Internal Revenue Bulletin 2019-8 (PDF rendition): IRS Notices

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HIGHLIGHTS
OF THIS ISSUE
These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.
EMPLOYEE PLANS
Notice 2019–13, page 580.
This notice sets forth updates on the corporate bond monthly
yield curve, the corresponding spot segment rates for January
2019 used under § 417(e)(3)(D), the 24-month average seg-
ment rates applicable for January 2019, and the 30-year Trea-
sury rates, as reflected by the application of § 430(h)(2)(C)(iv).
EMPLOYMENT TAX
Action On Decision 2019–01, page 569.
Acquiescence in result only as to whether a professional
hockey team’s expenses for providing pregame meals at away
city hotels were fully deductible because they were provided at
employer-operated facilities.
INCOME TAX
T.D. 9845, page 570.
Under § 147(f) of the Code, a private activity bond is not
tax-exempt if it is not approved by both the governmental unit
issuing the bond and the governmental unit in which the fi-
nanced property will be located. These final regulations update
the existing regulations to address changes in the Code and to
provide issuers of private activity bonds additional flexibility in
satisfying the approval requirement.
Finding Lists begin on page ii.
Bulletin No. 2019–08
February 19, 2019

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and en-
force the law with integrity and fairness to all.
Introduction
The Internal Revenue Bulletin is the authoritative instrument of
the Commissioner of Internal Revenue for announcing official
rulings and procedures of the Internal Revenue Service and for
publishing Treasury Decisions, Executive Orders, Tax Conven-
tions, legislation, court decisions, and other items of general
interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all
substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless other-
wise indicated. Procedures relating solely to matters of internal
management are not published; however, statements of inter-
nal practices and procedures that affect the rights and duties
of taxpayers are published.
Revenue rulings represent the conclusions of the Service on
the application of the law to the pivotal facts stated in the
revenue ruling. In those based on positions taken in rulings to
taxpayers or technical advice to Service field offices, identify-
ing details and information of a confidential nature are deleted
to prevent unwarranted invasions of privacy and to comply with
statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned
against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions of
the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A, Tax
Conventions and Other Related Items, and Subpart B, Legisla-
tion and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative Rul-
ings. Bank Secrecy Act Administrative Rulings are issued by
the Department of the Treasury’s Office of the Assistant Sec-
retary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbar-
ment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index for
the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.
The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.
February 19, 2019Bulletin No. 2019–08

Actions Relating to
Decisions of the Tax Court
It is the policy of the Internal Revenue
Service to announce at an early date
whether it will follow the holdings in cer-
tain cases. An Action on Decision is the
document making such an announcement.
An Action on Decision will be issued at
the discretion of the Service only on un-
appealed issues decided adverse to the
government. Generally, an Action on De-
cision is issued where its guidance would
be helpful to Service personnel working
with the same or similar issues. Unlike a
Treasury Regulation or a Revenue Ruling,
an Action on Decision is not an affirma-
tive statement of Service position. It is not
intended to serve as public guidance and
may not be cited as precedent.
Actions on Decisions shall be relied
upon within the Service only as conclu-
sions applying the law to the facts in the
particular case at the time the Action on
Decision was issued. Caution should be
exercised in extending the recommenda-
tion of the Action on Decision to similar
cases where the facts are different. More-
over, the recommendation in the Action
on Decision may be superseded by new
legislation, regulations, rulings, cases, or
Actions on Decisions. Prior to 1991, the
Service published acquiescence or nonac-
quiescence only in certain regular Tax
Court opinions. The Service has expanded
its acquiescence program to include other
civil tax cases where guidance is deter-
mined to be helpful. Accordingly, the Ser-
vice now may acquiesce or nonacquiesce
in the holdings of memorandum Tax
Court opinions, as well as those of the
United States District Courts, Claims
Court, and Circuit Courts of Appeal. Re-
gardless of the court deciding the case, the
recommendation of any Action on Deci-
sion will be published in theInternal
Revenue Bulletin.
The recommendation in every Action
on Decision will be summarized as acqui-
escence, acquiescence in result only, or
nonacquiescence. Both “acquiescence”
and “acquiescence in result only” mean
that the Service accepts the holding of the
court in a case and that the Service will
follow it in disposing of cases with the
same controlling facts. However, “acqui-
escence” indicates neither approval nor
disapproval of the reasons assigned by the
court for its conclusions; whereas, “acqui-
escence in result only” indicates disagree-
ment or concern with some or all of those
reasons. “Nonacquiescence” signifies that,
although no further review was sought,
the Service does not agree with the hold-
ing of the court and, generally, will not
follow the decision in disposing of cases
involving other taxpayers. In reference to
an opinion of a circuit court of appeals, a
“nonacquiescence” indicates that the Ser-
vice will not follow the holding on a na-
tionwide basis. However, the Service will
recognize the precedential impact of the
opinion on cases arising within the venue
of the deciding circuit.
The Commissioner ACQUIESCES in
result only to the following decision:
Jacobs v. Commissioner, 148 T.C.
No. 24 (2017),
1
1
Acquiescence in result only as to whether a professional hockey team’s expenses for providing pregame meals at away city hotels were fully deductiblebecause they were provided at
employer-operated facilities.
Bulletin No. 2019–08February 19, 2019
569

Part I. Rulings and Decisions Under the Internal Revenue Code
of 1986
26 CFR 1.147(f)–1: Public approval of private ac-
tivity bonds
T.D. 9845
DEPARTMENT OF THE
TREASURY
Internal Revenue Service
26 CFR Parts 1 and 5f
Public Approval of Tax-
Exempt Private Activity Bonds
AGENCY:Internal Revenue Service (IRS),
Treasury.
ACTION: Final regulation.
SUMMARY: This document contains fi-
nal regulations on the public approval re-
quirement applicable to tax-exempt pri-
vate activity bonds issued by State and
local governments. The final regulations
update and replace existing regulations to
address statutory changes, streamline the
public approval process, and reduce ad-
ministrative burdens. The final regulations
affect State and local governments that
issue tax-exempt private activity bonds.
DATES:Effective date: These regulations
are effectiveDecember 31, 2018
Applicability date: For dates of appli-
cability, see § 1.147(f)–1(h).
FOR FURTHER INFORMATION CON-
TACT:Spence Hanemann, (202) 317-
6980 (not a toll-free number).
SUPPLEMENTARY INFORMATION:
Paperwork Reduction Act
The collection of information con-
tained in these final regulations has been
reviewed and approved by the Office of
Management and Budget in accordance
with the Paperwork Reduction Act of
1995 (44 U.S.C. 3507(d)) under OMB
Control Number 1545-2185. The collec-
tion of information in these final regula-
tions is the requirement in § 1.147(f)–1
that certain information be contained in a
public notice or public approval and, con-
sequently, disclosed to the public. This
information is required to meet the statu-
tory public approval requirement provided
in section 147(f) of the Internal Revenue
Code.
An agency may not conduct or spon-
sor, and a person is not required to re-
spond to, a collection of information un-
less it displays a valid control number
assigned by the Office of Management
and Budget.
Books or records relating to a collec-
tion of information must be retained as
long as their contents may become mate-
rial in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential, as
required by 26 U.S.C. 6103.
Background
This document contains amendments
to 26 CFR part 1 under section 147(f) of
the Internal Revenue Code of 1986 (Code)
and 26 CFR part 5f under section 103(k)
of the Internal Revenue Code of 1954
(1954 Code). In the Tax Equity and Fiscal
Responsibility Act of 1982 (TEFRA),
Public Law 97–248, 96 Stat. 324, Con-
gress redesignated subsection (k) of sec-
tion 103 of the 1954 Code as subsection
(l) and inserted a new subsection (k) that
imposed a public approval requirement on
tax-exempt industrial development bonds.
On May 11, 1983, the Department of the
Treasury (Treasury Department) and the
IRS published in theFederal Register(48
FR 21115) temporary regulations under sec-
tion 103(k) of the 1954 Code (TD 7892)
(Existing Regulations). See § 5f.103–2. A
notice of proposed rulemaking (LR–221–
82) by cross-reference to the temporary reg-
ulations was published in theFederal Reg-
ister(48 FR 21166) on the same day.
In the Tax Reform Act of 1986 (1986
Tax Act), Public Law 99–514, 100 Stat.
2085, Congress reorganized the tax-
exempt bond provisions and carried for-
ward the public approval requirement of
section 103(k) of the 1954 Code in ex-
panded form in section 147(f) of the Code.
In section 147(f), Congress extended the
public approvalrequirement to apply to all
types of tax-exempt private activity bonds,
as provided in section 141(e). The legisla-
tive history of the 1986 Tax Act states that
“[t]he conferees intend that, to the extent not
amended, all principles of present law con-
tinue to apply under the reorganized provi-
sions.” H.R. Rep. No. 99–841, at II–686
(1986) (Conf. Rep.). Thus, the Existing
Regulations in § 5f.103–2 remained in ef-
fect even after the 1986 Tax Act became
law.
On September 9, 2008, the Treasury
Department and the IRS published a no-
tice of proposed rulemaking (REG–
128841–07) in theFederal Register(73
FR 52220) that proposed regulations to
amend and supplement the Existing Reg-
ulations (2008 Proposed Regulations).
The Treasury Department and the IRS re-
ceived public comments on the 2008 Pro-
posed Regulations and held a public hear-
ing on January 26, 2009. On September
28, 2017, the Treasury Department and
the IRS withdrew the 2008 Proposed Reg-
ulations and published a second notice of
proposed rulemaking (REG–128841–07)
in theFederal Register(82 FR 45233)
(2017 Proposed Regulations). The Trea-
sury Department and the IRS received
comments on the 2017 Proposed Regula-
tions but did not hold a public hearing
because none was requested. After consid-
eration of all of the comments, the 2017
Proposed Regulations are adopted as
amended by this Treasury decision (Final
Regulations).
Summary of Comments and
Explanation of Revisions
This section discusses the public com-
ments received on the 2017 Proposed
Regulations and explains the revisions
made in the Final Regulations in response
to those comments.
1. Section 1.147(f)–1(d): Public Hearing
and Reasonable Public Notice
Under the2017 Proposed Regulations,
an issue of private activity bonds is ap-
proved by a governmental unit if a qualify-
ing elected representative of that govern-
mental unit approves the issue following a
public hearing for which there was reason-
able public notice. For this purpose, a public
hearing is generally defined as a forum that
February 19, 2019Bulletin No. 2019–08
570

