OTHER NEWS - April 13, 1996

Orange County Faces IRS Inquiry: An Internal Revenue Service investigation into the county’s sale of $200 million in tax-exempt bonds could cost the county about $5 million in back taxes. The agency is looking into whether the one-year tax-exempt bonds the county sold the summer before it filed for bankruptcy protection in 1994 are instead taxable securities. If the bonds are declared taxable, investors will have to pay back taxes on the interest earned--or, more likely, force the county to pay. The IRS could also levy penalties against the county. Orange County officials would not comment on the investigation. The bonds would be taxable if the IRS finds that bond proceeds were used improperly or if the county earned too much interest.