The IRS recently ruled that bonds, in order to be tax free, must be for “essential government functions” only. Bonds to help in the building of an Indian casino resort (at Fantasy Springs Casino near Palm Springs) didn’t make the cut. The IRS is going to be going after the bondholders for taxes.
So what does our state legislature do? It passes, out of the Senate Revenue and Taxation Committee, SB995. This bill would grant Indian casinos tax exemption (for California tax returns) on such bonds.