The Internal Revenue Service introduced a Voluntary Closing Agreement Program that will help financial firms avoid harsh penalties for violating federal tax laws on arbitrage investment restrictions for municipal bonds.

The program is available to municipal bond issuers so they can correct any violations of non-fair-market value purchases of forward-float investment agreements. The IRS noted that purchasing a forward-float agreement at a yield below market value could result in a violation of the applicable arbitrage yield restrictions.

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