Notice 2008-79

SECTION VII: DRAFTING
INFORMATION
The principal author of this notice is
Faith P. Colson of the Office of Associate
Chief Counsel (Passthroughs & Special Industries). For further information regarding this notice, contact Faith P. Colson at
(202) 622–3060 (not a toll-free call).

Tax-Exempt Housing Bonds
and 2008 Housing Legislation
Notice 2008–79
SECTION 1. Purpose
This notice provides guidance regarding certain provisions affecting tax-exempt
bonds and related matters under the Housing Assistance Tax Act of 2008, Division
C of Pub. L. No. 110–289, enacted on
July 30, 2008 (“2008 Housing Act”). Section 3021 of the 2008 Housing Act amends
§§ 143 and 146 of the Internal Revenue
Code (“Code”) to provide a temporary $11
billion increase in the annual private activity bond volume cap under § 146 for qualified housing issues and to allow the use
of qualified mortgage bonds to refinance
certain subprime mortgage loans. (Except
as otherwise provided, section references
in this notice are to the Code.) This notice
provides guidance on allocations, carryforwards, information reporting, and uses of
this additional bond volume cap, and guidance on the use of qualified mortgage revenue bonds to refinance certain subprime
mortgage loans. In addition, § 3005 of
the 2008 Housing Act amends § 142(d)(2)
of the Code to disregard basic housing allowance payments to military members at
certain military bases for purposes of applicable low-income set-aside income limitations under § 42 and § 142. This notice lists certain affected military bases.
Section 3023 of the 2008 Housing Act
provides temporary authority to Federal
Home Loan Banks to guarantee certain
tax-exempt bonds. This notice provides
guidance on tax-exempt bonds eligible for
such guarantees.
SECTION 2. Background
Section 103(a) provides that interest on
bonds issued by States or political subdivisions thereof is excluded from gross

October 6, 2008

income upon satisfaction of certain requirements. Sections 142(a)(7) and 142(d)
authorize the issuance of tax-exempt multifamily housing bonds to finance qualified residential rental projects with certain
low-income set-aside limitations. Income
determinations for purposes of compliance
with these low-income set-aside limitations are made under § 142(d)(2)(B).
Section 143 authorizes the issuance of
tax-exempt qualified mortgage bonds to
finance owner-occupied single-family
housing mortgages upon satisfaction of a
number of program requirements. Section
143(a)(2)(D) generally requires proceeds
of qualified mortgage bonds to be used
to originate loans within a 42-month period after the issue date of the bonds and
unused proceeds remaining at the end of
such 42-month period to be used to redeem
bonds (the “42-month loan origination
period”). Section 146 imposes an annual
bond volume cap on most tax-exempt private activity bonds, including qualified
mortgage bonds under § 143 and tax-exempt bonds for qualified residential rental
projects under § 142(a)(7). Section 25
allows an issuer to exchange tax-exempt
bond volume cap under § 146 with respect
to qualified mortgage bonds under § 143
for authority to issue certain mortgage
credit certificates. Section 42 provides a
low-income housing tax credit for certain
projects which, among other things, meet
low-income set-aside limitations similar
to those applicable to tax-exempt bonds
for qualified residential rental projects
under § 142(d). Section 42(g)(4) provides
that § 142(d)(2)(B) applies for purposes
of determining whether a project qualifies
for the low-income housing tax credit.
SECTION 3. Allocation,
Carryforward, Use, and Reporting of
Additional Bond Volume Cap under
§ 3021(a) of the 2008 Housing Act
3.1 General Volume Cap under § 146 of
the Code
Section 146 generally provides a unified annual state tax-exempt private activity bond volume cap for most private
activity bonds and § 146(f) provides
a three-year carryforward mechanism
for unused bond volume cap. Section
146(d)(1) provides that the State ceiling
applicable to any State for any calendar

