Examples of Direct Payment BABs in a sentence
Direct Payment BABs provide a direct federal subsidy paid by the US Treasury to the government issuer in an amount equal to 35% of the interest.
Direct Payment BABs are also subject to the arbitrage restrictions of Section 148 in order to be “qualified bonds” under Section 54AA.
In the case of Direct Payment BABs, the government issuer receiving the subsidy is the primary taxpayer.
IRS Notice 2009-26 provides guidance on Direct Payment BABs and the payment of the federal subsidy procedures.
The Debt Management Compliance Coordinator for each entity receiving proceeds from the issuance of tax-exempt bonds/notes or Direct Payment BABs shall meet with the Debt Compliance Officer (via telephone conference call or in person) to ensure that all requirements are clearly understood.
Direct Payment BABs – Direct payment BABs shall also comply with Section 54AA of the Code which requires that 100% of the available project proceeds be used for capital expenditures after allowing for a reasonably required reserve fund and for costs of issuance not exceeding 2 percent.
Recovery Zone Economic Development bonds (like the Direct Payment BABs) provide a direct federal subsidy to the government issuer in an amount equal to 45% of the interest.
Each state agency or other entity receiving bond proceeds through the issuance of tax- exempt bonds/notes or Direct Payment BABs shall designate a person to serve as the Debt Management Compliance Coordinator.
Records Establishing the Use of Property – The Bond Compliance Officer shall retain documents regarding the use of property financed with tax- exempt bonds/notes or Direct Payment BABs. This includes leases and service contracts.
Records of the Federal Subsidy Payments for Direct Payment BABs – The Bond Compliance Officer shall obtain a copy of the filed IRS Form 8038- CP and store in the CEDMR.