On May 7 AMWA was part of a broad coalition of stakeholders that asked members of Congress to support legislation to reinstate the ability of communities to issue tax-free advance refunded bonds.
The letter requests support for passage of H.R. 5003, a bill that would reinstate the federal tax exemption on interest earned on advance refunded bonds that was eliminated in last year’s tax reform bill. Previously, federal law gave communities a one-time opportunity to advance refund a bond and reissue new tax-free municipal debt when interest rates fell, thereby reducing interest costs by effectively allowing cities and towns to refinance tax-exempt bonds. However, last year’s tax bill ended the tax exemption for interest earned on advance refunded bonds, thus reducing their attractiveness to investors and their savings potential to communities.
Republican congressional leaders are not eager to roll back portions of the tax code overhaul they approved last year, but continued advocacy in support of H.R. 5003 could prompt Congress to revisit the advance refund issue in the future.