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The IRS is investigating the tax-exempt status of $27 million in bonds sold to fund low-income home loans in Pima County.

Neither taxpayers nor homeowners who received the loans will be affected by the investigation, said a lawyer for the Pima County Industrial Development Authority, which issued the bonds.

The investigation is part of a larger IRS investigation into municipal bond sales. Bloomberg News reported as much as $3 billion in bonds sold by more than 100 local governments are being reviewed in the investigation.

After industrial development bonds are sold, the money often is invested until it is turned over to borrowers in the form of loans. The law authorizing the sale of tax-exempt bonds to finance certain types of development requires that most of the profits earned on invested bond funds be paid as taxes.

But in the cases under investigation, the Internal Revenue Service alleges banks were paid inflated fees out of money that should have gone to the IRS.

Steven Russo, lawyer for the Pima County IDA, said the bonds in question were sold in 2002 to fund a lease-to-own home program for people with bad credit.

The IDA is a nonprofit corporation that issues bonds for economic development and affordable housing projects. It receives no tax money.

Members of the IDA board referred questions to Russo, as did representatives of Family Housing Resources, which administers an IDA low-income home program.

Russo said the IRS audited the Pima County IDA along with 20 other IDAs around the country to determine whether inappropriate fees were paid to Paris-based Societe Generale and CDR Financial Products Inc. of Beverly Hills, Calif.

IRS investigators also are looking at whether the companies rigged the bid for the contract to invest the money.

Earlier this month, the Pima County IDA issued a public notice saying the tax-exempt status of the bonds may be revoked.

But Russo said that is very unlikely to happen because the IRS would get more money from claiming the questioned investment gains. Russo said the IDA audits are a way to get at Societe Generale. The IDA is not accused of any wrongdoing.

However, bond holders need to know that the bonds are being reviewed, he said.

Russo said even if the bonds are declared taxable, Societe Generale, not the IDA, will be responsible. Russo said the bond sale was reviewed and approved by an independent bond firm, but the IDA has not used Societe Generale since 2002 and likely won't use it again.