provides a reasonable opportunity for inter-
ested individuals to express their views,
orally or in writing, on the proposed issue of
bonds and the location and nature of the
proposed project to be financed. Reasonable
public notice generally means a published
notice that is reasonably designed to inform
residents of the approving governmental
unit, including residents of the issuing unit
and the host governmental unit where a
project is to be located, of the proposed
issue.
A. Public Hearing
The 2017 Proposed Regulations pro-
vided that a governmental unit may im-
pose reasonable requirements on persons
who wish to participate in a public hear-
ing, such as a requirement that persons
desiring to speak at the hearing make a
written request to speak at least 24 hours
before the hearing. Onecommenter sug-
gested that the Final Regulations allow a
governmental unit to cancel a scheduled
public hearing if the governmental unit re-
ceived no timely requests to participate in
the hearing and published a supplemental
public notice. However, section 147(f)(2)
(B)(i) specifically requires a public hearing
before an elected official may approve the
issue. Furthermore, members of the public
may not always provide timely notice of
their intent to participate in a public hearing
and, in such cases, canceling the hearing
could frustrate the purpose of the public
hearing requirement. Therefore, the Trea-
sury Department and the IRS have con-
cluded that the Final Regulations should not
disregard the express requirement of hold-
ing a public hearing in section 147(f)(2)
(B)(i) by permitting a governmental unit to
cancel a public hearing. Accordingly, the
Final Regulations do not adopt this com-
ment.
Other commenters suggested alterna-
tive means to satisfy the public hearing
requirement. One commenter suggested
allowing a public hearing by teleconfer-
ence or webinar. The Treasury Depart-
ment and the IRS have determined that,
although these technologies may be effec-
tive for other purposes, they cannot re-
place a conventional public hearing con-
ducted in-person because they are not
sufficiently reliable, publicly available,
susceptible to public response, or uniform
in their features and operation. Another
commenter suggested allowing a public
hearing performed for any other federal,
state, or local purpose to satisfy the public
hearing requirement under section 147(f),
regardless of the procedures by which the
organizer publishes notice or conducts the
hearing. The Final Regulations defer to a
certain degree to state and local proce-
dures for conducting a public hearing and
publishing notice of that hearing. See
§ 1.147(f)–1(d)(3) and (d)(4)(iv) of the
Final Regulations. Furthermore, to the ex-
tent that a hearing conducted for another
governmental purpose satisfies all of the
requirements of section 147(f) and the Fi-
nal Regulations, such a hearing may serve
for both purposes. The Treasury Depart-
ment and the IRS have determined, how-
ever, that state and local procedures may
not supersede a specific requirement of
the Final Regulations. Accordingly, the
Final Regulations do not adopt either of
these comments.
B. Reasonable Public Notice
The Existing Regulations provide that
public notice is presumed reasonable if
published no fewer than 14 days before
the hearing. The 2008 Proposed Regula-
tions proposed to shorten this minimum
notice period from 14 days to seven days.
The 2017 Proposed Regulations proposed
to retain the 14-day period between notice
and hearing, citing a statement in the leg-
islative history of TEFRA referring to
such a time period. Several commenters
recommended shortening this minimum
notice period to seven days before the
public hearing, as proposed in 2008.
These commenters noted that, although a
portion of the legislative history includes
a reference to a 14-day notice period, the
statute does not require it. Commenters
also reasoned that the substantial in-
creases in the speed at which information
spreads to individual members of the pub-
lic and advances in technology since the
original enactment of this public approval
requirement in 1982 should warrant a
shorter public notice period. Accordingly,
the Final Regulations adopt this comment.
The Final Regulations treat notice as pre-
sumed to be reasonably designed to in-
form residents of an approving govern-
mental unit if, among other things, the
notice is given no fewer than seven days
before the public hearing.
The 2017 Proposed Regulations pro-
posed to treat notice as presumed to be
reasonably designed to inform residents of
an approving governmental unit if, among
other things, the notice was posted to the
approving governmental unit’s public
website. Many commenters supported this
proposed rule. Some commenters sug-
gested modifications to this rule. Several
commenters noted that issuers that issue
bonds on behalf of a governmental unit
may be unable to use this rule as pro-
posed. The proposed rule would permit
publication on the website of the approv-
ing governmental unit, but an on-behalf-of
issuer (such as a constituted authority that
acts on behalf of a city or county) may not
have the authority to post content to the
approving governmental unit’s website.
Commenters suggested permitting publi-
cation of a public notice on the website of
the on-behalf-of issuer as an alternative to
the website of the approving governmen-
tal unit. The Final Regulations adopt this
comment. The Final Regulations provide
that, for an issuer approval by an issuer
that acts on behalf of a governmental unit,
public notice may be posted on the public
website of either the on-behalf-of issuer or
the approving governmental unit.
The 2017 Proposed Regulations re-
quired that, for public notices by website,
a governmental unit also offer a reason-
able alternative notice method for resi-
dents without access to the internet. Com-
menters presented evidence that more
people regularly use the internet than use
a particular newspaper, radio station, or
television station. These commenters rec-
ommended removing the requirement for
an alternative notice method in the case of
publication by website. The Final Regula-
tions adopt this comment and eliminate
the requirement for an alternative method
of obtaining the information in a website
notice.
Further, to address concerns that a pub-
lic notice posted on a large, complex web-
site may be difficult for the intended re-
cipients of that public notice to locate, the
Final Regulations clarify that a public no-
tice must be posted on the governmental
unit’s primary public website in an area of
that website that is used to inform its
residents about events affecting the resi-
Bulletin No. 2019–08February 19, 2019
571

