Where tax-exempt debt is used to finance the construction or acquisition of facilities and capital equipment, the University must comply with IRS laws and regulations applicable to Private Business Use. Pursuant to the Private Business Use test set forth at 26 USC §141, the tax-exempt status of a bond issuance is jeopardized if more than 10% of the proceeds are used for Private Business Use (the applicable limit is 5% for bonds issued for the benefit of University-Associated Organizations and other 501(c)3 affiliates).
Because of the decentralized management of space assignment, unit managers must have a working knowledge of “private business use” restrictions applicable to tax-exempt financed facilities. This policy formalizes the responsibility of managers in enabling the University to comply with Internal Revenue Service (IRS) laws and regulations on Private Business Use.