4.2.3.2 63-20 Corporations

4.2.3.2 63-20 Corporations

A 63-20 corporation is an entity formed under general state non profit corporation law. It is typically used when state law does not specifically authorize the formation of entities that would otherwise qualify as constituted authorities (as described in Revenue Ruling 63-20). For an entity to qualify as a 63-20 corporation, certain criteria must be satisfied, including the following:

1. The corporation must engage in activities that are essentially public in nature.
   
   
2. The corporation must be organized under the applicable state’s general non profit corporation law.
   
   
3. The corporate income must not benefit any private person.
   
   
4. The state or political subdivision thereof must have a beneficial interest in the corporation while the debt is outstanding, which can be shown in various ways, including the state or political subdivision having exclusive possession and use of the property financed by the obligations.
   
   
5. Once the debt is retired, the state or political subdivision must obtain legal title to the property for which the indebtedness was incurred.
   
   
6. The state or political subdivision must approve both the corporation and the specific obligations to be issued by the corporation.