2023 Maryland Statutes › State Finance and Procurement › Division I - State Finance › Title 8 - Debt › Subtitle 2 - Debts of State Units › Part II - General Provisions › Section 8-211 - Exclusion of Interest From Gross Income for Federal Tax Purposes

(a)    (1)    In this section the following words have the meanings indicated.
(2)    “Code” means the Internal Revenue Code of 1986 and includes regulations and rulings issued under that Code.
(3)    “Financial officer” means the Controller, the director of finance or similar official of a unit of the State government or a political instrumentality of the State that has authority to issue bonds. “Financial officer” includes, to the extent necessary, the Treasurer and the Comptroller.
(4)    “Proceeds” means money received from the sale of bonds, and includes any money deemed to be proceeds of bonds under the Code.
(b)    The financial officer may establish and maintain funds and accounts for the administration, management, investment and accounting of proceeds, including any investment earnings on proceeds, that may be necessary or appropriate from time to time to comply with the Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds.
(c)    The financial officer may manage and invest proceeds, including any investment earnings on proceeds, in a manner so as to maintain the exclusion from gross income for federal income tax purposes of interest on the bonds. The financial officer may restrict the yields on investments of proceeds if and to the extent necessary to maintain the exclusion from gross income for federal income tax purposes of interest on the bonds.
(d)    The financial officer may prepare and maintain records of the receipt, deposit, investment, management, disbursement and application of proceeds, including any investment earnings on proceeds, that may be necessary or appropriate from time to time to comply with the Code and to maintain or verify the exclusion from gross income for federal income tax purposes of interest on the bonds.
(e)    (1)    The financial officer may establish a separate rebate fund to be used to make any payments to the United States with respect to investment earnings on proceeds that may be required from time to time by the Code.
(2)    There may be separate accounts within the rebate fund.
(3)    Amounts deposited to the rebate fund shall be used only for the purpose of making rebate payments to the United States.
(4)    The financial officer may make payments from the rebate fund as may be required from time to time in order to:
(i)    comply with the Code; and
(ii)    maintain the exclusion from gross income for federal income tax purposes of interest on the bonds.
(5)    Any excess money held in the rebate fund with respect to an issue of bonds after all required rebate payments for that issue have been made, as certified by the financial officer, shall be applied in a manner consistent with the Code.
(f)    The financial officer may prepare and file from time to time with the appropriate agency of the United States any forms, information, and reports with respect to the bonds and the expenditure and investment of proceeds that may be required under the Code.
(g)    The financial officer and other officers of a State unit may:
(1)    take any other or further actions;
(2)    enter into any agreement or covenant regarding the use of proceeds, including any investment earnings on proceeds, the deposit of money to the rebate fund and the making of rebate payments; and
(3)    provide certifications of facts and estimates, that may be necessary or appropriate from time to time to comply with the Code and to establish or maintain the exclusion from gross income for federal income tax purposes of interest on the bonds.
(h)    Nothing in this section shall prevent the State unit from authorizing the issuance and sale of bonds the interest on which is not excludable from gross income for federal income tax purposes.