In certain situations a municipal bond may be considered a private activity bond if it satisfies the non-governmental use tests set out by the Internal Revenue Service. However, certain private activity bonds are tax-exempt if they are considered a qualified bond under the Code. Shanahan & Shanahan LLP has experience working with issuers and advising them on the complicated regulations governing private activity bonds and when interest on such bonds is exempt from federal income taxation.

Private activity bonds that qualify for the tax exemption include those issued to finance various types of facilities, including airports and certain other transportation-related facilities; water, sewer and other local utility facilities; solid and hazardous waste disposal facilities; certain residential rental projects; those issued as Enterprise Zone bonds; those issued to finance a facility owned and utilized by a 501(c)(3) organization; those issued to fund mortgage loans to finance owner-occupied residential property; qualified redevelopment bonds; certain bonds to finance manufacturing facilities; and recovery zone facility bonds authorized by the Recovery Act that can be used for a variety of qualified businesses.