Tax Policy

Preliminary Data on Tax-Exempt Bonds Used to Finance Housing for the Elderly Gao ID: GGD-89-7 October 14, 1988

In response to a congressional request, GAO provided data on tax-exempt bonds issued to finance housing for the elderly.

GAO found that: (1) private organizations that provide housing for elderly or low-income individuals can apply to the Internal Revenue Service (IRS) for tax-exempt status under section 501(c)(3) of the Internal Revenue Code (IRC); and (2) although 501(c)(3) organizations cannot issue tax-exempt bonds to finance their operations, state and local governments can issue tax-exempt bonds on behalf of such organizations if the bonds meet certain requirements. GAO also found that: (1) state and local government units must file an information return, Form 8038, when they issue private tax-exempt bonds; (2) Form 8038 does not identify the 501(c)(3) organization that will use the proceeds of the issue; (3) since IRS cannot link particular bond issues with individual 501(c)(3) organizations, it cannot easily enforce the $150 million limit on the outstanding bonds of an individual 501(c)(3) organization; and (4) 145 retirement community projects, representing over 1,000 tax-exempt bond issues with an aggregate value of $1.265 billion, have defaulted since the early 1980s.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.