Tax Exempt Bond Compliance
Accounting and Financial Reporting
View policy pdf: Tax Exempt Bond Compliance Policy
It is the University’s policy that it shall comply with all laws, rules, regulations, and contracts applicable to tax-exempt bonds. In order to do so, the University will gather and maintain information on its use of bond proceeds, provide reports and certifications required by the Georgia State Finance and Investment Commission (GSFIC) or University Cooperative Organizations, such as the UGA Athletic Association or the UGA Real Estate Foundation, and develop the procedures necessary to ensure compliance.
Private Business Use Generally
Federal and state laws impose a number of restrictions on the use of facilities and equipment financed with the proceeds of tax-exempt bonds. One important restriction concerns private business use.
Private business use means use (directly or indirectly) of the facilities or equipment financed by the proceeds of tax-exempt bonds in any trade or business activity carried out by or for the benefit of any person or entity that is not a “qualified user.”
A “qualified user” is a state or local government unit or, in certain circumstances, a nonprofit charitable organization described in Section 501(c)(3) of the Internal Revenue Code using facilities in furtherance of its tax-exempt purpose. Note: the federal government and its agencies are NOT considered qualified users.
Excessive private business use of facilities or equipment financed with tax-exempt bonds may cause the bonds to lose their tax-exempt status, making interest on the bonds taxable to the bond holders.
For facilities and equipment financed with general obligation bonds issued by GSFIC, the University may not make capital plans that depend on private business use, or enter into any contracts that result in private business use, without the specific written approval of GSFIC. For tax-exempt bonds issued for the benefit of University Cooperative Organizations, the University may not make capital plans that depend on private business use, or enter into any contracts that result in private business use, without the specific written approval of the Cooperative Organizations.
Private business use of tax-exempt bond financed facilities or equipment commonly occurs in the following situations:
- Transfer of ownership of the facility or equipment
- Leases and similar arrangements
- Management contracts
- Service contracts
- Sponsored research agreements
- Other arrangements that convey special legal entitlements
Responsible University Senior Administrator: Vice President for Finance & Administration
Responsible University Administrator: Associate Vice President for Finance Division
Policy Owner: Accounting
Policy Contact: Allison Davis
Phone Number: 706-542-1197