815

year is the greater of: (A) an amount equal
to $75 multiplied by the State population, or (B) $225,000,000. Pursuant to
§ 103(c)(2), the term “State” includes the
District of Columbia and any possession
of the United States. Section 146(d)(2)
provides for inflation adjustments to the
amounts described in § 146(d)(1) for calendar years after 2002. Section 146(d)(4)
provides for an adjustment to the bond
volume cap for certain United States possessions. For purposes of this notice, this
general bond volume cap or State ceiling provided to States for private activity
bonds under § 146(d)(1) is referred to as
“General Volume Cap” to distinguish it
from “2008 Housing Act Volume Cap,” as
defined below.
3.2 2008 Housing Act Volume Cap
Section 3021(a)(1) of the 2008 Housing
Act adds new § 146(d)(5) which authorizes
a temporary increase in the annual State
private activity bond volume cap for 2008
(“2008 Housing Act Volume Cap”) for use
only for bonds for “qualified housing issues” as defined below, that are issued after the date of enactment of the 2008 Housing Act and by the end of calendar year
2010. Section 146(d)(5)(A) provides that,
for calendar year 2008, the State ceiling for
each State shall be increased by an amount
equal to $11,000,000,000 multiplied by a
fraction: (i) the numerator of which is the
State ceiling for the State for calendar year
2008 (determined without regard to the increase in § 146(d)(5)(A)), and (ii) the denominator of which is the sum of the State
ceilings determined under clause (i) for all
States. Section 146(d)(5)(B)(i) provides
that the 2008 Housing Act Volume Cap
may be allocated only to finance “qualified
housing issues.” Section 146(d)(5)(B)(ii)
defines the term “qualified housing issue”
as: (I) an issue for qualified residential
rental projects under § 142(a)(7), or (II)
a qualified mortgage issue (determined by
substituting a 12-month origination period
for the 42-month origination period under
§ 143(a)(2)(D)(i)).
3.3 Allocation of 2008 Housing Act
Volume Cap
Interpretative questions have arisen regarding allocations of the 2008 Housing
Act Volume Cap to each of the States and
whether and to what extent the District of

2008–40 I.R.B.

Columbia and possessions of the United
States receive allocations of the 2008
Housing Act Volume Cap. In this regard,
§ 103(c)(2) defines a “State” for purposes
of the tax-exempt bond provisions of the
Code, including § 146, as amended by the
2008 Housing Act, to include the District
of Columbia and any possession of the
United States. Further, in determining

2008–40 I.R.B.

2008 General Volume Cap for this purpose, although § 146(d)(4) provides an
adjustment for certain possessions, this
adjustment only affects the amount determined under § 146(d)(1)(A).
The following list provides the allocations of 2008 Housing Act Volume Cap to
the States, the District of Columbia, and
possessions of the United States. These

allocations are based on the 2008 General
Volume Cap, determined using the population figures provided in Notice 2008–22,
2008–8 I.R.B. 465, and reflecting the Costof-Living Adjustments for 2008 contained
in Rev. Proc. 2007–66, 2007–45 I.R.B.
970.

Area

Allocation

Alabama
Alaska
American Samoa
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
D.C.
Florida
Georgia
Guam
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Northern Mariana Islands
Ohio
Oklahoma
Oregon
Pennsylvania
Puerto Rico
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
U.S. Virgin Islands
Utah

144,908,544
96,550,479
96,550,479
198,480,840
96,550,479
1,144,564,324
152,225,095
109,665,263
96,550,479
96,550,479
571,487,942
298,867,838
96,550,479
96,550,479
96,550,479
402,442,519
198,685,435
96,550,479
96,550,479
132,810,201
134,429,985
96,550,479
175,923,133
201,956,503
315,371,661
162,749,339
96,550,479
184,066,548
96,550,479
96,550,479
96,550,479
96,550,479
271,975,917
96,550,479
604,255,799
283,721,527
96,550,479
96,550,479
359,055,260
113,266,394
117,341,342
389,299,003
123,416,049
96,550,479
138,015,397
96,550,479
192,780,879
748,500,523
96,550,479
96,550,479

