Talking About Business Days and the HTOP Method

Tuesday, October 20, 2020

It’s fall, and meaning two issues. Pumpkin spice every thing, and a calendar that’s replete with holidays – Sukkot, Halloween, Thanksgiving, and Sweetest Day[1] to call however just a few. Diligent readers of The Public Finance Tax Weblog will do not forget that we beforehand posted an exhaustive evaluation of the “hold-the-offering-price-method” of building the problem value of tax-exempt bonds (the “HTOP Technique”). These similar readers little question keep in mind Treasury regulation § 1.148-1(f)(2)(ii)(B), which requires that the underwriter agree in writing neither to supply nor promote a bond to which the HTOP Technique will apply at a value that’s increased than the bond’s preliminary providing value to the general public for a interval that begins on the sale date of the problem and that ends on the shut of the fifth enterprise day after the sale date.[2]

These readers at the moment are maybe questioning whether or not, given the surfeit of autumnal holidays, they’ve accurately counted the variety of enterprise days to attain a profitable invocation of the HTOP Technique. Don’t fear; we’re right here to assist.

The Inner Income Code doesn’t set forth a definition for “enterprise day.” Likewise, the Treasury rules promulgated underneath Code Sections 148 and 150 don’t present such a definition. There are, nevertheless, at the least three Treasury rules that outline the time period enterprise day – §§ 301.6708-1(f)(2), 31.3406(d)(-5(b)(3), and 31.6302-1(c)(2)(iii). These rules outline enterprise day identically as “any day apart from a Saturday, Sunday, or authorized vacation (throughout the that means of part 7503).”

It’s a canon of statutory/regulatory development that, absent a transparent indication on the contrary, a time period ought to have the identical that means when utilized in totally different statutes or rules throughout the similar physique of regulation. Underneath this canon, “enterprise day” as utilized in Treas. Reg. § 1.148-1(f)(2)(ii)(B) ought to have the identical, uniform that means as contained in different provisions of the Treasury rules, as a result of nothing in Treas. Reg. § 1.148-1(f)(2)(ii)(B) makes it clear that “enterprise day” ought to have a unique that means. Saturdays, Sundays, and authorized holidays as outlined in Part 7503 of the Code ought to subsequently be excluded from the rely of enterprise days to find out whether or not the HTOP Technique has been happy.

Code Part 7503 defines a “authorized vacation” as “a authorized vacation within the District of Columbia.” § 28-2701 of the Code of the District of Columbia specifies the next days as authorized holidays within the District:

New 12 months’s Day (January 1);
Martin Luther King, Jr.’s Birthday (third Monday in January);
District of Columbia Emancipation Day (April 16);
Memorial Day (final Monday in Could);
Independence Day (July 4);
Labor Day (first Monday in September);
Indigenous Peoples’ Day[3] (second Monday in October);
Veteran’s Day (November 11);
Thanksgiving Day (fourth Thursday in November);
Christmas Day (December 25);
Any day appointed by the President of the US as a day of public feasting or thanksgiving; and
The day on which the President is inaugurated (January 20 in each fourth yr, commencing on January 20, 1981).

28-2701 of the D.C. Code additional supplies that if New 12 months’s Day, D.C. Emancipation Day, Independence Day, Veteran’s Day, or Christmas falls on a Saturday, the authorized vacation is noticed on the instantly previous day (i.e., on Friday). Furthermore, if any of those holidays fall on a Sunday, the authorized vacation is noticed on the instantly following day (i.e., on Monday).

And now you recognize the times which are excluded from the rely of “enterprise days” to find out compliance with the HTOP methodology. Exclude them accordingly.

[1] Which fell on October 17, so it’s too late should you forgot.

[2] This era will finish on the date on which the underwriter sells at the least 10% of the bond to the general public at a value that doesn’t exceed the bond’s preliminary providing value, if that date precedes the shut of the fifth enterprise day after the sale date.

[3] Columbus Day in different jurisdictions.