SAN ANTONIO — Legislation recently introduced in Congress suggests that traditional tax-credit bonds may be replaced by bonds offering Build America Bond-style direct subsidies to issuers, an Internal Revenue Service attorney said last week.

“I think this legislation that’s coming out … not only is very fascinating in and of itself, but when you take it in conjunction with the other legislative proposal to eliminate the stripping, I think it’s potentially pointing to a moving toward the ... 'BABification’ of tax-credit bonds,” said James Polfer, chief of the IRS’ tax-exempt bond branch in the associate chief counsel’s office.

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