816

October 6, 2008

Area

Allocation

Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming

96,550,479
241,483,115
202,541,072
96,550,479
175,400,093
96,550,479

Total

3.4 Use and Carryforward of 2008
Housing Act Volume Cap
New § 146(f)(6), added by § 3021(a)(2)
of the 2008 Housing Act, provides that
any carryforwards of 2008 Housing Act
Volume Cap may be used only for qualified housing issues that are issued by the
end of calendar year 2010. Certain interpretive questions have arisen about allocations and carryforwards of 2008 Housing
Act Volume Cap in relation to General Volume Cap.
In order to facilitate prompt and flexible use of the 2008 Housing Act Volume
Cap to address challenges in the housing
market within the limited time-frame provided for this purpose, the Internal Revenue Service will afford issuers flexibility in their use of 2008 Housing Act Volume Cap and in coordinating the use of
this volume cap with their General Volume Cap. Accordingly, the 2008 Housing
Act Volume Cap should be tracked and accounted for separately from General Volume Cap. Further, in this regard, for purposes of both initial allocations and carryforwards of 2008 Housing Act Volume
Cap and General Volume Cap, including,
without limitation, the “first-in, first-out”
ordering rule for carryforwards of General Volume Cap under § 146(f)(3)(B), an
issuer may in its discretion utilize 2008
Housing Act Volume Cap or carryforwards
of 2008 Housing Act Volume Cap either
before or after the use of General Volume
Cap or carryforwards of General Volume
Cap.
In applying § 146(f)(2) regarding identification of carryforward purposes for
2008 Housing Act Volume Cap, it is sufficient to identify such carryforwards for
use for “qualified housing issues.” Thus,
issuers retain the flexibility to use such
carryforwards for the different types of
qualified housing issues as needs dictate.

October 6, 2008

11,000,000,000

Further, in order to provide flexibility,
an issuer who files a proper carryforward
election for 2008 Housing Act Volume Cap
may assign any portion of that 2008 Housing Act Volume Cap to another eligible issuer in the state.
3.5 Refinancing of Qualified Subprime
Loans under the 2008 Housing Act
Section 3021(b) of the 2008 Housing
Act provides temporary authority under
new § 143(k)(12) to refinance qualified
subprime loans with qualified mortgage
bonds under § 143 that are issued by the
end of calendar year 2010. This provision applies to qualified mortgage bonds
issued pursuant to General Volume Cap as
well as 2008 Housing Act Volume Cap.
Section 143(k)(12)(A) provides an exception to the new mortgage requirement under § 143(i)(1) to allow such refinancings. Section 143(k)(12)(B) provides the
following special rules for such refinancings: (i) the general 42-month loan origination period under § 143(a)(2)(D)(i) is
shortened to 12 months; (ii) the rule under § 143(d) limiting borrowers to those
who had no ownership interest in a home
in the preceding three years is inapplicable; and (iii) the purchase price limitation
under § 143(e) applies based on the market
value of the residence at the time of refinancing in lieu of the acquisition cost.
Section 143(k)(12)(C) defines the term
“qualified subprime loan” to mean an
adjustable rate single-family residential
mortgage loan made after December 31,
2001 and before January 1, 2008 that the
bond issuer determines would be reasonably likely to cause financial hardship to
the borrower if not refinanced. For this
purpose, issuers may base determinations
with respect to likely financial hardship to
borrowers on reasonable estimates made
in good faith.

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For qualified subprime loan refinancings to be funded from qualified mortgage
bonds that have received an allocation of
General Volume Cap (as opposed to 2008
Housing Act Volume Cap), an issuer may
make proceeds of such bonds available for
use for qualified subprime loan refinancings during the permitted 12-month origination period for such loans, and then either redeem bonds from unused proceeds
or make such proceeds available for regular qualified mortgage loans under § 143
for the balance of the permitted 42-month
origination period for such loans under the
general rules for qualified mortgage bonds
under § 143(a)(2)(D) before redemption of
bonds from unused proceeds. Qualified
mortgage bonds that receive an allocation
of 2008 Housing Act Volume Cap must apply all unused proceeds to the redemption
of bonds after the 12-month period as provided in § 146(d)(5)(B)(ii)(II), as added by
§ 3021(a) of the 2008 Housing Act.
3.6 Information Reporting and
Carryforward Elections for Use of 2008
Housing Act Volume Cap
Subject to updated IRS information reporting forms or procedures, an issuer of
a qualified housing issue that uses 2008
Housing Act Volume Cap should make the
following modifications to the IRS Information Return for Tax-Exempt Private Activity Bond Issues on Form 8038 filed with
respect to the issue:
1.
2.

