In July, the Internal Revenue Service (IRS) published new arbitrage regulations, which are intended to finalize proposed rules from 2007 and 2013. The final regulations will take effect on October 16, 2016 and will make minor changes to the proposed regulations.
While the application of the proposed rules has been optional, issuers will now be required to follow the final tax regulations. However, because many issuers have applied the proposed regulations, the final IRS rules do not present major changes for most issuers. Also, although the regulations pertain to tax-advantaged obligations issued on or after October 16, 2016, issuers may choose to apply certain provisions to obligations outstanding as of the effective date. These new regulations do not address the more controversial issue price rules, which will be the subject of future rule making.