In May 2006, the Internal Revenue Service (“IRS”) passed the Tax Increase Prevention and Reconciliation Act of 2005 (the “Act”). The Act makes it a requirement to report to the IRS all payments to bond holders of tax-exempt interest earned in a calendar year. This requirement is effective for all tax-exempt interest paid in calendar year 2006 and every year thereafter. The passage of the Act does not mean that the tax-exempt status of the bonds has changed. It simply means that tax-exempt interest must be reported to the IRS the same way taxable interest is reported.
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