Arbitrage Rebate Compliance

As a leader in the public finance industry, Hawkins Delafield & Wood LLP has devoted substantial resources to assisting state and local governments in addressing the ever changing and evolving arbitrage rules and regulations. Since 1974, shortly after the general arbitrage regulations were introduced, Hawkins has maintained a full time staff of financial analysts working to undertake the complex calculations related to tax-exempt financings.

Our in-house analyst group is known as the Financial Analysis & Services Group ("FAS"). FAS is comprised of professionals who have backgrounds in mathematics, statistics, engineering, physics or accounting. 

Takashi Iwata, who has extensive experience in arbitrage rebate matters and tax-exempt financial analyses, is the director of FAS.

FAS and our Tax Department constitute a powerful combination of in-depth experience and expertise in both financial analyses and public finance tax law. This combination enables us to efficiently provide arbitrage rebate compliance services of the highest caliber.

Extensive Arbitrage Rebate Experience
For over over 25 years, we have been providing arbitrage rebate and related services to the public finance community. Members of our rebate team have experience with virtually every type of transaction, including general obligations, revenue bonds with parity debt service reserve funds for multiple issues, leases and loan programs (e.g. student loans and single family mortgage loans). Our in-depth experience enables us to undertake an engagement for any client efficiently and cost-effectively, without any disruption to the client.

In-Depth Tax Expertise
Hawkins Delafield & Wood LLP has one of the largest and most experienced tax departments in the industry devoted primarily to public finance. One of our tax partners, T. Kam Wong, has a strong financial and engineering background; she provides the requisite integration of tax law and arbitrage rebate calculations. Other tax partners provide insight and guidance on the tax regulations and coordination, when needed, with the IRS.

Comprehensive Reports With Tax Opinion
Unlike many other providers of arbitrage rebate compliance services, our comprehensive reports are laid out in an easily understandable format and include all supporting schedules and cashflows. In addition, each of our reports also includes, if desired by the client, our tax opinion that the methodologies are correct, the assumptions are reasonable, and the calculations comply with federal tax law.

Arbitrage Mitigation 
As part of our arbitrage rebate compliance services, we consider various elective and computational options as part of the effort to reduce rebate liability of the client. We have devoted significant resources to ensure that clients receive the best possible arbitrage rebate advice. We are at the top of the learning curve on solutions to arbitrage-related issues, while many other firms have yet to address or even identify them.

Value-Added Approach
We take a value-added approach in providing arbitrage rebate compliance services. A key part of such an approach is to make rebate compliance as simple as possible for our clients. For example, we work closely with the client to determine what investment data is most practical to collect and yet sufficient for arbitrage computation purposes. We guide the client through each step of the engagement and advise the client well in advance of each "milestone" date so that any required action may be taken in a timely manner.

Tailored Client Services  
While arbitrage rebate compliance is a critical and serious matter which may affect the tax exemption of the interest on bonds issued by the client, we firmly believe that the arbitrage rebate services to be provided should be tailored to the specific needs of the client. Clients with in-house financial analysis capability may wish to perform their own analysis and retain us for verification, tax advice or training purposes. Other clients may wish to use the full range of services we can provide.

Competitive Fees  
We believe our fees are reasonably competitive and fair in relationship to the quality of our services. We offer the best value in terms of the quality of services relative to the fees charged. Our fees depend on a number of factors, including the nature and the volume of the services requested by the client. While we have standard fee schedules, we are also amenable to formulating fees that take into account the special circumstances of our clients.

Experienced in IRS Tax Audits 
We possess the tax expertise and experience with the IRS that we consider necessary to defend and represent the client in the event of an IRS tax audit. Our partners have extensive experience in audit and ruling request matters with the IRS.

To look at our arbitrage rebate compliance brochure (in PDF), please click Rebate Brochure.

Rebate compliance is a serious business. Noncompliance has serious consequences. Among other things, noncompliance may cause the interest on the bonds to be declared taxable for federal income tax purposes retroactive to the date of issue of the bonds. In an attempt to explain the requirements for rebate compliance in a more easily-understood and light-hearted fashion, the Rebate Game was developed by FAS. Please click Rebate Game (in PDF) for a look

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