dents. In addition, issuers remain respon-
sible for maintaining records showing that
a public notice containing the requisite
information was timely posted to an ap-
propriate website. See § 1.6001–1.
The 2017 Proposed Regulations included
a provision in § 1.147(f)–1(d)(4)(iv) that
presumed notice to be reasonable if, among
other things, the notice was given in a way
permitted under a general state law for pro-
viding public notice of a public hearing held
by the approving governmental unit. The
2017 Proposed Regulations also included a
provision in § 1.147(f)–1(d)(3) that treated a
public hearing performed in compliance
with state procedural requirements as meet-
ing the public hearing requirements of sec-
tion 147(f) except to the extent in conflict
with a specific requirement of the proposed
regulations. One commenter expressed a
concern that these two provisions were in-
consistent. The Treasury Department and
the IRS have determined that these two
provisions of the 2017 Proposed Regu-
lations are not inconsistent. Inthis regard,
§ 1.147(f)–1(d)(3) addresses public hearings
and § 1.147(f)–1(d)(4) addresses public no-
tices. Upon consideration of this comment
and in response to concerns raised about the
accessibility of notices given under state
laws, the Final Regulations clarify that no-
tice given in a way a state permits under a
general law must still be reasonably acces-
sible to the residents of the approving gov-
ernmental unit.
2. Section 1.147(f)–1(e): Applicable
Elected Representative
The 2017 Proposed Regulations pro-
vided that an applicable elected represen-
tative of the approving governmental unit
may execute a public approval. The 2017
Proposed Regulations provided that the
applicable elected representative of a gov-
ernmental unit consists of any one of the
following: (1) The governmental unit’s
elected legislative body; (2) the govern-
mental unit’s chief elected executive offi-
cer; (3) in the case of a state, the chief
elected legal officer of the state’s execu-
tive branch of government; or (4) any
official elected by the voters of the gov-
ernmental unit and designated by the gov-
ernmental unit’s chief elected executive
officer or by state or local law to approve
issues for the governmental unit. One
commenter suggested expanding the def-
inition of an applicable elected represen-
tative to include the chairman of the gov-
erning board of a conduit issuer, if that
person is appointed by an elected official
to execute public approvals and empow-
ered to approve a bond resolution to au-
thorize an issuance of private activity
bonds. The 2017 Proposed Regulations
reflected the statutory definition of an ap-
plicable elected representative in section
147(f). This statutory definition generally
requires that an applicable elected repre-
sentative be either an elected official or a
body comprised of elected officials. Under
section 147(f)(2)(E)(i), the statute allows
an appointee of an elected official to serve
as an applicable elected representative
only in the event that the office of an
applicable elected representative is va-
cated and only for the remaining term of
the elected official who vacated that of-
fice. The Treasury Department and the
IRS have determined that expanding the
statutory definition of applicable elected
representative to permit the appointee of
an elected official to qualify as an appli-
cable elected representative on a perma-
nent basis would be inconsistent with the
purpose and content of the statute. Ac-
cordingly, the Final Regulations adopt
this provision as proposed.
3. Section 1.147(f)–1(f): Contents of
Notice and Approval
The 2017 Proposed Regulations pro-
vided that a project was within the scope
of a public approval if the requisite public
notice and the approval contained a gen-
eral functional description of the project,
the maximum stated principal amount of
bonds to be issued to finance the project,
the name of the initial owner or principal
user of the project, and a general descrip-
tion of the project’s location. The 2017
Proposed Regulations further provided
that a substantial deviation between the
information required to be provided in the
notice and approval and the actual use of
proceeds of the issue generally would
cause that issue to fail to meet the public
approval requirement.
A. Contents of Notice and Approval:
Maximum Stated Principal Amount of
Bonds
The 2017 Proposed Regulations pro-
vided that the public notice and public
approval must include the maximum
stated principal amount of the issue of
private activity bonds to be issued to fi-
nance the project. The 2017 Proposed
Regulations clarified that, if an issue fi-
nanced multiple projects, the notice and
approval must specify separately the max-
imum stated principal amount of bonds to
be issued to finance each separate project.
The 2017 Proposed Regulations further
provided that a deviation between the
maximum stated principal amount of
bonds to be used to finance a project that
is specified in the notice and approval and
the stated principal amount of bonds ac-
tually used to finance that project is an
insubstantial deviation if that actual stated
principal amount is no more than ten per-
cent (10%) greater than the amount in the
notice and approval or any amount less
than the amount in the notice and ap-
proval.
One commenter suggested the notice
and approval should require only the ag-
gregate maximum stated principal amount
of the bonds of the issue to be used to
finance all of the projects financed by the
issue. Another commenter similarly sug-
gested that a deviation between the max-
imum stated principal amount of the
bonds to be used to finance a project as
provided in the notice and approval and
the actual stated principal amount of the
bonds so used be calculated with respect
to the issue as a whole rather than indi-
vidually for each project. The Treasury
Department and the IRS have determined
that the relativeprincipal amounts within
an issue to be spent on each separate project
are relevant information for this public ap-
proval process. The approximate amount of
money used to fund a particular project is
evidence of the scope of that project and the
project’s potential impact on the local com-
munity. By contrast, the aggregate maxi-
mum stated principal amount of bonds fi-
nancing all projects financed by an issue is
essentially the stated principal amount of the
issue and conveys little additional informa-
tion about the relative scopes of the partic-
ular projects in multiple-project financings.
February 19, 2019Bulletin No. 2019–08
572

Accordingly, the Final Regulations do not
adopt these comments.
One commenter suggested clarifying
that the maximum stated principal amount
of bonds used to finance a project may be
determined on any reasonable basis and
may take into account contingencies, such
as cost overruns or failures to receive con-
struction approvals, without regard to
whether the occurrence of any such con-
tingency is reasonably expected at the
time of the notice or approval. Such a rule
would give issuers the flexibility to ac-
count for uncertainties that may arise after
the bonds are issued, and the prohibition
against a substantial deviation would as-
sure the accuracy of the public approval
information to an acceptable degree. The
Final Regulations adopt this comment.
One commenter suggested changing
the term “maximum stated principal
amount” of bonds to “maximum stated
paramount” of bonds. The Treasury De-
partment and the IRS have determined
that, for this purpose, these two terms
have the same meaning. The Final Regu-
lations do not adopt this comment and
retain the term “maximum stated principal
amount” as proposed.
B. Contents of Notice and Approval:
Initial Owner or Principal User
The 2017 Proposed Regulations pro-
vided that a project was within the scope
of a public approval if the public notice
and approval included the name of the
expected initial legal owner or principal
user of the project or, alternatively, the
name of the true beneficial party of inter-
est for such legal owner or user. One
commenter suggested clarifying that a
general partner of a partnership that owns
a project may be treated as a true benefi-
cial party of interest for this purpose. Rec-
ognizing that limited partnership owner-
ship structures are common among
exempt facilities under section 142, the
Treasury Department and the IRS have
determined that this clarification is war-
ranted. Accordingly, the Final Regula-
tions adopt this comment and include an
example clarifying that a public notice
and approval may name a general partner
of an owner of a project as a true benefi-
cial party of interest.
C. Contents of Notice and Approval:
Project Location
The Existing Regulations provide that
a facility is within the scope of a public
approval if the public notice and approval
contain the prospective location of the fa-
cility by its street address or, if none, by a
general description designed to inform
readers of its specific location. The 2017
Proposed Regulations required that the
public notice and approval include a gen-
eral description of the prospective loca-
tion of the project by street address, ref-
erence to boundary streets or other
geographic boundaries, or other descrip-
tion of the specific geographic location
that is reasonably designed to inform
readers of the location. One commenter
raised a concern that the phrase “specific
geographic location” in the 2017 Pro-
posed Regulations would be more restric-
tive than the language in the Existing Reg-
ulations and would be burdensome for
projects located at well-known landmarks,
which may be widely recognized by their
public name but may not have a street
address or identifiable geographic bound-
aries. The Treasury Department and the
IRS do not agree with the comment be-
cause, as noted above, the 2017 Proposed
Regulations and the Existing Regulations
both call for a general description of the
specific location. The Final Regulations
adopt this provision as proposed.
D. Special Rule for Pooled Financings
With Qualified 501(c)(3) Bonds
For qualified 501(c)(3) bonds issued to
finance pooled loan programs that are de-
scribed in section 147(b)(4)(B), the 2017
Proposed Regulations provided a special,
two-stage public approval process. At the
time that such bonds are issued, the issuer
may have only limited information about
the projects to be financed. Thus, for the
first stage of public approvals occurring
before the qualified 501(c)(3) bonds are
issued, the 2017 Proposed Regulations al-
lowed the public notice and approval to
include limited general information about
projects to be financed, such as the max-
imum stated principal amount of bonds
expected to finance loans to section
501(c)(3) organizations or governmental
units and a general description of the
types of projects to be financed with those
loans (for example, hospital facilities or
college facilities). For the second stage of
public approvals for these financings, be-
fore the issuer originates a loan to a sec-
tion 501(c)(3) organization or governmen-
tal unit, the 2017 Proposed Regulations
required a supplemental public approval
satisfying the ordinary requirements of
section 147(f) for the bonds financing that
loan. One commenter recommended that
no host approval be required at the time of
the limited pre-issuance public approval
before the qualified 501(c)(3) bonds are
issued because the specific project infor-
mation may be unknown at that time. The
Final Regulations adopt this comment.
Under the Final Regulations, for this type
of financing, an issuer may either meet the
general rules on the public approval re-
quirement or, alternatively, at the issuer’s
option, may meet the special rules for a
two-stage public approval process that re-
flects adoption of this comment. In partic-
ular, under this optional two-stage public
approval process, a pre-issuance issuer ap-
proval is required and a supplemental
post-issuance public approval, including
issuer approval and host approval, is re-
quired.
E. Timing of Hearing and Approval
The 2017 Proposed Regulations pro-
vided a safe harbor for the minimum pe-
riod of time between a notice of public
hearing and the public hearing. The 2017
Proposed Regulations also provided that
the approved bonds must be issued within
a certain period of time after the public
approval. Neither the Existing Regula-
tions nor the 2017 Proposed Regulations
restrict the period of time between a pub-
lic hearing and a public approval. One
commenter suggested that the Final Reg-
ulations impose a one-year maximum
time period between a public hearing and
a valid public approval. The Treasury De-
partment and the IRS have determined
that, although a period of one year be-
tween a public hearing and a public ap-
proval is reasonable, a longer period may
be reasonable in some circumstances. Fur-
ther, no such maximum period was pro-
posed. Accordingly, the Final Regulations
do not adopt this comment.
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573

