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October 04
Shutdown May Affect Build America Bond Subsidy Payments

As the government shutdown continued this week, its impact on the bond market has yet to be fully realized, but there is cause for concern for entities (especially counties) who have issued Build America Bonds (BABs). The Internal Revenue Service (IRS) has not issued official guidance on how BABs subsidy payments should be handled, but given that 90 percent of the IRS staff is furloughed, and to the extent that subsidy payments are treated as tax refunds, payments to BABs issuers will likely be suspended during the shutdown. The less than 10 percent of IRS staff who are exempt from furlough will focus primarily on upholding tax laws.

Contact: Mike Belarmino at mbelarmino@naco.org or 202.942.4254

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