Yesterday was tax day. A few unlucky souls will face the prospect of an audit in the coming months. But for the Destiny USA project, the IRS has already announced an audit of the project's $228 million Green Bonds.
If you need background on the Destiny USA story, I would suggest you review the e-book I published on the subject. In 2007, the developer of a large-scale mall project received $228 million from a federal Green Bonds program in exchange for installing green building and renewable energy technologies. The developer recently revealed the many of the green technologies will not be incorporated as promised.
As reported by Rick Moriarty, the Internal Revenue Service (IRS) notified the Syracuse Industrial Development Agency on March 17 that it would be auditing the Green Bonds issued by the Agency to the Destiny USA developer:
"The IRS notice states that the Destiny bonds were selected for examination 'because of information we received from external sources or developed internally that causes a concern that the debt issuance may fail one or more provisions' of the Internal Revenue Code.
Destiny said in a notice to the bond market that it believes it has met the requirements of the federal code relating to the bonds and is cooperating with the IRS."
The Internal Revenue Service (IRS) is the agency ultimately responsible for determining compliance with the Green Bonds requirements. If the IRS were to determine that non-compliance occurred, then Destiny USA could lose hundreds of millions of dollars in estimated tax breaks.
Keep in mind, the IRS issued its notice just seventeen days after the Agency and Developer were required to submit a letter stating whether compliance with the Green Bonds program occurred. The IRS moved quickly to get involved.
What do you think will be the result of the IRS audit?