3.

Report the bond issue on Line 20c of
IRS Form 8038;
If the bond issue is an issue described
in § 142(a)(7) (relating to qualified
residential rental projects), enter the
following description: “2008 Housing Act Qualified Housing Issue under 142”;
If the bond issue is a qualified mortgage issue (determined by substituting “12-month period” for “42-month

2008–40 I.R.B.

period” each place it appears in
§ 143(a)(2)(D)(i)), enter the following description: “2008 Housing Act
Qualified Housing Issue under 143”;
4. Issuers of qualified housing issues that
use a carryforward of 2008 Housing
Act Volume Cap should complete line
44b by attaching a copy of the IRS
Carryforward Election of Unused Private Activity Bond Volume Cap on
Form 8328 filed in accordance with
the procedures described in this notice
for the carryforward of such unused
2008 Housing Act Volume Cap.
Subject to updated IRS information reporting forms or procedures, an issuer that
has unused 2008 Housing Act Volume Cap
at the end of calendar year 2008 should
elect this carryforward amount by filing
a separate IRS Form 8328, Carryforward
Election of Unused Private Activity Bond
Volume Cap, on Form 8328 for such carryforward as modified by the following instructions:
1.

2.

3.

Write across the top of the IRS Form
8328 the following: “Carryforward of
2008 Housing Act Volume Cap”;
Complete Part I in accordance with
the instructions on the form, except
that, on line 9, under Report Number,
enter “99” after the preprinted “9”;
Complete Part II by entering the following amounts:
a. Line 1: Indicate total 2008 Housing Act Volume Cap of the issuer
as provided in this notice.
b. Line 2: Enter the aggregate
amount of qualified housing issues issued in 2008 that were
taken into account for purposes
of the 2008 Housing Act Volume
Cap.
c. Line 3: Enter the total amount of
2008 Housing Act Volume Cap
exchanged for authority to issue
mortgage credit certificates.
d. Line 4: Skip this line.
e. Line 5: Add lines 2 and 3.
f. Line 6: Enter unused 2008 Housing Act Volume Cap (line 1 minus
line 5).
g. Skip lines 7 through 10j.
h. Line 11: Enter the total carryforward amount of 2008 Housing
Act Volume Cap (not to exceed
line 6).

2008–40 I.R.B.

i.

Under “Purpose of Form” in the
instructions, ignore references to
the use of the carryforward for
three calendar years. Carryforwards of 2008 Housing Act Volume Cap may only be used for
bonds issued by December 31,
2010.
j. File the IRS Form 8328 by the
due date provided in the instructions.
Issuers who have both unused General
Volume Cap and 2008 Housing Act Volume Cap should file separate carryforward
elections for each of those carryforwards.
A carryforward election for General Volume Cap should follow the instructions
on IRS Form 8328 and a carryforward
election for 2008 Housing Act Volume
Cap should follow the instructions on IRS
Form 8328 with the modifications provided in this notice.
SECTION 4. Use of 2008 Housing
Act Volume Cap for Mortgage Credit
Certificates
In general, mortgage credit certificates
under § 25 provide Federal subsidies to
borrowers in the form of Federal tax credits with respect to eligible home mortgage
loans that are similar to the Federal subsidies provided through qualified mortgage
loans at subsidized interest rates financed
with tax-exempt qualified mortgage bonds
under § 143. The program restrictions on
mortgage credit certificates under § 25 are
substantially identical to the program restrictions on qualified mortgage bonds under § 143. Section 25(a) allows a taxpayer
a credit against income tax for any taxable
year in an amount equal to the product of
the certificate credit rate and the interest
paid or accrued by the taxpayer during the
taxable year on the remaining principal of
the certified indebtedness amount.
In addition, § 25(c)(2) basically allows
an issuer to elect to exchange unused taxexempt private activity bond volume cap
authority under § 146 with respect to qualified mortgage bonds under § 143 for a
prescribed amount of mortgage certificate
issuance authority. Section 146(n) provides that the applicable private activity
bond volume cap authority of any issuer
for any calendar year is reduced by the sum
of the amount of qualified mortgage bonds
that such issuer elects not to issue under

