IRS Issues Guidance on Telephonic Public Hearings for Qualified Private Activity BondsMay 6, 2020 – Legal Alerts
In light of the restrictions on gatherings imposed in many states due to the COVID-19 pandemic, the IRS has issued Revenue Procedure 2020-21, which will temporarily allow public hearings to be held by teleconference. For the purposes of IRS rules, teleconference hearings will be permitted in all jurisdictions, regardless of any state or local orders or guidance on public gatherings.
Tax-exempt qualified private activity bonds are subject to a public approval requirement, which means that unless there is a voter referendum, the issue must be approved by the applicable elective representative of the governmental unit after a public hearing following reasonable public notice. Reasonable public notice must state the time and place for the public hearing and must be given no fewer than seven calendar days before the public hearing. The public hearing must be held in a location convenient for residents — the governmental unit’s capital or seat of government is presumed convenient — and must provide a reasonable opportunity for interested individuals to express their views, orally or in writing, on the proposed issue of bonds and the location and nature of the proposed project to be financed.
From May 4, 2020 to Dec. 31, 2020, a hearing held by teleconference will be treated as a convenient location for residents if such hearing is accessible by calling a toll-free telephone number. Notice of such hearing must still be provided no fewer than seven calendar days before and must state the time of the hearing and the telephone number residents can use to access the hearing. The hearing, likewise, must still allow interested individuals to express their views.
This revenue procedure may be applied retroactively to public hearings held telephonically in response to the COVID-19 pandemic before May 4, 2020.
This is only a summary of Rev. Proc. 2020-21. Issuers interested in holding telephonic hearings should consult with a member of Dinsmore’s Public Finance group.