Feds versus state...
Stantheman,
there's no "conflict" between florida law and federal law because they address different things.
florida law creates a community development district and gives it power to issue bonds. i do not believe the law says does not say "tax exempt bonds."
the federal tax codes specify what makes a bond issue meet the test of "tax exempt." the IRS is applying the code to this issue and saying that it doesn't meet the test.
the district's defense is that it is a government under florida law and as such, it should be able to issue tax-exempt bonds.
the IRS says that argument is specious. its response: 'well, you might be a government under florida law, but state law doesn't matter to us when determining whether bonds are tax exempt. the two do NOT necessarily go together.'
that is what the agent meant when when he declared that the district's attorney archie lowry had made an "irrelevant" argument.
the IRS has a set of tests that it applies to any bond issue anywhere in the united states. pass, and it's tax-exempt. fail and it's not.
so, at the end of the day, these bonds could be declared formally as taxable and the district is still just as much a valid government under florida law as it was yesterday.
hope that helps.
--lauren
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