818

§ 25(c)(2)(A)(ii) during such year, plus the
amount of any reduction in such ceiling
under § 25(f) for noncompliance of such
issuer for such year.
An interpretive question has arisen regarding whether an issuer may elect to exchange unused authority to issue private
activity bonds with the 2008 Housing Act
Volume Cap under § 146 for authority to issue mortgage credit certificates under § 25.
For calendar years 2008 through 2010, in
determining the amount of private activity
bonds that an issuer may otherwise issue
in such years, § 25(c)(2)(A)(ii) is applied
by taking into account any 2008 Housing
Act Volume Cap authority or carryforward
of such 2008 Housing Volume Cap authority allocated to such issuer. Consequently,
for calendar years 2008 through 2010 an
issuer may elect to exchange such unused
2008 Housing Act Volume Cap authority
under § 146 for mortgage credit certificate
authority under § 25. Consistent with the
requirements of new § 146(d)(5)(B)(ii)(II)
added by § 3021(a) of the 2008 Housing Act, an issuer may elect to exchange
2008 Housing Act Volume Cap authority for mortgage credit certificate authority
only if the indebtedness to which the mortgage credit certificate relates is incurred
within 12 months of the date of the election under § 25(c)(2)(A)(ii) not to issue an
amount of private activity bonds which it
may otherwise issue during the calendar
year under § 146.
In addition, an issuer may elect to issue
mortgage credit certificates to refinance
qualified subprime loans if it otherwise
satisfies the requirements of § 143(k)(12),
as added by § 3021(b) of the 2008 Housing Act. Any such qualified subprime
loan refinancing must be incurred within
12 months after such election. Further, an
issuer must make any such election with
respect to such mortgage credit certificates
by December 31, 2010.
SECTION 5. Information Reporting of
Subprime Refinancing Loans
Issuers who issue bonds under § 143
of the Code and expect to use the proceeds for the refinancing of qualified subprime loans under § 143(k)(12), as added
by § 3021 of the 2008 Housing Act, should
attach a schedule to the IRS Form 8038
filed with respect to the issue that indicates the amount of proceeds that are rea-

October 6, 2008

sonably expected to be used to refinance
qualified subprime loans. An issuer must
comply with this information reporting requirement regardless of whether the bonds
are being issued using General Volume
Cap or 2008 Housing Act Volume Cap.
The issuer may determine the amount of
bond proceeds that it expects to use to
refinance qualified subprime loans under
§ 143(k) based on a reasonable good faith
estimate of the amount of bond proceeds
expected to be used for this purpose. Issuers who do not in fact utilize the full
amount indicated on the schedule to refinance qualified subprime loans are permitted to apply such unused amounts to the
financing of mortgage loans otherwise eligible to be financed under § 143.
SECTION 6. Exclusion of Military
Basic Housing Allowances from Income
for Certain Purposes Under § 142 and
§ 42
In general, §§ 142(d) and 42(g) impose similar low-income set-aside restrictions on incomes of eligible residents of
prescribed numbers of housing units in
qualified residential rental projects and
qualified low-income housing projects

for purposes of eligibility for tax-exempt
private activity bond financing under
§ 142(a)(7) and for low-income housing
tax credits under § 42, respectively. In
addition, § 142(d)(2)(B) applies to determinations of income both for § 142 and
§ 42 purposes.
Section 3005(a) of the 2008 Housing Act renumbered § 142(d)(2)(B)
as § 142(d)(2)(B)(i) and added new
§ 142(d)(2)(B)(ii), (iii) and (iv) to the
Code. Section 142(d)(2)(B)(ii) excludes
military basic allowance payments under
§ 403 of title 37, United States Code, from
income for purposes of income limitations
under § 142(d)(2)(B) for certain qualified buildings. Section 142(d)(2)(B)(iii)
defines a “qualified building” to mean
a building located: (I) in any county in
which is located a qualified military installation to which the number of members of
the Armed Forces of the United States assigned to units based out of such qualified
military installation, as of June 1, 2008,
has increased by not less than 20 percent,
as compared to such number on December
31, 2005, or (II) in any county adjacent to
a county described in subclause (I). Section 142(d)(2)(B)(iv) defines a “qualified

