Bond Relief Amid COVID-19 Restrictions: Telephonic Public Hearings and Enhanced Issuer Ability to Purchase Bonds

The IRS provided much-awaited relief for issuers seeking to do a public hearing for their bonds amidst the current pandemic situation. The IRS guidance, Revenue Procedure 2020-21, permits a public hearing to be held by teleconference accessible to the residents of the approving governmental entity, by calling a toll-free number.

Additional access may be offered to the telephonic hearing by toll-based telephone numbers and/or internet-based technology platforms, such as WebEx or Zoom. Rev. Proc. 2020-21 is dated May 4, 2020, and applies for the period of May 4, 2020 through December 31, 2020. Issuers may retroactively apply the guidance to public hearings held telephonically before May 4, 2020, in response to the COVID-19 pandemic.

Additionally, in an effort to assist the bond market during the economic disruption, the IRS also temporarily expanded the circumstances and times periods in which a governmental issuer may purchase its own tax-exempt bonds without causing a reissuance. The relief applies to purchases on or after January 1, 2020. Similar relief was provided in response to the 2008 financial crisis. The current IRS guidance, Notice 2020-25, extends the holding period provided under proposed regulations on reissuance and Notice 2008-41 from 90 days to 180 days for qualified tender bonds. The recently released guidance also expands applicability of the relief to commercial paper, in addition to qualified tender bonds.

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