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The reporting and backup withholding requirements do not in and of themselves affect the
excludability of interest on the Bonds from gross income for federal income tax purposes, and amounts
withheld under the backup withholding rules may be refunded or credited against the owner’s federal
income tax liability, if any, provided that the required information is timely furnished to the IRS.
Internal Revenue Service Audits
The IRS has established a program to audit tax-exempt obligations to determine whether the interest
thereon is includable in gross income for federal income tax purposes. If the IRS does audit the Bonds, the
IRS will, under its current procedures, treat the Issuer as the taxpayer. As such, the beneficial owners of the
Bonds will have only limited rights, if any, to participate in the audit or any administrative or judicial review
or appeal thereof. Any action of the IRS, including but not limited to the selection of the Bonds for audit,
or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect
the marketability or market value of the Bonds.
Opinion of Bond Counsel – Virginia Income Tax Consequences
In the opinion of Bond Counsel, under current law, interest on the Bonds is excludable from gross
income for purposes of income taxation by the Commonwealth. Bond Counsel will express no opinion
regarding (i) other tax consequences arising with respect to the Bonds under the laws of the Commonwealth
or (ii) any consequences arising with respect to the Bonds under the tax laws of any state or local jurisdiction
other than the Commonwealth. Prospective purchasers of the Bonds should consult their own tax advisors
regarding such other Virginia tax consequences or the tax status of interest on the Bonds in a particular state
or local jurisdiction other than the Commonwealth.
Changes in Federal and State Tax Law and Regulations
Legislation affecting tax-exempt obligations is regularly considered by the U.S. Congress and
various state legislatures. Such legislation may effect changes in federal or state income tax rates and the
application of federal or state income tax laws (including the substitution of another type of tax), or may
repeal or reduce the benefit of the excludability of interest on the tax-exempt obligations from gross income
for federal or state income tax purposes.
The U.S. Department of the Treasury and the IRS and state regulatory authorities are continuously
drafting regulations to interpret and apply the provisions of the Code and state law and court proceedings
may be filed, the outcome of which could modify the federal or state tax treatment of tax-exempt
obligations.
There can be no assurance that legislation proposed or enacted after the date of issue of the Bonds,
regulatory interpretation of the Code or state laws or actions by a court involving either the Bonds or other
tax-exempt obligations will not have an adverse effect on the Bonds’ federal or state tax status, marketability
or market price or on the economic value of the tax-exempt status of the interest on the Bonds.
Prospective purchasers of the Bonds should consult their own tax advisors regarding the potential
consequences of any such proposed or pending federal or state tax legislation, regulations or litigation, as
to which Bond Counsel expresses no opinion.
LEGAL MATTERS
Legal matters incident to the authorization, issuance and sale of the Bonds and with regard to the
tax-exempt status of the interest thereon (see “TAX MATTERS” herein) are subject to the approving legal
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