4. Section 1.147(f)–1(g): Definitions
The Existing Regulations define a fa-
cility to mean a tract or adjoining tracts of
land, the improvements thereon, and any
personal property used in connection with
such real property. The Existing Regula-
tions further provide that non-adjoining
tracts of land may be treated as one facil-
ity only if they are used in an “integrated
operation.” The 2017 Proposed Regula-
tions use the term “project” rather than
“facility” and generally define a project as
one or more capital projects or facilities,
including land, buildings, equipment, and
other property, to be financed with an
issue, that are located on the same site, or
adjacent or proximate sites used for sim-
ilar purposes. This proposed definition of
project was intended to afford flexibility
for a single project to extend beyond a
single tract or adjoining tracts of land,
such as the case of a college campus on
adjacent or proximate sites. Because of
the potential difficulty of determining
whether facilities are used in an integrated
operation, the 2017 Proposed Regulations
proposed to remove the provision of the
Existing Regulations that allowed fi-
nanced assets on non-adjoining tracts of
land to be treated as one facility if those
assets were used in an integrated opera-
tion.
One commenter noted that, under the
2017 ProposedRegulations, two financed
properties that are located on non-proximate
sites could not be part of a single project,
whereas two such financed properties could
be part of a single facility under the Existing
Regulations if the properties were part of an
integrated operation. The commenter sug-
gested that this aspect of the definition of
project in the 2017 Proposed Regulations
was more burdensome than the definition of
facility in the Existing Regulations. In gen-
eral, the 2017 Proposed Regulations would
provide greater flexibility to permit a greater
physical distance between the sites included
in a project than would the Existing Regu-
lations, as the 2017 Proposed Regulations
would permit a single project to include
financed property at sites that are proximate
but not adjoining. The Final Regulations
generally adopt this more flexible definition
of project from the2017 Proposed Regu-
lations. In addition, to address this com-
menter’s concern, the Final Regulations
also retain the longstanding “integrated
operations” standard from the Existing
Regulations to allow capital projects or
facilities that are located on non-
proximate sites to be treated as a one
project if those capital projects or facil-
ities are used in an integrated operation.
The same commenter also suggested
adopting the very broad definition of proj-
ect from a different context involving
mixed-use projects under § 1.141–6(a)(3),
which generally includes any facilities or
capital projects financed in whole or in
part with proceeds of the issue. The com-
menter reasoned that the requirement in
the 2017 Proposed Regulations that the
public notice and approval include the
maximum stated principal amount of
the issue to be used to finance each project
would lock an issuer into a specific allo-
cation of bond proceeds to the project
as defined in section 147(f), whereas
§ 1.141–6 would permit floating alloca-
tions of bond proceeds to financed prop-
erty in certain cases. These two definitions
of project serve rules with different pur-
poses, and the different definitions reflect
those purposes. The Treasury Department
and the IRS have determined that, if the
public notice and approval presented this
information as an aggregate of all prop-
erty financed by the issue, members of the
public and approving officials would be
unable to extract and evaluate the portions
of the aggregate relevant to their respec-
tive roles in the public approval process.
The Final Regulations do not adopt this
comment.
5. Section 1.147(f)–1(h): Applicability of
the Final Regulations
The Final Regulations apply to bonds
issued pursuant to a public approval oc-
curring on or afterApril 1, 2019.Inad-
dition, in response to public comments, an
issuer may apply the provisions of
§ 1.147(f)–1(f)(6) of the Final Regulations
(regarding deviations in public approval
information) in whole, but not in part, to
bonds issued pursuant to a public approval
occurring beforeApril 1, 2019.
Special Analyses
This regulation is not subject to review
under section 6(b) of Executive Order
12866 pursuant to the Memorandum of
Agreement (April 11, 2018) between the
Department of the Treasury and the Office
of Management and Budget regarding re-
view of tax regulations. It is hereby certi-
fied that these regulations will not have a
significant economic impact on a substan-
tial number of small entities. The Existing
Regulations provide guidance on the min-
imum informational content, procedures,
and timing for the statutorily required
public notices, public hearings, and public
approvals. Although the Final Regulations
are expected to affect a significant number
of small state or local governmental units
that issue tax-exempt private activity
bonds, the Final Regulations are not ex-
pected to have a significant economic ef-
fect on those governmental units because
the Final Regulations generally would
streamline and simplify the Existing Reg-
ulations in various respects to reduce the
administrative burdens of meeting the
statutory public approval requirement. For
example, the Final Regulations, unlike the
Existing Regulations, would permit pub-
lication of public notice by website to
reduce costs associated with print publi-
cation or radio or television broadcast,
reduce the information required to be con-
tained in public notice and public ap-
proval for certain types of bonds, liberal-
ize the consequences of insubstantial
changes in project information, and permit
curative actions to address certain circum-
stances in which finished projects differ
from descriptions provided in the public
notice or public approval. Accordingly, a
regulatory flexibility analysis is not re-
quired. Pursuant to section 7805(f) of the
Code, the 2017 Proposed Regulations pre-
ceding the Final Regulations were submit-
ted to the Chief Counsel for Advocacy of
the Small Business Administration for
comment on its impact on small business.
No comments were received.
Drafting Information
The principal authors of these regula-
tions are Spence Hanemann of the Office
of Associate Chief Counsel (Financial In-
stitutions and Products) and Vicky Tsilas,
formerly of the Office of Associate Chief
Counsel (Financial Institutions and Prod-
ucts). However, other personnel from the
Treasury Department and the IRS partic-
ipated in their development.
February 19, 2019Bulletin No. 2019–08
574

List of Subjects
26 CFR Part 1
Income taxes, Reporting and record-
keeping requirements.
26 CFR Part 5f
Income taxes, Reporting and record-
keeping requirements.
Adoption of Amendments to the
Regulations
Accordingly, 26 CFR parts 1 and 5f are
amended as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation for
part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805***
Par. 2. Section 1.147(f)–1 is added to
read as follows:
§ 1.147(f)–1 Public approval of private
activity bonds.
(a)In general. Interest on a private
activity bond is excludable from gross in-
come under section 103(a) only if the
bond meets the requirements for a quali-
fied bond as defined in section 141(e) and
other applicable requirements provided in
section 103. In order to be a qualified
bond as defined in section 141(e), among
other requirements, a private activity bond
must meet the requirements of section
147(f). A private activity bond meets the
requirements of section 147(f) only if the
bond is publicly approved pursuant to
paragraph (b) of this section or the bond
qualifies for the exception for refunding
bonds in section 147(f)(2)(D).
(b)Public approval requirement—(1)
In general. Except as otherwise provided
in this section, a bond meets the require-
ments of section 147(f) if, before the issue
date, the issue of which the bond is a part
receives issuer approval and host approval
(each apublic approval) as defined in
paragraphs (b)(2) and (3) of this section in
accordance with the method and process
set forth in paragraphs (c) through (f) of
this section.
(2)Issuer approval. Except as other-
wise provided in this section,issuer ap-
provalmeans an approval that meets the
requirements of this paragraph (b)(2). Ei-
ther the governmental unit that issues the
issue or the governmental unit on behalf
of which the issue is issued must approve
the issue. For this purpose, § 1.103–1 ap-
plies to the determination of whether an
issuer issues bonds on behalf of another
governmental unit. If an issuer issues
bonds on behalf of more than one govern-
mental unit (for example, in the case of an
authority that acts for two counties), any
one of those governmental units may pro-
vide the issuer approval.
(3)Host approval. Except as otherwise
provided in this section,host approval
means an approval that meets the require-
ments of this paragraph (b)(3). Each gov-
ernmental unit the geographic jurisdiction
of which contains the site of a project to
be financed by the issue must approve the
issue. If, however, the entire site of a
project to be financed by the issue is
within the geographic jurisdiction of more
than one governmental unit within a State
(counting the State as a governmental unit
within such State), then any one of those
governmental units may provide host ap-
proval for the issue for that project. For
purposes of the host approval, if a project
to be financed by the issue is located
within the geographic jurisdiction of two
or more governmental units but not en-
tirely within any one of those governmen-
tal units, each portion of the project that is
located entirely within the geographic ju-
risdiction of the respective governmental
units may be treated as a separate project.
The issuer approval provided pursuant to
paragraph (b)(2) of this section may be
treated as a host approval if the govern-
mental unit providing the issuer approval
is also a governmental unit eligible to
provide the host approval pursuant to this
section.
(4)Special rule for host approval of
airports or high-speed intercity rail facil-
ities. Pursuant to aspecial rule in section
147(f)(3), if the proceeds of an issue are to
be used to finance a project that consists of
either facilities located at an airport (within
the meaning of section 142(a)(1)) or high-
speed intercity rail facilities (within the
meaning of section 142(a)(11)) and the is-
suer of that issue is the owner or operator of
the airport or high-speed intercity rail facil-
ities, the issuer is the only governmental unit
that is required to provide the host approval
for that project.
(5)Special rule for issuer approval of
scholarship funding bond issues and vol-
unteer fire department bond issues.Inthe
case of a qualified scholarship funding
bond as defined in section 150(d)(2), the
governmental unit that made a request de-
scribed in section 150(d)(2)(B) with re-
spect to the issuer of the bond is the gov-
ernmental unit on behalf of which the
bond was issued for purposes of the issuer
approval. If more than one governmental
unit within a State made a request de-
scribed in section 150(d)(2)(B), the State
or any such requesting governmental unit
may be treated as the governmental unit
on behalf of which the bond was issued
for purposes of the issuer approval. In the
case of a bond of a volunteer fire depart-
ment treated as a bond of a political sub-
division of a State under section 150(e),
the political subdivision described in sec-
tion 150(e)(2)(B) with respect to that vol-
unteer fire department is the governmental
unit on behalf of which the bond is issued
for purposes of the issuer approval.
(6)Special rules for host approval of
mortgage revenue bonds, student loan
bonds, and certain qualified 501(c)(3)
bonds. In the case of a mortgage revenue
bond (as defined in paragraph (g)(5) of
this section), a qualified student loan bond
as defined in section 144(b), and the por-
tion of an issue of qualified 501(c)(3)
bonds as defined in section 145 that fi-
nances working capital expenditures, the
issue or portion of the issue must receive
an issuer approval but no host approval is
necessary. See also paragraph (f)(5) of
this section, providing certain optional al-
ternative special rules for certain qualified
501(c)(3) bonds for pooled loan financ-
ings described in section 147(b)(4)(B).
(c)Method of public approval. The
method of public approval of an issue
must satisfy either paragraph (c)(1) or (2)
of this section. An approval may satisfy
the requirements of this paragraph (c)
without regard to the authority under State
or local law for the acts constituting that
approval.
(1)Applicable elected representative.
An applicable elected representative of
the approving governmental unit approves
the issue following a public hearing for
which there was reasonable public notice.
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575

