Legal Definitions - tax-anticipation note

A tax-anticipation note is a short-term obligation issued by state or local governments to finance current expenditures. It usually matures once the local government receives individual and corporate tax payments. Tax-anticipation notes are abbreviated as TAN.

For example, a city government may issue a tax-anticipation note to pay for immediate expenses, such as salaries or infrastructure projects, before the tax revenue is collected. Once the tax revenue is received, the government uses it to pay off the tax-anticipation note.

Tax-anticipation notes are a way for governments to manage their cash flow and ensure that they have enough money to cover their expenses. They are generally considered safe investments because they are backed by the government's ability to collect taxes.