I was just discussing this situation with a resident of The Villages the other day (mercifully I don’t live there myself). It seems to fall under asset protection (or at least asset awareness?) so I thought I would post the blog article:
http://andrewblechman.blogspot.com/2009/06/villages-in-heap-of-tax-trouble.html
There is no asset protection when it comes to the IRS. At best, it’s legal. At worst, the village issued tax exempt bond when it shouldn’t.
It sounds like the developer definitely screwed up with those bonds. There are a bunch of rumors swirling around The Villages that each resident will have to pay X dollars to IRS to fix this. Hopefully the elderly people of that community won’t get completely screwed because of someone else’s actions.