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May 7, 2020

COVID-19: IRS Allows Remote Attendance at TEFRA Public Hearings

On May 4, 2020, the Internal Revenue Service (IRS) issued Revenue Procedure 2020-21 in response to the COVID-19 pandemic, providing temporary guidance regarding the public hearing requirement for tax-exempt private activity bonds—commonly known in the industry as the “TEFRA hearing.”

Issuers of tax-exempt private activity bonds are generally required to obtain public approval before issuing the bonds pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the Code) and the Treasury Regulations promulgated thereunder. Section 147(f) of the Code requires tax-exempt private activity bond issuances to be approved by the governmental unit issuing the bonds (or on behalf of which the bonds are issued) and by the governmental unit with jurisdiction over the area where any facility to be financed by the issue is located. A bond issue will be treated as having been approved by any governmental unit if the issue is approved by the applicable elective representative of the governmental unit after a TEFRA hearing following reasonable public notice or by voter referendum of the governmental unit.

The TEFRA hearing must be a forum that provides a reasonable opportunity for interested individuals to express their views on the proposed bond issue and the location and nature of the proposed project to be financed. The TEFRA hearing must be held in a location that, based on the facts and circumstances, is convenient for residents of the approving governmental unit. Further, pursuant to the preamble to the Treasury Regulations related to TEFRA hearings, holding a teleconference or webinar was expressly prohibited as a permissible means of conducting a TEFRA hearing. The IRS and the Treasury Department determined that remote attendance at TEFRA hearings could not replace a conventional public hearing conducted in person.

Due to stay-at-home and shelter-in-place orders for non-essential businesses and the prohibition on public gatherings resulting from COVID-19, meeting the requirement of holding in-person TEFRA hearings became a challenge for many issuers of tax-exempt private activity bonds. In response, the IRS issued Revenue Procedure 2020-21, allowing telephonic TEFRA hearings in place of in-person TEFRA hearings from May 4, 2020 until December 31, 2020.

Specifically, a TEFRA hearing conducted during this time period held by teleconference, accessible to the residents of the approving governmental unit by calling a toll-free telephone number, will be treated as held in a location that, based on the facts and circumstances, is convenient for residents of the approving governmental unit. In addition to providing residents of the approving governmental unit with a toll-free telephone number, governmental units can also, but are not required to, offer additional access to the hearing by other telephone numbers or by internet-based meeting technology.

Finally, Revenue Procedure 2020-21 provides procedures for a supplemental public notice in connection with a TEFRA hearing for which a public notice is published on or before May 11, 2020. If the public notice is published not less than seven calendar days prior to the TEFRA hearing, the public notice will satisfy the public approval requirements if:

  1. The TEFRA hearing is held by teleconference accessible to residents of the approving governmental unit by calling a toll-free telephone number; and
  2. The toll-free telephone number is provided at least 48 hours prior to the TEFRA hearing via an electronic posting on the approving governmental unit’s primary public website in an area of the website used to inform its residents about events affecting the residents.

Revenue Procedure 2020-21 became effective on May 4, 2020. However, it may be applied retroactively to TEFRA hearings held telephonically prior to May 4, 2020 due to the COVID-19 pandemic.

If you have any questions regarding the content of this alert, please contact Sharon Brown, partner, at; Shali Natesan, associate, at; or another member of the firm’s Public Finance Practice Area.

We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. You can reach our COVID-19 Response Team at


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