Arbitrage Restrictions and Guidance on Issue Price Definition for Tax Exempt Bonds

Forms and Documents

Document Name	Status
81 FR 81242.pdf Supplementary Document	2017-02-16
SS 1545-1347 revised 2-28-17 - New.doc Supporting Statement A	2017-02-28

IC Document Collections

IC ID	Document Title	Status
225733	Arbitrage Guidance For Tax-Exempt Bonds (TD 9777)	New
217687	TD 9801 - Issue Price Definition for Tax-Exempt Bonds	Modified
18149	Arbitrage restrictions and related rules under sections 103, 148, 149, and 150 (TD 8476, TD 8718, TD 8801 )	Modified

ICR Details

OMB Control No: 1545-1347	ICR Reference No: 201701-1545-018
Status: Historical Active	Previous ICR Reference No: 201506-1545-008
Agency/Subagency: TREAS/IRS	Agency Tracking No:
Title: Arbitrage Restrictions and Guidance on Issue Price Definition for Tax Exempt Bonds
Type of Information Collection: Revision of a currently approved collection	Common Form ICR:  No
Type of Review Request: Regular
OIRA Conclusion Action: Approved without change	Conclusion Date: 06/29/2017
	Date Received in OIRA: 02/28/2017
Terms of Clearance:

	Inventory as of this Action	Requested	Previously Approved
Expiration Date	06/30/2020	36 Months From Approved	06/30/2017
Responses	48,040	0	24,010
Time Burden (Hours)	92,978	0	94,326
Cost Burden (Dollars)	0	0	0

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Abstract: Section 148 was enacted to minimize the arbitrage benefits from investing gross proceeds of tax-exempt bonds in higher yielding investments and to remove the arbitrage incentives to issue more bonds, to issue bonds earlier, or to leave bonds outstanding longer than is otherwise reasonably necessary to accomplish the governmental purposes for which the bonds were issued. To accomplish these purposes, section 148 restricts the direct and indirect investment of bond proceeds in higher yielding investments and requires that certain earnings on higher yielding investments be rebated to the United States. Violation of these provisions causes the bonds in the issue to become arbitrage bonds, the interest on which is not excludable from the gross income of the owners under section 103(a). The regulations in §§ 1.148-1 through 1.148-11 apply in a manner consistent with these purposes. Section 148 of the Internal Revenue Code requires issuers of tax-exempt bonds to rebate certain arbitrage profits earned on nonpurpose investments acquired with the bond proceeds. Issuers are required to file a Form 8038-T and remit the rebate. Issuers are also required to keep records of certain interest rate hedges so that the hedges are taken into account in determining arbitrage profits. The scope of interest rate hedging transactions covered by the arbitrage regulations was broadened by requiring that hedges entered into prior to the sale date of the bonds are covered as well. The collection of information for TD 9777 is in §1.148-4(h)(2)(viii), which contains a requirement that the issuer maintain in its records a certificate from the hedge provider. For a hedge to be a qualified hedge, existing regulations require, among other items, that the actual issuer identify the hedge on its books and records. The identification must specify the hedge provider, the terms of the contract, and the hedged bonds. These final regulations require that the identification also include a certificate from the hedge provider specifying certain information regarding the hedge.

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Authorizing Statute(s): US Code: 26 USC 148 Name of Law: Qualified Small Issue Bond; Qualified Student Loan Bond; Qualified Redevelopment Bond
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
	Not associated with rulemaking

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Federal Register Notices & Comments
60-day Notice:	Federal Register Citation:	Citation Date:
	81 FR 81242	11/17/2016
30-day Notice:	Federal Register Citation:	Citation Date:
	82 FR 12026	02/27/2017
Did the Agency receive public comments on this ICR? No

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Number of Information Collection (IC) in this ICR: 3

IC Title	Form No.	Form Name
Arbitrage restrictions and related rules under sections 103, 148, 149, and 150 (TD 8476, TD 8718, TD 8801 )
TD 9801 - Issue Price Definition for Tax-Exempt Bonds
Arbitrage Guidance For Tax-Exempt Bonds (TD 9777)

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ICR Summary of Burden

	Total Approved	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	48,040	24,010	0	24,030	0	0
Annual Time Burden (Hours)	92,978	94,326	0	-1,348	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Miscellaneous Actions

Burden decreases because of Program Change due to Agency Discretion: Yes

Burden Reduction Due to: Miscellaneous Actions

Short Statement: There are changes to the burden estimates that were previously approved by OMB. Burden increased with the addition of TD 9801 and TD 8801 (under OMB No. 1545-1490) due to related regulations, but were offset by the revised estimates, which resulted in an overall decrease of (1348) burden hours, and also an increase in the number of responses by 24030 responses. Also, we corrected the mathematical errors in the regulations listed in the chart.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Is the Supporting Statement intended to be a Privacy Impact Assessment required by the E-Government Act of 2002? No

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? Uncollected

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Common Form ICR:  No

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On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).

The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(i) Why the information is being collected;

(ii) Use of information;

(iii) Burden estimate;

(iv) Nature of response (voluntary, required for a benefit, or mandatory);

(v) Nature and extent of confidentiality; and

(vi) Need to display currently valid OMB control number;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.

Certification Date: 02/28/2017

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