(2)Voter referendum. A voter referen-
dum of the approving governmental unit
approves the issue.
(d)Public hearing and reasonable
public notice—(1)Public hearing.Public
hearingmeans a forum providing a rea-
sonable opportunity for interested individ-
uals to express their views, orally or in
writing, on the proposed issue of bonds
and the location and nature of the pro-
posed project to be financed.
(2)Location of the public hearing. The
public hearing must be held in a location
that, based on the facts and circumstances,
is convenient for residents of the approv-
ing governmental unit. The location of the
public hearing is presumed convenient for
residents of the unit if the public hearing
is located in the approving governmental
unit’s capital or seat of government. If
more than one governmental unit is re-
quired to hold a public hearing, the hear-
ings may be combined as long as the
combined hearing affords the residents of
all of the participating governmental units
a reasonable opportunity to be heard. The
location of any combined hearing is pre-
sumed convenient for residents of each
participating governmental unit if it is no
farther than 100 miles from the seat of
government of each participating govern-
mental unit beyond whose geographic ju-
risdiction the hearing is conducted.
(3)Procedures for conducting the pub-
lic hearing. In general, a governmental
unit may select its own procedure for a
public hearing,provided that interested in-
dividuals have a reasonable opportunity to
express their views. Thus, a governmental
unit may impose reasonable requirements
on persons who wish to participate in the
hearing, such as a requirement that persons
desiring to speak at the hearing make a
written request to speak at least 24 hours
before the hearing or that they limit their
oral remarks to a prescribed time. For this
purpose, it is unnecessary, for example, that
the applicable elected representative of the
approving governmental unit be present at
the hearing, that a report on the hearing be
submitted to that applicable elected repre-
sentative, or that State administrative proce-
dural requirements for public hearings be
observed. Except to the extent State proce-
dural requirements for public hearings are in
conflict with a specific requirement of this
section, a public hearing performed in com-
pliance with State procedural requirements
satisfies the requirements for a public hear-
ing in this paragraph (d). A public hearing
may be conducted by an individual ap-
pointed or employed to perform such func-
tion by the governmental unit or its agen-
cies, or by the issuer. Thus, for example, for
bonds to be issued by an authority that acts
on behalf of a county, the hearing may be
conducted by the authority, the county, or an
appointee of either.
(4)Reasonable public notice.Reason-
able public noticemeans notice that is
reasonably designed to inform residents of
an approving governmental unit, includ-
ing the issuing governmental unit and the
governmental unit in whose geographic
jurisdiction a project is to be located, of
the proposed issue. The notice must state
the time and place for the public hearing
and contain the information required by
paragraph (f)(2) of this section. Notice is
presumed to be reasonably designed to
inform residents of an approving govern-
mental unit if it satisfies the requirements
of this paragraph (d)(4) and is given no
fewer than seven (7) calendar days before
the public hearing in one or more of the
ways set forth in paragraphs (d)(4)(i)
through (iv) of this section.
(i)Newspaper publication. Public no-
tice may be given by publication in one or
more newspapers of general circulation
available to the residents of the govern-
mental unit.
(ii)Radio or television broadcast. Pub-
lic notice may be given by radio or tele-
vision broadcast to the residents of the
governmental unit.
(iii)Governmental unit website post-
ing. Public notice may be given by elec-
tronic posting on the approving govern-
mental unit’s primary public website in an
area of that website used to inform its
residents about events affecting the resi-
dents (for example, notice of public meet-
ings of the governmental unit). In the case
of an issuer approval of an issue issued by
an on-behalf-of issuer that acts on behalf
of a governmental unit, such notice may
be posted on the public website of the
on-behalf-of issuer as an alternative to the
public website of the approving govern-
mental unit.
(iv)Alternative State law public notice
procedures. Public notice may be given in
a way that is permitted under a general
State law for public notices for public
hearings for the approving governmental
unit, provided that the public notice is
reasonably accessible.
(e)Applicable elected representative—
(1)In general—(i)Definition of applica-
ble elected representative. Theapplicable
elected representativeof a governmental
unit means—
(A) The governmental unit’s elected
legislative body;
(B) The governmental unit’s chief
elected executive officer;
(C) In the case of a State, the chief
elected legal officer of the State’s execu-
tive branch of government; or
(D) Any official elected by the voters
of the governmental unit and designated
for purposes of this section by the govern-
mental unit’s chief elected executive offi-
cer or by State or local law to approve
issues for the governmental unit.
(ii)Elected officials. For purposes of
paragraphs (e)(1)(i)(B), (C), and (D) of
this section, an official is considered
elected only if that official is popularly
elected at-large by the voters of the gov-
ernmental unit. If an official popularly
elected at-large by the voters of a govern-
mental unit is appointed or selected pur-
suant to State or local law to be the chief
executive officer of the unit, that official is
deemed to be an elected chief executive
officer for purposes of this section but for
no longer than the official’s tenure as an
official popularly elected at-large.
(iii)Legislativebodies. In the case of a
bicameral legislature that is popularly
elected, both chambers together constitute
an applicable elected representative. Absent
designation under paragraph (e)(1)(i)(D) of
this section, however, neither such chamber
independently constitutes an applicable
elected representative. If multiple elected
legislative bodies of a governmental unit
have independent legislative authority, the
body with the more specific authority relat-
ing to the issue is the only legislative body
that is treated as an elected legislative body
under paragraph (e)(1)(i)(A) of this section.
(2)Governmental unit with no applica-
ble elected representative—(i)In general.
The applicable elected representatives of a
governmental unit with no applicable
elected representative (but for this para-
graph (e)(2) and section 147(f)(2)(E)(ii))
are the applicable elected representatives
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576

of the next higher governmental unit (with
an applicable elected representative) from
which the governmental unit derives its
authority. Except as otherwise provided in
this section, any governmental unit from
which the governmental unit with no ap-
plicable elected representative derives its
authority may be treated as the next higher
governmental unit without regard to the
relative status of such higher governmen-
tal unit under State law. A governmental
unit derives its authority from another
governmental unit that—
(A) Enacts a specific law (for example,
a provision in a State constitution, charter,
or statute) by or under which the govern-
mental unit is created;
(B) Otherwise empowers or approves
the creation of the governmental unit; or
(C) Appoints members to the govern-
ing body of the governmental unit.
(ii)Host approval. For purposes of a
host approval, a governmental unit may be
treated as the next higher governmental
unit only if the project is located within its
geographic jurisdiction and eligible resi-
dents of the unit are entitled to vote for its
applicable elected representatives.
(3)On behalf of issuers. In the case of
an issuer that issues bonds on behalf of a
governmental unit, the applicable elected
representative is any applicable elected
representative of the governmental unit on
behalf of which the bonds are issued.
(f)Public approval process—(1)In
general. The public approval process for
an issue, including scope, content, and
timing of the public approval, must meet
the requirements of this paragraph (f). A
governmental unit must timely approve
either each project to be financed with
proceeds of the issue or a plan of financ-
ing for each project to be financed with
proceeds of the issue.
(2)General rule on information re-
quired for a reasonable public notice and
public approval. Except as otherwise pro-
vided in this section, a project to be fi-
nanced with proceeds of an issue is within
the scope of a public approval under sec-
tion 147(f) if the reasonable public notice
of the public hearing, if applicable, and
the public approval (together the notice
and approval) include the information set
forth in paragraphs (f)(2)(i) through (iv)
of this section.
(i)The project. The notice and ap-
proval must include a general functional
description of the type and use of the
project to be financed with the issue. For
this purpose, a project description is suf-
ficient if it identifies the project by refer-
ence to a particular category of exempt
facility bond to be issued (for example, an
exempt facility bond for an airport pursu-
ant to section 142(a)(1)) or by reference to
another general category of private activ-
ity bond together with information on the
type and use of the project to be financed
with the issue (for example, a qualified
small issue bond as defined in section
144(a) for a manufacturing facility or a
qualified 501(c)(3) bond as defined in sec-
tion 145 for a hospital facility and work-
ing capital expenditures).
(ii)The maximum stated principal
amount of the issue. The notice and ap-
proval must include the maximum stated
principal amount of the issue of private
activity bonds to be issued to finance the
project or projects. If an issue finances
multiple projects (for example, facilities at
different locations on non-proximate sites
that are not treated as part of the same
project), the notice and approval must
specify separately the maximum stated
principal amount of bonds to be issued to
finance each separate project to be fi-
nanced as part of the issue. The maximum
stated principal amount of bonds to be
issued to finance a project may be deter-
mined on any reasonable basis and may
take into account contingencies, without
regard to whether the occurrence of any
such contingency is reasonably expected
at the time of the notice.
(iii)The name of the initial legal owner
or principal user of the project. The notice
and approval must include the name of
either the expected initial legal owner or
principal user (within the meaning of sec-
tion 144(a)) of the project or, alterna-
tively, the name of a significant true ben-
eficial party of interest for such legal
owner or user (for example, the name of a
section 501(c)(3) organization that is the
sole member of a limited liability com-
pany that is the legal owner or the name of
a general partner of a partnership that
owns the project).
(iv)The location of theproject. The
notice and approval must include a general
description of the prospective location of the
project by street address, reference to
boundary streets or other geographic bound-
aries, or other description of the specific
geographic location that is reasonably de-
signed to inform readers of the location. For
a project involving multiple capital projects
or facilities located on the same site, or on
adjacent or reasonably proximate sites with
similar uses, a consolidated description of
the location of those capital projects or fa-
cilities provides a sufficient description of
the location of the project. For example, a
project for a section 501(c)(3) educational
entity involving multiple buildings on the
entity’s main urban college campus may
describe the location of the project by ref-
erence to the outside street boundaries of
that campus with a reference to any noncon-
tiguous features of that campus.
(3)Special rule for mortgage revenue
bonds. Mortgage loans financed by mort-
gage revenue bonds are within the scope
of a public approval if the notice and
approval state that the bonds are to be
issued to finance residential mortgages,
provide the maximum stated principal
amount of mortgage revenue bonds ex-
pected to be issued, and provide a general
description of the geographic jurisdiction
in which the residences to be financed
with the proceeds of the mortgage revenue
bonds are expected to be located (for ex-
ample, residences located throughout a
State for an issuer with a statewide juris-
diction or residences within a particular
local geographic jurisdiction, such as
within a city or county, for a local issuer).
For this purpose, in the case of mortgage
revenue bonds, no information is required
on specific names of mortgage loan bor-
rowers or specific locations of individual
residences to be financed.
(4)Special rule for qualified student
loan bonds. Qualified student loans fi-
nanced by qualified student loan bonds as
defined in section 144(b) are within the
scope of a public approval if the notice
and approval state that the bonds will be
issued to finance student loans and state
the maximum stated principal amount of
qualified student loan bonds expected to
be issued for qualified student loans. For
this purpose, in the case of qualified stu-
dent loan bonds, no information is re-
quired with respect to names of specific
student loan borrowers.
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577

