Tax-Exempt Municipal Bonds

Summary

This practice note discusses tax-exempt mutual bonds, their registration and exemptions from registration, timing considerations, and the roles of the parties in a bond offering. Bonds of state and local governments, and their variants such as notes, certificates, and warrants, are all securities subject to the federal and state securities laws. However, due to their historical importance as a means of finance in the United States, state and local bonds – in particular those whose interest is excluded from gross income for federal income tax purposes – are exempt from some of the more onerous requirements of the federal securities laws.