First Bankers Provides Valuable Information on Local Government Certification for Firetruck Financing
This article discusses the local government certification for volunteer fire department fire truck financing.
If your department is separate from the local government such as a city, county, township, village, or borough, why do they have to sign anything when you finance a fire truck?
Why it’s required by the IRS
If your department wants the benefits of lower tax-exempt interest rates then, all the IRS rules and requirements to qualify for this benefit must be followed. Otherwise, your department does not qualify and is forced to pay higher interest rates.
Plus, your department may be liable for IRS penalties and interest if you obtained tax-exempt financing without following all the IRS rules. Section 147 lays out the procedures that volunteer fire departments must follow to qualify for lower tax-exempt interest rates.
The IRS rules (abbreviated) read:
Sec. 147(f). Public approval required for private activity bonds
(2) Public approval requirement
(A) In general
A bond shall satisfy the requirements of this paragraph if such bond is issued as a part of an issue which has been approved by -
(B) Approval by a governmental unit
For purposes of subparagraph an issue shall be treated s having been approved by any governmental unit if such issue
is approved -
(i) by the applicable elected representative of such governmental unit after a public hearing following reasonable public notice
What can be done to make meeting this requirement easier?
When your volunteer fire department enters into the legally complex world of tax-exempt financing, you need to work with someone knowledgeable that will help make it easier to follow the rules.
A company that specializes in fire truck financing will work directly with your local government to get the proper documents signed on your behalf, and help your local government understand why they are signing this IRS-required document and that they are not “cosigning” or “guaranteeing” your volunteer fire department’s obligation.
By John R. Hill
First Bankers Corporation