IRS Clarifies Rules on Tax-Exempt Bonds

The Internal Revenue Service has issued a ruling to clarify that universities are indeed allowed to use tax-exempt bonds to pay for research facilities, reports The Chronicle of Higher Education.

Universities had been confused by a provision of the Bayh-Dole Act, which allows the federal government some rights to research developments. The universities had worried that conducting research paid for with federal money in facilities paid for with federal bonds could threaten the bonds’ tax exemption.

The IRS ruling should help put such concerns to rest.

“In order to foster more basic research through federal-state-university partnerships,” said Sen. Max S. Baucus, a Montana Democrat and chairman of the Senate Finance Committee, in a written statement, “we need to clarify that this provision of the Bayh-Dole Act does not cause these bonds to lose their tax-exempt status.”