Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 Becomes Law

December 20, 2010

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853) (the Act) became law Dec. 17, 2010. The Act did not extend several municipal bond programs and enhancements established under the Recovery Act (see our alert for July 13, 2010) such as Build America Bonds or the $30 million bank-qualified eligibility set-aside for 501(c)(3) entities.

The Act contains the following municipal bond provisions:

  • Extends through Dec. 31, 2011, the authorizations for the issuance of certain tax-exempt bonds for the District of Columbia Enterprise Zone, the New York Liberty Zone, and the Gulf Opportunity Zone.
  • Provides 2011 allocation for the issuance of $400 million of Qualified Zone Academy Bonds (QZABs), but disallows the ability to issue QZABs under such allocation as “direct pay” bonds pursuant to which the issuer of such bonds receives a credit in the form of a payment from the U.S. Treasury.
  • Extends through Dec. 31, 2012, the increase of the arbitrage rebate exception from $10 million to $15 million for governmental bonds used to finance qualified school construction.
  • Extends through Dec. 31, 2012, the authorization for the issuance of tax-exempt private activity bonds for qualified education facilities with annual state volume caps equal to the greater of $10 multiplied by the state population or $5 million.

The Act did not address Qualified School Construction Bonds, Qualified Energy Conservation Bonds and New Clean Renewable Energy Bonds (see our alerts for September 20, 2010, May 20, 2010, March 17, 2010, November 2, 2009, and March 30, 2009).

Several municipal bond programs were not renewed by the Act, including Build America Bonds, Recovery Zone Facility Bonds and Recovery Zone Economic Development Bonds. In addition, the Act did not renew (i) the liberalized rules governing bank-qualified tax-exempt bonds; (ii) the exemption from the Alternative Minimum Tax of the interest earned on private activity bonds; (iii) the exemption from adjusted current earnings of interest earned on certain tax-exempt bonds; or (iv) the guaranty by a federal home loan bank for tax-exempt bonds.