United States: IRS Provides Procedures For Telephonic Public Approval Hearings For Private Activity Bonds

In light of the COVID-19 crisis, many governmental issuers have canceled their in-person public hearings and replaced them with "virtual hearings" where no one is present in the same physical location.

The IRS has released guidance in Revenue Procedure 2020-21 (the Guidance), which allows for remote telephonic hearings to qualify as "public hearings" required for private activity bonds under Section 147(f) of the Internal Revenue Code of 1986, as amended (the Code). To qualify, the hearing must be held by teleconference accessible to the residents of the approving governmental unit by calling a toll-free telephone number. That toll-free number and the procedures for calling in with comments should be published in the public notice for the hearing. In addition to this telephonic access, the approving governmental unit may also offer additional access to the hearing by other telephone numbers or by internet-based meeting technology.

Points to Consider

The Guidance applies only to hearings held telephonically — thus internet only or other non-telephonic hearings do not qualify.

The Guidance applies to public hearings held from May 4, 2020, through Dec. 31, 2020, but may be applied retroactively to public hearings held telephonically before May 4, 2020, in response to the COVID-19 pandemic. In addition, for public meetings for which a public notice of that meeting is published on or before May 11, 2020, if that notice is published no fewer than seven calendar days before the hearing, the notice will satisfy the requirement for public approval 1) if the public hearing is held telephonically and otherwise qualifies under the Guidance, and 2) if the toll-free number to call into the meeting described above is provided at least 48 hours prior to the hearing on the primary website of the approving governmental unit in the area of the website used to inform residents of events affecting them.

Originally published 5 May, 2020

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