military installation” to mean any military
installation or facility that has at least one
thousand members of the Armed Forces of
the United States assigned to it as of June
1, 2008.
The following list identifies military installations that are deemed to be qualified
military installations that satisfy the 20
percent population increase requirement
under § 142(d)(2)(B)(iii)(I) for purposes of
the exclusion of basic housing allowance
payments to military members in determining income under § 142(d)(2)(B). The
Internal Revenue Service will update this
list if it receives additional information
indicating that other military installations
should receive the same treatment. Issuers
may rely on this list for income determinations made after the date of enactment
of the 2008 Housing Act and before any
successor list is published. The following list is not meant to be exclusive and
any qualified military installation within
the meaning of § 142(d)(2)(B)(iv) which
satisfies the percentage requirements of
§ 142(d)(2)(B)(iii)(I) would be eligible to
receive similar treatment regardless of its
failure to be included in this list or in any
future updates.

Name of Military Installation

State

U.S. Air Force Academy

Colorado

Fort Shafter

Hawaii

Fort Riley

Kansas

Annapolis Naval Station (including U.S. Naval Academy)

Maryland

Fort Jackson

South Carolina

Fort Bliss

Texas

Fort Hood

Texas

Dam Neck Training Center Atlantic

Virginia

Naval Station Bremerton

Washington

Section 3005(b) of the 2008 Housing
Act limits the scope of application of this
exclusion of basic housing allowances
from income under § 142(d)(2) in a number of significant technical respects, as
described therein. Further, this exclusion
is inapplicable to tax-exempt bonds for
qualified residential rental projects issued
under § 142(a)(7) unless the project also
receives low-income housing tax credits
under § 42.

October 6, 2008

SECTION 7. Temporary Authority
for Federal Home Loan Banks to
Guarantee Tax-Exempt Bonds
Section 3023 of the 2008 Housing
Act added new § 149(b)(3)(A)(iv) to
provide a temporary exception to the
general restriction against Federal guarantees of tax-exempt bonds under § 149(b)
for certain guarantees made by Federal
Home Loan Banks. In particular, new
§ 149(b)(3)(A)(iv) provides that this Fed-

819

eral guarantee restriction is inapplicable
to a guarantee by a Federal Home Loan
Bank made in connection with the “original issuance” (emphasis added) of a bond
during the period beginning on the date
of enactment of the 2008 Housing Act
and ending on December 31, 2010 (or
a renewal or extension of a guarantee
so made). Section 3023(b) of the 2008
Housing Act also adds new § 149(b)(3)(E)
which requires guarantees by a Federal
Home Loan Bank to meet certain safety

2008–40 I.R.B.

and soundness collateral requirements as
described therein.
An interpretive question has arisen
regarding the meaning of an “original issuance” during the relevant period and
whether both bonds for new money purposes (e.g., to finance construction or
acquisition costs in the first instance) and
refunding bonds for refinancing purposes
may be treated as originally issued during
the relevant period and thereby be eligible
for Federal Home Loan Bank guarantees.
For this purpose, any tax-exempt bond,
including a bond for new money purposes
and a bond that is part of a refunding issue
(as defined in § 1.150–1(d) of the Income
Tax Regulations) that is issued during the
relevant period may be eligible for Federal
Home Loan Bank guarantees under new
§ 149(b)(3)(A)(iv).
SECTION 8. Effective Date
This notice is effective as of the date of
enactment of the 2008 Housing Act on July
30, 2008.
SECTION 9. Effect on Other
Documents
Notice 88–80, 1988–2 C.B. 396, is
modified to the extent provided by Section
6 of this notice for the periods applicable
under section 3005 of the 2008 Housing
Act.
SECTION 10. Paperwork Reduction
Act
The information collection contained in
this notice has been approved by the Office of Management and Budget (OMB) in
accordance with the Paperwork Reduction
Act (44 U.S.C. chapter 35) under control
number 1545–2119. Under the Paperwork
Reduction Act, an agency may not conduct
or sponsor and a person is not required to
respond to a collection of information unless it displays a valid OMB control number.
The collections of information in this
notice are in Section 3.6 and Section 5.
The information is required in order to
report tax-exempt bond issues that receive allocations of the 2008 Housing Act
Volume Cap, to report the carryforward
of unused amounts of 2008 Housing Act
Volume Cap, and to report the estimated
amount of proceeds expected to be used to