(5)Specialrule for certain qualified
501(c)(3) bonds. Qualified 501(c)(3) bonds
issued pursuant to section 145 for pooled
loan financings that are described in section
147(b)(4)(B) (without regard to any election
under section 147(b)(4)(A)) are within the
scope of a public approval if the public
approval either meets the general require-
ments of paragraph (b) of this section or,
alternatively, at the issuer’s option, meets
the special requirements of paragraphs
(f)(5)(i) and (ii) of this section.
(i)Pre-issuance issuer approval. Within
the time period required by paragraph (f)(7)
of this section, an issuer approval is ob-
tained after reasonable public notice of a
public hearing is provided and a public hear-
ing is held. For this purpose, a project is
treated as described in the notice and ap-
proval if the notice and approval provide
that the bonds will be qualified 501(c)(3)
bonds to be used to finance loans described
in section 147(b)(4)(B), state the maximum
stated principal amount of bonds expected
to be issued to finance loans to section
501(c)(3) organizations or governmental
units as described in section 147(b)(4)(B),
provide a general description of the type of
project to be financed with such loans (for
example, loans for hospital facilities or col-
lege facilities), and state that an additional
public approval that includes specific proj-
ect information will be obtained before any
such loans are originated.
(ii)Post-issuance public approval for
specific loans. Before a loan described in
section 147(b)(4)(B) is originated, a sup-
plemental public approval, including is-
suer approval and host approval, for the
bonds to be used to finance that loan is
obtained that meets all the requirements of
section 147(f) and the requirements for a
public approval in paragraph (b) of this
section. This post-issuance supplemental
public approval requirement applies by
treating the bonds to be used to finance
such loan as if they were reissued for
purposes of section 147(f) (without regard
to paragraph (f)(5) of this section). For
this purpose, proceeds to be used to fi-
nance such loan do not include the portion
of the issue used to finance a common
reserve fund or common costs of issuance.
(6)Deviations in public approval in-
formation—(i)In general. Except as oth-
erwise provided in this section, a substan-
tial deviation between the stated use or
amount of proceeds of an issue included
in the information required to be provided
in the notice and approval (public ap-
proval information) and the actual use or
amount of proceeds of the issue causes
that issue to fail to meet the public ap-
proval requirement. Conversely, insub-
stantial deviations between the stated use
or amount of proceeds of an issue in-
cluded in the public approval information
and the actual use or amount of proceeds
of the issue do not cause such a failure. In
general, the determination of whether a
deviation is substantial is based on all the
facts and circumstances. In all events,
however, a change in the fundamental na-
ture or type of a project is a substantial
deviation.
(ii)Certain insubstantial deviations in
public approval information. The follow-
ing deviations from the public approval
information in the notice and approval are
treated as insubstantial deviations:
(A)Size of bond issue and use of pro-
ceeds. A deviation between the maximum
stated principal amount of a proposed is-
suance of bonds to finance a project that is
specified in public approval information
and the actual stated principal amount of
bonds issued and used to finance that proj-
ect is an insubstantial deviation if that
actual stated principal amount is no more
than ten percent (10%) greater than that
maximum stated principal amount or is
any amount less than that maximum stated
principal amount. In addition, the use of
proceeds to pay working capital expendi-
tures directly associated with any project
specified in the public approval informa-
tion is an insubstantial deviation.
(B)Initial legal owner or principal
user. A deviation between the initial legal
owner or principal user of the project
named in the notice and approval and the
actual initial legal owner or principal user
of the project is an insubstantial deviation
if such parties are related parties on the
issue date of the issue.
(iii)Supplemental public approval to
cure certain substantial deviations in pub-
lic approval information. A substantial
deviation between the stated use or
amount of proceeds of an issue included
in the public approval information and the
actual use or amount of the proceeds of
the issue does not cause that issue to fail
to meet the public approval requirement if
all of the following requirements are met:
(A)Original public approval and rea-
sonable expectations. The issue met the
requirements for a public approval in
paragraph (b) of this section. In addition,
on the issue date of the issue, the issuer
reasonably expected there would be no
substantial deviations between the stated
use or amount of proceeds of an issue
included in the public approval informa-
tion and the actual use or amount of the
proceeds of the issue.
(B)Unexpected events or unforeseen
changes in circumstances. As a result of
unexpected events or unforeseen changes
in circumstances that occur after the issue
date of the issue, the issuer determines to
use proceeds of the issue in a manner or
amount not provided in a public approval.
(C)Supplemental public approval. Be-
fore using proceeds of the bonds in a
manner or amount not provided in a pub-
lic approval, the issuer obtains a supple-
mental public approval for those bonds
that meets the public approval require-
ment in paragraph (b) of this section. This
supplemental public approval requirement
applies by treating those bonds as if they
were reissued for purposes of section
147(f).
(7)Certain timing requirements. Pub-
lic approval of an issue is timely only if
the issuer obtains the public approval
within one year before the issue date of
the issue. Public approval of a plan of
financing is timely only if the issuer ob-
tains public approval for the plan of fi-
nancing within one year before the issue
date of the first issue issued under the plan
of financing and the issuer issues all issues
under the plan of financing within three
years after the issue date of such first
issue.
(g)Definitions. The definitions in this
paragraph (g) apply for purposes of this
section. In addition, the general defini-
tions in § 1.150–1 apply for purposes of
this section.
(1)Geographic jurisdictionmeans the
area encompassed by the boundaries pre-
scribed by State or local law for a govern-
mental unit or, if there are no such bound-
aries, the area in which a unit may
exercise such sovereign powers that make
that unit a governmental unit for purposes
of § 1.103–1 and this section.
February 19, 2019Bulletin No. 2019–08
578

