Tax Equity and Fiscal Responsibility Act (TEFRA)
A TEFRA hearing is a public inquiry required by the Internal Revenue Service of non-profit borrowers that intend to issue tax-exempt debt. The TEFRA hearing provides the public an opportunity to comment on the use of tax-exempt bond proceeds by the specific borrowing institution to finance their capital needs. Following the public hearing, the Treasurer executes an approval certificate for the financing under the TEFRA rules.
|TEFRA Date||School Name||Resolution #||TEFRA Notification|
Hesperia Experiential Learning Pathways
|23-03||Hesperia Experiential Learning Pathways|
|02/03/23||Camino Nuevo Charter Academy||23-05||Camino Nuevo Charter Academy|
Why TEFRA hearings are held: A TEFRA hearing is an IRS requirement for any non-profit borrower seeking tax-exempt bonds through a conduit issuer, such as CSFA. The hearing is held to allow members of the public to comment, contest, oppose, or support the use of tax-exempt bonds for a non-profit borrower that is providing a public benefit.
When TEFRA hearings are held: The TEFRA hearing must be held prior to the Board meeting at which a financing application is before the board, in case any issues arise at the TEFRA hearing. The TEFRA hearing is typically held the day of the CSFA Board meeting when the financing is being presented to the board. In light of COVID, the IRS has approved TEFRA hearings be held virtually with a telephone conference or video conference connection provided for public participation.
How much does the TEFRA hearing cost: The TEFRA hearing typically involves legal counsel costs as well as approving local government jurisdiction staff or other costs. There is no charge to borrowers to hold their TEFRA hearing through CSFA. CSFA only conducts TEFRA hearings for financing being issued through CSFA.
The TEFRA Notice: The TEFRA Notice (Notice) must be published seven calendar days prior to the public hearing (example notice). The Notice provides the public with the time, location, and call-in number for the hearing. The Notice must be published in a public location. The IRS recently approved websites for TEFRA Notice publications, and CSFA publishes the Notice on its website as part of the process.
Sample docs and instructions on applying:
The TEFRA Notice and approval documents are part of the general CSFA bond application process.
Please don’t hesitate to reach out to CSFA staff or your bond counsel with any additional questions