020-21 in response to the COVID-19 pandemic, providing temporary guidance regarding the public hearing requirement for tax-exempt private activity bonds, commonly known in the industry as the “TEFRA hearing.”
Pursuant to section 147(f) of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder, tax-exempt private activity bond issuances must be approved by the governmental unit issuing the bonds (or on behalf of which the bonds are issued) and by the governmental unit with jurisdiction over the area where any facility to be financed by the issue is located. A bond issue will be treated as having been approved by any governmental unit if the issue is approved by the applicable elective representative of the governmental unit after a TEFRA hearing following reasonable public notice or by voter referendum of the governmental unit.
Hearings held by teleconference or webinar were expressly prohibited prior to the issuance of Revenue Procedure 2020-21. However, due to stay-at-home and shelter-in-place orders for non-essential businesses and the prohibition on public gatherings resulting from COVID-19, the IRS issued Revenue Procedure 2020-21, allowing telephonic TEFRA hearings in place of in-person TEFRA hearings occurring from May 4, 2020, until December 31, 2020.
In response to the ongoing nature of the pandemic, the IRS has now issued Revenue Procedure 2020-49, which, effective immediately, extends the time period for which telephonic hearings are permitted under Revenue Procedure 2020-21, from December 31, 2020, until September 30, 2021.
A TEFRA hearing conducted during this time period held by teleconference, accessible to the residents of the approving governmental unit by calling a toll-free telephone number, will be treated as held in a location that, based on the facts and circumstances, is convenient for residents of the approving governmental unit. In addition to providing residents of the approving governmental unit with a toll-free telephone number, governmental units can also, but are not required to, offer additional access to the hearing by other telephone numbers or by internet-based meeting technology.
If you have any questions regarding the content of this alert, please contact Sharon Brown, partner, at slbrown@barclaydamon.com; Shali Natesan, associate, at snatesan@barclaydamon.com; or another member of the firm’s Public Finance Practice Area.
We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. You can reach our COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.