(2)Governmental unithas the meaning
of “State or local governmental unit” as
defined in § 1.103–1. Thus, a governmen-
tal unit is a State, territory, a possession of
the United States, the District of Colum-
bia, or any political subdivision thereof.
(3)Host approvalis defined in para-
graph (b)(3) of this section.
(4)Issuer approvalis defined in para-
graph (b)(2) of this section.
(5)Mortgage revenue bondsmean
qualified mortgage bonds as defined in
section 143(a), qualified veterans’ mort-
gage bonds as defined in section 143(b),
or refunding bonds issued to finance mort-
gages of owner-occupied residences pur-
suant to applicable law in effect prior to
enactment of section 143(a) or section
143(b).
(6)Proceedsmeans “proceeds” as de-
fined in § 1.141–1(b), except that it does
not include disposition proceeds.
(7)Projectgenerally means one or
more capital projects or facilities, includ-
ing land, buildings, equipment, and other
property, to be financed with an issue, that
are located on the same site, or adjacent or
proximate sites used for similar purposes,
and that are subject to the public approval
requirement of section 147(f). Capital
projects or facilities that are not located on
the same site or adjacent or proximate
sites may be treated as one project if those
capital projects or facilities are used in an
integrated operation. For an issue of mort-
gage revenue bonds or an issue of quali-
fied student loan bonds as defined in sec-
tion 144(b), the term project means the
mortgage loans or qualified student loans
to be financed with the proceeds of the
issue. For an issue of qualified 501(c)(3)
bonds as defined in section 145, the term
project means a project as defined in the
first sentence of this definition, and also is
deemed to include working capital expen-
ditures to be financed with proceeds of the
issue.
(8)Public approval informationis de-
fined in paragraph (f)(6)(i) of this section.
(9)Public hearingis defined in para-
graph (d)(1) of this section.
(10)Reasonable public noticeis de-
fined in paragraph (d)(4) of this section.
(11)Voter referendummeans a vote by
the voters of the affected governmental
unit conducted in the same manner and
time as voter referenda on matters relating
to governmental spending or bond issu-
ances by the governmental unit under ap-
plicable State and local law.
(h)Applicability date. This section ap-
plies to bonds issued pursuant to a public
approval occurring on or afterApril 1,
2019. For bonds issued pursuant to a pub-
lic approval occurring beforeApril 1,
2019, see § 5f.103–2 as contained in 26
CFR part 5f, revised as of April 1, 2018.
In addition, an issuer may apply the pro-
visions of paragraph (f)(6) of this section
in whole, but not in part, to bonds issued
pursuant to a public approval occurring
beforeApril 1, 2019.
PART 5f—TEMPORARY INCOME
TAX REGULATIONS UNDER THE
TAX EQUITY AND FISCAL
RESPONSIBILITY ACT OF 1982
Par. 3. The authority citation for part 5f
continues to read in part as follows:
Authority: 26 U.S.C. 7805***
§ 5f.103–2 [Removed]
Par. 4. Section 5f.103–2 is removed.
Kirsten Wielobob,
Deputy Commissioner for Services and
Enforcement.
Approved: November 1, 2018.
David J. Kautter,
Assistant Secretary of the Treasury
(Tax Policy)
(Filed by the Office of the Federal Register on December 28,
2018, 8:45 a.m., and published in the issue of the Federal
Register for December 31, 2018, 83 F.R. 67685)
Bulletin No. 2019–08February 19, 2019
579

Part III. Administrative, Procedural, and Miscellaneous
Update for Weighted
Average Interest Rates,
Yield Curves, and Segment
Rates
Notice 2019–13
This notice provides guidance on the
corporate bond monthly yield curve, the
corresponding spot segment rates used un-
der § 417(e)(3), and the 24-month average
segment rates under § 430(h)(2) of the
Internal Revenue Code. In addition, this
notice provides guidance as to the interest
rate on 30-year Treasury securities under
§ 417(e)(3)(A)(ii)(II) as in effect for plan
years beginning before 2008 and the 30-
year Treasury weighted average rate un-
der § 431(c)(6)(E)(ii)(I).
YIELD CURVE AND SEGMENT
RATES
Section 430 specifies the minimum
funding requirements that apply to single-
employer plans (except for CSEC plans
under § 414(y)) pursuant to § 412. Section
430(h)(2) specifies the interest rates that
must be used to determine a plan’s target
normal cost and funding target. Under this
provision, present value is generally de-
termined using three 24-month average
interest rates (“segment rates”), each of
which applies to cash flows during speci-
fied periods. To the extent provided under
§ 430(h)(2)(C)(iv), these segment rates
are adjusted by the applicable percentage
of the 25-year average segment rates for
the period ending September 30 of the
year preceding the calendar year in which
the plan year begins.
2
However, an elec-
tion may be made under § 430(h)(2)
(D)(ii) to use the monthly yield curve in
place of the segment rates.
Notice 2007–81, 2007–44 I.R.B. 899,
provides guidelines for determining the
monthly corporate bond yield curve, and
the 24-month average corporate bond seg-
ment rates used to compute the target nor-
mal cost and the funding target. Consis-
tent with the methodology specified in
Notice 2007–81, the monthly corporate
bond yield curve derived from December
2018 data is in Table 2018–12 at the end
of this notice. The spot first, second, and
third segment rates for the month of De-
cember 2018 are, respectively, 3.38, 4.32,
and 4.69.
The 24-month average segment rates de-
termined under § 430(h)(2)(C)(i) through
(iii) must be adjusted pursuant to § 430(h)
(2)(C)(iv) to be within the applicable mini-
mum and maximum percentages of the cor-
responding 25-year average segment rates.
For plan years beginning before 2021, the
applicable minimum percentage is 90% and
the applicable maximum percentage is
110%. The 25-year average segment rates
for plan years beginning in 2017, 2018, and
2019 were published in Notice 2016–54,
2016–40 I.R.B. 429, Notice 2017–50,
2017–41 I.R.B. 280, and Notice 2018–73,
2018–40 I.R.B. 526, respectively.
24-MONTH AVERAGE CORPORATE
BOND SEGMENT RATES
The three 24-month average corporate
bond segment rates applicable for January
2019 without adjustment for the 25-year
average segment rate limits are as follows:
24-Month Average Segment Rates Without 25-Year Average Adjustment
Applicable MonthFirst SegmentSecond SegmentThird Segment
January 20192.553.934.49
Based on § 430(h)(2)(C)(iv), the 24-
month averages applicable for January
2019, adjusted to be within the applicable
minimum and maximum percentages of
the corresponding 25-year average seg-
ment rates, are as follows:
Adjusted 24-Month Average Segment Rates
For Plan Years
Beginning InApplicable Month
First
Segment
Second
Segment
Third
Segment
2017January 20194.165.726.48
2018January 20193.925.526.29
2019January 20193.745.356.11
30-YEAR TREASURY SECURITIES
INTEREST RATES
Section 431 specifies the minimum
funding requirements that apply to mul-
tiemployer plans pursuant to § 412. Sec-
tion 431(c)(6)(B) specifies a minimum
amount for the full-funding limitation de-
scribed in § 431(c)(6)(A), based on the
plan’s current liability. Section 431(c)(6)
(E)(ii)(I) provides that the interest rate
used to calculate current liability for this
purpose must be no more than 5 percent
above and no more than 10 percent below
the weighted average of the rates of inter-
est on 30-year Treasury securities during
the four-year period ending on the last day
before the beginning of the plan year.
Notice 88–73, 1988–2 C.B. 383, provides
guidelines for determining the weighted
average interest rate. The rate of interest
on 30-year Treasury securities for Decem-
ber 2018 is 3.10 percent. The Service de-
termined this rate as the average of the
2
Pursuant to § 433(h)(3)(A), the 3
rd
segment rate determined under § 430(h)(2)(C) is used to determine the current liability of a CSEC plan (which is used to calculate the minimum amount
of the full funding limitation under § 433(c)(7)(C)).
February 19, 2019Bulletin No. 2019–08
580

daily determinations of yield on the 30-
year Treasury bond maturing in Novem-
ber 2048. For plan years beginning in
January 2019, the weighted average of the
rates of interest on 30-year Treasury se-
curities and the permissible range of rates
used to calculate current liability are as
follows:
Treasury Weighted Average Rates
For Plan Years
Beginning In
30-Year Treasury
Weighted Average
Permissible Range
90% to 105%
January 20192.922.63 to 3.06%
MINIMUM PRESENT VALUE
SEGMENT RATES
In general, the applicable interest rates
under § 417(e)(3)(D) are segment rates
computed without regard to a 24-month
average. Notice 2007–81 provides guide-
lines for determining the minimum pres-
ent value segment rates. Pursuant to that
notice, the minimum present value seg-
ment rates determined for December 2018
are as follows:
Minimum Present Value Segment Rates
MonthFirst SegmentSecond SegmentThird Segment
December 20183.384.324.69
DRAFTING INFORMATION
The principal author of this notice is
Tom Morgan of the Office of the Associ-
ate Chief Counsel (Employee Benefits,
Exempt Organizations, and Employment
Taxes). However, other personnel from
the IRS participated in the development of
this guidance. For further information re-
garding this notice, contact Mr. Morgan at
202-317-6700 or Paul Stern at 202-317-
8702 (not toll-free numbers).
Bulletin No. 2019–08February 19, 2019
581

