Tax Audit and Analysis

Tax-Exempt Finance

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Our tax-exempt finance team has extensive experience dealing with Section 103 and Sections 141 through 150 of the Code and has extensive experience with complex arbitrage and investment and derivative product issues. In addition, one of our lawyers has over 25 years of experience practicing as a Section 103 tax attorney, which allows us to better represent our clients before the Internal Revenue Service in controversy matters and in obtaining private letter rulings.

Our expertise in the area of Section 103 has enabled us to create opportunities that add value to our clients’ financing plans. For example, one of our clients, a mid-size continuing care retirement community (CCRC), was engaged in a five-year capital expansion plan to be implemented in three phases. The development of phases two and three, however, were contingent upon market conditions. The CCRC arranged a five year draw down loan with a consortium of banks. The applicable Treasury Regulations require that an issuer reasonably expect to expend at least 85% of the proceeds of a tax-exempt issue within three years (except under limited circumstance that were not applicable to the client). To address this conflict, Stevens & Lee solicited and obtained a private letter ruling for the CCRC that permitted the CCRC to have one closing for the full principal amount required to finance the project, thus issuing only one series of obligations and incurring only one set of closing costs, but drawing the funds as needed. The ruling held that the bonds would not be arbitrage bonds even if the CCRC never drew down the funds for phases two or three because market conditions would not warrant the development of either of such phases.

Stevens & Lee lawyers also possess specific tax expertise in the areas of tax controversy, audits, arbitrage rebate and post-issuance compliance. We have represented issuers and conduit borrowers in audits where the IRS has questioned compliance with arbitrage requirements and with private use limitations. We have also represented conduit borrowers in audits where compliance with the exempt facility and similar rules have been the center of the IRS’s inquiries. In addition, we have negotiated closing agreements on behalf of our clients to close audits without having the applicable bonds declared taxable.


Steven R. Arose



Reading: 610.478.2074


Ramiro M. Carbonell



Reading: 610.478.2275


Peter T. Edelman



Reading: 610.478.2168


John W. Espenshade



Lancaster: 717.399.6621


Edward A. Fedok


Allentown: 610.997.5063


Brian P. Koscelansky



Scranton: 570.969.5364

Wilkes-Barre: 570.718.0300


Blake C. Marles



Allentown: 610.997.5060


David A. Vind

Of Counsel


Reading: 610.478.2173

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