Client Alert
Generally, federal tax laws restrict the use of tax-exempt governmental use bonds by nongovernmental, non-public users, which is referred to as “private business use.” The tax laws do allow for a de minimis amount of private business use of tax-exempt bond financed property. However, if there is private business use of bond-financed property in excess of the de minimis allowance, tax-exempt governmental use bonds may lose their tax-exempt status.