Table 2018–12
Monthly Yield Curve for December 2018
Derived from December 2018 Data
MaturityYieldMaturityYieldMaturityYieldMaturityYieldMaturityYield
0.52.9820.54.6140.54.7060.54.7480.54.76
1.03.1221.04.6241.04.7161.04.7481.04.76
1.53.2421.54.6241.54.7161.54.7481.54.76
2.03.3322.04.6242.04.7162.04.7482.04.76
2.53.4022.54.6342.54.7162.54.7482.54.76
3.03.4523.04.6343.04.7163.04.7483.04.76
3.53.4923.54.6343.54.7163.54.7483.54.76
4.03.5424.04.6444.04.7164.04.7484.04.76
4.53.5824.54.6444.54.7164.54.7484.54.76
5.03.6325.04.6445.04.7265.04.7485.04.76
5.53.6925.54.6445.54.7265.54.7485.54.76
6.03.7526.04.6546.04.7266.04.7586.04.76
6.53.8126.54.6546.54.7266.54.7586.54.76
7.03.8727.04.6547.04.7267.04.7587.04.76
7.53.9427.54.6647.54.7267.54.7587.54.76
8.04.0028.04.6648.04.7268.04.7588.04.76
8.54.0628.54.6648.54.7268.54.7588.54.76
9.04.1229.04.6649.04.7269.04.7589.04.76
9.54.1729.54.6749.54.7269.54.7589.54.76
10.04.2230.04.6750.04.7270.04.7590.04.76
10.54.2730.54.6750.54.7370.54.7590.54.76
11.04.3131.04.6751.04.7371.04.7591.04.76
11.54.3531.54.6751.54.7371.54.7591.54.76
12.04.3932.04.6852.04.7372.04.7592.04.76
12.54.4232.54.6852.54.7372.54.7592.54.76
13.04.4533.04.6853.04.7373.04.7593.04.76
13.54.4733.54.6853.54.7373.54.7593.54.76
14.04.4934.04.6854.04.7374.04.7594.04.76
14.54.5134.54.6954.54.7374.54.7594.54.76
15.04.5335.04.6955.04.7375.04.7595.04.76
15.54.5435.54.6955.54.7375.54.7595.54.77
16.04.5536.04.6956.04.7376.04.7596.04.77
16.54.5636.54.6956.54.7376.54.7596.54.77
17.04.5737.04.6957.04.7477.04.7597.04.77
17.54.5837.54.7057.54.7477.54.7597.54.77
18.04.5938.04.7058.04.7478.04.7698.04.77
18.54.5938.54.7058.54.7478.54.7698.54.77
19.04.6039.04.7059.04.7479.04.7699.04.77
19.54.6039.54.7059.54.7479.54.7699.54.77
20.04.6140.04.7060.04.7480.04.76100.04.77
February 19, 2019Bulletin No. 2019–08
582

Definition of Terms
Revenue rulings and revenue procedures
(hereinafter referred to as “rulings”) that
have an effect on previous rulings use the
following defined terms to describe the
effect:
Amplifieddescribes a situation where
no change is being made in a prior pub-
lished position, but the prior position is
being extended to apply to a variation of
the fact situation set forth therein. Thus, if
an earlier ruling held that a principle ap-
plied to A, and the new ruling holds that
the same principle also applies to B, the
earlier ruling is amplified. (Compare with
modified, below).
Clarifiedis used in those instances
where the language in a prior ruling is
being made clear because the language
has caused, or may cause, some confu-
sion. It is not used where a position in a
prior ruling is being changed.
Distinguisheddescribes a situation
where a ruling mentions a previously pub-
lished ruling and points out an essential
difference between them.
Modifiedis used where the substance
of a previously published position is being
changed. Thus, if a prior ruling held that a
principle applied to A but not to B, and the
new ruling holds that it applies to both A
and B, the prior ruling is modified because
it corrects a published position. (Compare
withamplifiedandclarified, above).
Obsoleteddescribes a previously pub-
lished ruling that is not considered deter-
minative with respect to future transac-
tions. This term is most commonly used in
a ruling that lists previously published rul-
ings that are obsoleted because of changes
in laws or regulations. A ruling may also
be obsoleted because the substance has
been included in regulations subsequently
adopted.
Revokeddescribes situations where the
position in the previously published ruling
is not correct and the correct position is
being stated in a new ruling.
Supersededdescribes a situation where
the new ruling does nothing more than
restate the substance and situation of a
previously published ruling (or rulings).
Thus, the term is used to republish under
the 1986 Code and regulations the same
position published under the 1939 Code
and regulations. The term is also used
when it is desired to republish in a single
ruling a series of situations, names, etc.,
that were previously published over a pe-
riod of time in separate rulings. If the new
ruling does more than restate the sub-
stance of a prior ruling, a combination of
terms is used. For example,modifiedand
supersededdescribes a situation where the
substance of a previously published ruling
is being changed in part and is continued
without change in part and it is desired to
restate the valid portion of the previously
published ruling in a new ruling that is
self contained. In this case, the previously
published ruling is first modified and then,
as modified, is superseded.
Supplementedis used in situations in
which a list, such as a list of the names of
countries, is published in a ruling and that
list is expanded by adding further names
in subsequent rulings. After the original
ruling has been supplemented several
times, a new ruling may be published that
includes the list in the original ruling and
the additions, and supersedes all prior rul-
ings in the series.
Suspendedis used in rare situations to
show that the previous published rulings
will not be applied pending some future
action such as the issuance of new or
amended regulations, the outcome of
cases in litigation, or the outcome of a
Service study.
Abbreviations
The following abbreviations in current
use and formerly used will appear in ma-
terial published in the Bulletin.
A—Individual.
Acq.—Acquiescence.
B—Individual.
BE—Beneficiary.
BK—Bank.
B.T.A.—Board of Tax Appeals.
C—Individual.
C.B.—Cumulative Bulletin.
CFR—Code of Federal Regulations.
CI—City.
COOP—Cooperative.
Ct.D.—Court Decision.
CY—County.
D—Decedent.
DC—Dummy Corporation.
DE—Donee.
Del. Order—Delegation Order.
DISC—Domestic International Sales Corporation.
DR—Donor.
E—Estate.
EE—Employee.
E.O.—Executive Order.
ER—Employer.
ERISA—Employee Retirement Income Security Act.
EX—Executor.
F—Fiduciary.
FC—Foreign Country.
FICA—Federal Insurance Contributions Act.
FISC—Foreign International Sales Company.
FPH—Foreign Personal Holding Company.
F.R.—Federal Register.
FUTA—Federal Unemployment Tax Act.
FX—Foreign corporation.
G.C.M.—Chief Counsel’s Memorandum.
GE—Grantee.
GP—General Partner.
GR—Grantor.
IC—Insurance Company.
I.R.B.—Internal Revenue Bulletin.
LE—Lessee.
LP—Limited Partner.
LR—Lessor.
M—Minor.
Nonacq.—Nonacquiescence.
O—Organization.
P—Parent Corporation.
PHC—Personal Holding Company.
PO—Possession of the U.S.
PR—Partner.
PRS—Partnership.
PTE
—Prohibited Transaction Exemption.
Pub. L.—Public Law.
REIT—Real Estate Investment Trust.
Rev. Proc.—Revenue Procedure.
Rev. Rul.—Revenue Ruling.
S—Subsidiary.
S.P.R.—Statement of Procedural Rules.
Stat.—Statutes at Large.
T—Target Corporation.
T.C.—Tax Court.
T.D.—Treasury Decision.
TFE—Transferee.
TFR—Transferor.
T.I.R.—Technical Information Release.
TP—Taxpayer.
TR—Trust.
TT—Trustee.
U.S.C.—United States Code.
X—Corporation.
Y—Corporation.
Z—Corporation.
Bulletin No. 2019–08February 19, 2019
i

Numerical Finding List
1
Bulletin 2019–8
Action on Decision:
2019-1, 2019-08 I.R.B.569
Announcements:
2019-1, 2019-06 I.R.B.566
Notices:
2019-01, 2019-02 I.R.B.275
2019-02, 2019-02 I.R.B.281
2019-03, 2019-03 I.R.B.350
2019-04, 2019-02 I.R.B.282
2019-05, 2019-02 I.R.B.283
2019-06, 2019-03 I.R.B.353
2019-08, 2019-03 I.R.B.354
2019-09, 2019-04 I.R.B.403
2019-11, 2019-05 I.R.B.430
2019-13, 2019-08 I.R.B.580
Proposed Regulations:
REG-104259-18, 2019-02 I.R.B.300
REG-104352-18, 2019-03 I.R.B.357
REG-106089-18, 2019-05 I.R.B.431
Revenue Procedures:
2019-1, 2019-01 I.R.B.1
2019-2, 2019-01 I.R.B.106
2019-3, 2019-01 I.R.B.130
2019-4, 2019-01 I.R.B.146
2019-5, 2019-01 I.R.B.230
2019-6, 2019-02 I.R.B.284
2019-7, 2019-01 I.R.B.268
2019-8, 2019-03 I.R.B.347
2019-9, 2019-02 I.R.B.293
2019-10, 2019-02 I.R.B.296
2019-12, 2019-04 I.R.B.401
Revenue Rulings:
2019-03, 2019-02 I.R.B.272
2019-04, 2019-07 I.R.B.567
Treasury Decisions:
9845, 2019-08 I.R.B.570
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.
February 19, 2019Bulletin No. 2019–08
ii

Finding List of Current Actions on
Previously Published Items
1
Bulletin 2019–8
1
A cumulative list of all revenue rulings, revenue procedures, Treasury decisions, etc., published in Internal Revenue Bulletins 2018–27 through 2018–52 is in Internal Revenue Bulletin
2018–52, dated December 27, 2018.
Bulletin No. 2019–08February 19, 2019
iii

INTERNAL REVENUE BULLETIN
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