What do Tax Anticipation Notes (TANs) provide?

Tax Anticipation Notes (TANs) are a form of short-term borrowing that municipalities use to meet their temporary cash flow needs, usually in anticipation of receiving tax revenues in the future. They are employed particularly during periods when immediate expenses need to be covered, but the tax income has not yet been collected. By issuing TANs, a government can secure interim financing to maintain operations while waiting for the expected receipts from taxes.

This characteristic is crucial because it allows governmental entities to efficiently manage their cash flow, ensuring that they can meet immediate obligations such as payroll, supplies, and other necessities without waiting for tax revenue to arrive. TANs facilitate smooth financial operations and help prevent disruptions in services or programs due to cash shortages. This is why option C, which states that TANs provide interim financing in anticipation of future receipts, accurately represents their purpose and function in government finance.