Revised Proposed Issue Price Regulations Would Look to Actual Sales Instead of Reasonable Expectations

    June 2015

    The US Treasury has withdrawn controversial proposed regulations on the definition of the “issue price” of a tax-advantaged bond issue from 2013, and has issued new proposed regulations in their place. These new proposed regulations make many improvements over the 2013 proposed regulations – they narrow what was perceived to be a definition of “underwriter” that was too broad to be administrable and otherwise take a more measured approach to the concerns that the IRS and Treasury have regarding finding a “representative” issue price of a bond issue. But, the 2015 proposed regulations would, if finalized, continue to require issuers to look to the first price at which at least 10% of each maturity of bonds actually sells to the public in a bona fide public offering to determine the issue price of the bond issue, even if that price is different from the price at which the underwriter reasonably expected to sell the bonds to the public when it purchased them from the issuer.