2008–40 I.R.B.

refinance qualified subprime loans. This
information will be used to quantify the
use and carryforward of 2008 Housing
Act Volume Cap and the refinancing of
qualified subprime loans. The collections
of information are mandatory. The likely
respondents are state or local governmental issuers of tax-exempt housing bonds.
We estimate the total number of respondents to be 100 and the total annual responses to be 150. We estimate it will take
2 hours to comply. Estimates of the annualized cost to respondents for the hour burdens shown are not available at this time.
Books or records relating to a collection
of information must be retained as long
as their contents may become material in
the administration of any internal revenue
law. Generally, tax returns and tax return
information are confidential, as required
by 26 U.S.C. 6103.
SECTION 11. Drafting Information
The principal authors of this notice
are Aviva M. Roth and Carla Young of
the Office of Associate Chief Counsel
(Financial Institutions & Products). For
further information regarding this notice,
contact Aviva M. Roth or Carla Young at
(202) 622–3980 (not a toll-free call).

Tax-Exempt Bond
Partnerships: Eligibility
for Monthly Closing Elections
Notice 2008–80
SECTION 1. Purpose.
In order to provide greater administrative certainty in a major short-term
sector of the tax-exempt bond market in
response to taxpayer requests and to promote stability in this sector of the market,
the Treasury Department and the Internal Revenue Service (“IRS”) propose to
issue a revenue procedure substantially
in the form included in section 5 of this
notice. The proposed revenue procedure
would modify and supersede Rev. Proc.
2003–84, 2003–2 C.B. 1159. The proposed revenue procedure would provide
certain more specific eligibility criteria
that partnerships that invest in tax-exempt
bonds must meet to qualify for monthly
closing elections to allow the partners to

820

take into account monthly the inclusions
required under §§ 702 and 707(c) of the Internal Revenue Code of 1986, as amended
(the “Code”). The Treasury Department
and the IRS are issuing this guidance in
proposed form to afford an opportunity for
public comment and to limit any potential
impact on the current market.
SECTION 2. Request for Comments.
The Treasury Department and the IRS
seek public comments on all aspects of the
proposed revenue procedure, including
comments on ways to facilitate market
innovation consistent with promoting
administrative certainty and sound tax policy. The Treasury Department and the IRS
seek specific public comment on whether
or under what circumstances the proposed
revenue procedure should apply when the
variable interest holder has a minimum
gain share percentage of less than five
percent, such as circumstances in which
the variable-rate interest holders receive
particular rights to control sales of underlying tax-exempt bond assets held by a
tax-exempt bond partnership. The Treasury Department and the IRS also seek
specific comment on whether or under
what circumstances the proposed revenue
procedure should be expanded to allow
qualifying income from assets beyond
original assets of the partnership referred
to in § 4.02(3) of the proposed revenue
procedure. The Treasury Department and
the IRS also seek specific comment on
whether or under what circumstances the
proposed revenue procedure should be
expanded to allow application to any other
types of transactions besides the contemplated tax-exempt bond partnerships.
Before the proposed revenue procedure
described in this notice is made effective,
consideration will be given to any written
public comments on this notice that are
submitted in a timely fashion by December
15, 2008. A signed original and eight (8)
copies of public comments should be sent
by mail to the IRS at CC:PA:LPD:PR (reference IRS Notice 2008–80), Room 5203,
Internal Revenue Service, PO Box 7604,
Ben Franklin Station, Washington, DC
20044. Public comments also may be sent
electronically, via the IRS Internet site at
www.irs.gov/regs or via the Federal eRulemaking portal at www.regulations.gov
(reference IRS Notice 2008–80). All

October 6, 2008