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Ada County approves $27,600 contingency payment to cover IRS arbitrage filing related to coroner bond
Summary
Treasury staff told commissioners that interest earned on funds tied to an October 2020 bond for the coroner—s office exceeded a small arbitrage cap, triggering IRS reporting. The board approved using contingency funds — $27,600 — to pay the tax/penalty and related calculation fees.
Ada County commissioners approved a one-time draw from contingency funds totaling $27,600 to cover IRS arbitrage reporting and related fees tied to a prior bond issue used for the coroner—s office.
Finance staff told the board the underlying bond was issued in October 2020. Because a planned CAT-scan purchase was delayed, funds remained invested and earned interest above the allowable arbitrage cap for the tax-exempt financing. County staff explained there is a legal limit on net interest earnings relative to the bond—s stated yield (staff cited a 0.125% cap) and that exceeding that cap requires an IRS filing and payment. Procurement/finance staff said the arbitrage calculation cost about $5,600 and the requested contingency total to cover taxes, penalties and fees was $27,600.
A commissioner asked whether the contingency draw was appropriate; staff responded that contingency funds are intended for unanticipated compliance costs. The board moved, seconded and approved the use of contingency funds and authorized the chair to sign documents to pay the Internal Revenue Service and to pay the cost of calculating the amount to be reported.
