There is one thing everyone is missing. The issuance of tax free bonds requires special lawyers, Bond Consul, Bond Consul writes the bonds and the bonds are approved by The IRS as non taxable bonds prior to being sold.
If a mistake is made by Bond Consul causing the IRS to claim the Bonds as taxable then Bond Consul and their insurance are as much on the line as the issuer of the bonds. There are many deep pockets in front of the residents.
I think that whatever the final ruling is will have a much larger effect on new bond issues than it will on the current issue.
For the IRS CDD's issuing bonds is new territory because CDD's are a new quasi form of government that have become popular in retirement communities so every ruling is precedent setting. I could see this going either way with no monetary penalties but changing precedent for future bond issues.
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