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Tax Anticipation Note (TAN)

What is 'Tax Anticipation Note - TAN'

A short-term debt security issued by a state or local government to finance an immediate project that will be repaid with future tax collections. State and local governments use tax anticipation notes to borrow money, typically for one year or less and at a low interest rate, in order to finance a capital expenditure such as the construction of a road or school. The government then uses the following year's tax revenue to repay the TANs.

Explaining 'Tax Anticipation Note - TAN'

Tax anticipation note financing helps governments smooth out the ups and downs in their revenue cycles, if the timing of their receipts does not match the timing of their expenditures. TANs are one of several types of anticipation note that state and local governments can use; others include revenue anticipation notes, tax and revenue anticipation notes and bond anticipation notes. Tax anticipation notes are a type of municipal bond, so the interest earned from TANs is generally tax exempt for investors.


Further Reading


Taxes and corporate finance: A review
academic.oup.com [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Stock market capitalization and financial integration in the Asia Pacific regionStock market capitalization and financial integration in the Asia Pacific region
www.tandfonline.com [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

The economic geography of offshore incorporation in tax havens and offshore financial centres: The case of Chinese MNEsThe economic geography of offshore incorporation in tax havens and offshore financial centres: The case of Chinese MNEs
academic.oup.com [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Did the 2008 tax rebates stimulate spending?Did the 2008 tax rebates stimulate spending?
pubs.aeaweb.org [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Tax increment financing: A propensity score approachTax increment financing: A propensity score approach
journals.sagepub.com [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Fiscal volatility shocks and economic activityFiscal volatility shocks and economic activity
www.aeaweb.org [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Seeking Local Government Financial Integrity Through Debt Ceilings, Tax Limitations, and Expenditure Limits: The New York City Fiscal Crisis, the Taxpayers' Revolt …Seeking Local Government Financial Integrity Through Debt Ceilings, Tax Limitations, and Expenditure Limits: The New York City Fiscal Crisis, the Taxpayers' Revolt …
heinonline.org [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.

Uncovering patterns of state short-term debt financingUncovering patterns of state short-term debt financing
search.proquest.com [PDF]
Abstract. This article reviews tax research related to domestic and multinational capital structure, payout policy, compensation policy, risk management, and o.



Q&A About Tax Anticipation Note (TAN)


What is a TAN?

A Tax Anticipation Note (TAN) is a short-term debt security issued by a state or local government to finance an immediate project that will be repaid with future tax collections.

What are other types of anticipation notes?

There are other types of anticipation notes including Revenue Anticipation Notes, Tax and Revenue Anticipation Notes, Bond Anticipation Notes, and more.

Are there any disadvantages to using the TANs?

Yes, if the timing of receipts does not match the timing of expenditures then this can cause problems for states and localities.

How does the TAN help governments smooth out their revenue cycles?

The TAN helps governments smooth out their revenue cycles by borrowing money at low interest rates and repaying it with future tax collections.