Qualified Zone Academy Bonds Program Guide

The Qualified Zone Academy Bonds Program is a great way for schools to get the funding they need to improve their facilities and services. It's a complex program, but don't worry, we've got a guide to help you navigate it.

To be eligible for QZABs, your school must be a Qualified Zone Academy (QZA) and meet specific requirements, such as being located in a low-income community or serving a high percentage of low-income students.

The program provides tax-exempt bonds to QZAs, which can be used to finance a wide range of projects, including construction, renovation, and equipment purchases. This can help schools improve their infrastructure and provide better services to their students.

The Qualified Zone Academy Bond (QZAB) Program helps eligible public schools raise funds to improve facilities, purchase equipment, and train teachers. This program is a great way for schools to get the resources they need to provide a better education for their students.

To be eligible for the QZAB Program, a public school must be located in an Empowerment Zone or Enterprise Community or have a student body in which at least 35% of students are eligible for the federal free and reduced-price lunch program. This is a key factor in determining whether a school can participate in the program.

The federal government allocates the authority to issue QZABs to states based on their proportion of the United States population living below the poverty line. Each state receives a specific allocation, and individual states determine what portion of their allocations, if any, may be used by charter schools.

Schools that participate in the QZAB Program must develop a partnership with a business or other private entity that makes a contribution to the school worth at least 10% of the principal amount borrowed. This partnership is an important aspect of the program, as it helps to leverage private sector resources to support public education.

QZABs are tax-credit or direct-payment bonds for which the federal government provides a tax credit or a cash subsidy payment from the Treasury Department in lieu of interest payable, thus lowering borrowing costs. This makes it easier for schools to access the funds they need to improve their facilities and programs.

Here are some examples of how QZABs have been used in the past:

It's worth noting that QZABs were canceled in January 2018, but the examples above demonstrate how the program was used to support public education in the past.

To be eligible for a Qualified Zone Academy Bond, you must be a school district or a state or local government unit that issues bonds for a qualified zone academy.

The qualified zone academy must be a public school that provides a high school education and has a high percentage of students from low-income families.

A qualified zone academy bond must be issued within a zone that is designated by the Secretary of Education.

The zone must be an empowerment zone or enterprise community designated by the Secretary of Housing and Urban Development.

The bond proceeds must be used for capital expenditures, such as purchasing land, building a new school, or renovating an existing one.

The qualified zone academy must have a high percentage of students from low-income families, typically 35% or more.

The bond issuer must agree to maintain a high level of student achievement and reduce the dropout rate.

The bond issuer must also agree to provide a certain level of funding for low-income students and to use a significant portion of the bond proceeds for teacher training and development.

Proceeds from QZABs can be used for a variety of purposes, but they must be used for qualified purposes within a certain timeframe. The proceeds can be used to rehabilitate or repair a public school facility, provide equipment for the academy, develop course materials for education, or train teachers and other school personnel.

To be considered used for a qualified purpose, proceeds must be spent on rehabilitating or repairing a public school facility, and at least 50 percent of the existing external walls of the building must be retained as external walls. This is similar to the rehabilitation standard used for the rehabilitation tax credit under section 47.

Proceeds can also be used to provide equipment for the academy, and once spent, those proceeds are treated as used for a qualified purpose with respect to the academy during any period after such expenditure. The academy must maintain its status as a qualified zone academy for the proceeds to be considered used for a qualified purpose.

To qualify as a rehabilitation expense, expenditures must be for reconstruction, subject to restrictions on retention of certain percentages of the existing walls. Expenditures to enlarge existing buildings or acquire existing buildings are not eligible as rehabilitation expenses.

Issuers of Qualified Zone Academy Bonds (QZABs) are required to submit information reporting returns to the IRS. This is similar to the reporting required for tax-exempt State or local bonds.

The reporting must be done at the same time and manner as the reports required for tax-exempt State or local bonds. The Commissioner will prescribe the forms to be used for this purpose.

The IRS will use the information reported to ensure compliance with the QZAB program.

The law surrounding Qualified Zone Academy Bonds is outlined in Section 54E, which provides a framework for these bonds.

To ensure compliance, it's essential to understand the specific laws and regulations governing these bonds.

Qualified Tax Credit Bonds are covered under Section 54A, which offers tax credits to investors.

The IRS has issued various notices and bulletins to provide guidance on Qualified Zone Academy Bonds, including Notice 2009-30 and IRS Bulletin 2011-6.

Here are some key laws and regulations related to Qualified Zone Academy Bonds:

Issuers of QZABs must submit information reporting returns to the IRS.

These returns are similar to those required for tax-exempt State or local bonds, and must be submitted at the same time and manner as those reports.

The IRS will prescribe the forms to be used for such purposes, so issuers should be prepared to follow their instructions.

Issuers must submit these reports on forms as prescribed by the Commissioner.

The Internal Revenue Service issued a rule on Qualified Zone Academy Bonds on July 16, 2007.

This rule was published in the Federal Register and has 12 pages.

The rule is related to 26 CFR and proposes to amend it.

The document number is E7-13665 and the RIN is 1545-BG44.

The document is part of the Unified Agenda of Federal Regulatory and Deregulatory Actions.

Here are the details of the document: