Formulaire 8038-T Instructions
Instructions pour le formulaire 8038-T, Remboursement d'arbitrage, réduction du rendement et pénalité en remplacement du remboursement d'arbitrage
Rév. octobre 2021
Formulaires associés
- Formulaire 8038 T - Remboursement d'arbitrage, réduction du rendement et pénalité en lieu et place du remboursement d'arbitrage
Department of the Treasury
Internal Revenue Service
Instructions for Form 8038-T
(Rev. October 2021)
Arbitrage Rebate, Yield Reduction, and Penalty in Lieu of Arbitrage Rebate
Section references are to the Internal Revenue
Code unless otherwise noted.
2. Yield reduction payments.
3. The penalty:
Note. Regulations section 1.148-3(b)
provides that as of any date, the rebate
amount for an issue is the excess of the
future value, as of that date, of all receipts
on nonpurpose investments over the
future value, as of that date, of all
In lieu of arbitrage rebate; or
•
Future Developments
To terminate the election to pay a
penalty in lieu of arbitrage rebate.
•
For the latest information about
developments related to Form 8038-T and
its instructions, such as legislation
enacted after they were published, go to
payments on nonpurpose investments.
The definitions of payments and receipts
in Regulations section 1.148-3(d), in part,
require inclusion of transactions
4. Penalties and interest on the failure to
pay on time any amounts in 1-3
above.
Issuers of QZABs issued under section
1397E or section 54E, as applicable, that
establish a defeasance escrow under the
Regulations must file Form 8038-T to pay
100% of the investment earnings on
amounts in the defeasance escrow.
(including, but not limited to, acquisition,
earnings, and return of principal) on a date
for each nonpurpose investment. Any
cash flow representation to the contrary
may result in the understatement of rebate
amount. Yield reduction payments are
determined using payments and receipts
as described in Regulations section
1.148-5(b)(1).
General Instructions
Purpose of Form
Under section 148(f), interest on a state or
local bond is not tax-exempt unless the
issuer of the bond rebates to the United
States arbitrage profits earned from
investing proceeds of the bond in higher
yielding nonpurpose investments. Issuers
of tax-exempt bonds and any other bonds
subject to the provisions of section 148
must use this form to make arbitrage
rebate and related payments.
Applicable Regulations
General
Unless otherwise stated, regulation
sections referenced in these instructions
are to the 1993 regulations, as amended.
Generally, an issuer may apply these
regulations to bonds that are outstanding
on July 8, 1997. For the 1993 regulations,
see T.D. 8476, 1993-2 C.B. 13, and T.D.
8538, 1994-1 C.B. 26. For the 1997
amendments to the 1993 regulations, see
T.D. 8718, 1997-1 C.B. 47. The 1992
regulations generally apply to bonds
issued before July 1, 1993. For the 1992
regulations, see T.D. 8418, 1992-1 C.B.
29.
Exceptions
A number of exceptions may relieve an
issuer of the rebate requirement for all or a
part of an issue of bonds.
Mortgage revenue bonds. Section
143(g)(3) provides special arbitrage
rebate rules for qualified mortgage bonds
and qualified veterans' mortgage bonds.
Under these special rules, issuers may
pay the rebate either to mortgagors, or if
an election is made before issuance of the
bond, to the United States. Use this form
only if you have elected to pay the rebate
to the United States.
Note. The following exceptions may
apply only to a portion of an issue. In such
cases, the rebate requirement continues
to apply to the portion of the issue not
covered by the exception.
Small issuer exception. The rebate
requirement does not apply to certain
bonds issued by governmental units
issuing no more than $5 million of bonds in
a calendar year.
The exception is modified as follows: a
governmental unit may issue up to $10
million in bonds after 1997 ($15 million
after 2001) per calendar year, provided no
more than $5 million of proceeds are used
to finance expenditures other than public
school capital expenditures. See section
148(f)(4)(D) and Regulations section
1.148-8.
Special Rules
Qualified Zone Academy Bonds
(QZABs) issued under section 1397E.
A QZAB is a bond issued by a state or
local government to finance certain
eligible public school purposes. An issuer
of QZABs issued under section 1397E or
section 54E, if applicable, may establish a
defeasance escrow to cure a failure to
properly use QZAB proceeds. An issuer
must pay any investment earnings on
amounts in the defeasance escrow that
are in excess of the yield on the issue. In
determining the yield on the issue, the
credit allowed is disregarded. Use this
form to make payments of investment
earnings on amounts in defeasance
escrows. See Regulations section
For rules on computing the arbitrage
rebate for mortgage revenue bonds, see
Temporary Regulations section
6a.103A-2(i)(4).
For rules on computing the arbitrage
rebate for bonds subject to section 103(c)
(6)(D) of the 1954 Code, see Temporary
Regulations section 1.103-15AT, T.D.
8005, 1985-1 C.B. 39, if the issuer has not
applied the later regulations.
6-month exception. The rebate
requirement is considered to be met for
gross proceeds of an issue (as defined in
Regulations section 1.148-7(c)(3)) if those
gross proceeds are spent within 6 months
of the issue date. The 6-month exception
is the only exception available for
refunding issues.
For QZABs issued under section
1397E and section 54E, see Regulations
T.D. 9495.
Arbitrage Rebate
Computation of Arbitrage Rebate
1.1397E-1(h)(8)(ii)(C).
Note. Use a separate Form 8038-T for
See section 148(f)(4)(B) and
The rebate amount for an issue is based
on the difference between the amount
actually earned on nonpurpose
each issue.
Regulations section 1.148-7(a)–(c).
Who Must File
18-month exception. The rebate
requirement is considered to be met for
gross proceeds of an issue if those gross
proceeds are spent according to an
investments and the amount that would
have been earned if those investments
had a yield equal to the yield on the issue.
Issuers of tax-exempt bonds and any
other bonds subject to the provisions of
section 148 must file Form 8038-T to pay:
1. Arbitrage rebate.
Oct 06, 2021
Cat. No. 30066E
18-month expenditure schedule measured Agreement Program for Tax-Exempt
QZABs. The issuer must pay 100% of the
investment earnings on amounts in a
defeasance escrow established for an
issue of QZABs under section 1397E or
section 54E, as applicable, at the same
time and in the same manner as arbitrage
rebate payments.
from the issue date.
Bonds and Tax Credit Bonds.
See Regulations section 1.148-7(a),
Where To File
(b), and (d).
File Form 8038-T and any attachments at
the following address.
2-year exception. The “available
construction proceeds” of a construction
issue are treated as meeting the rebate
requirement if those proceeds are spent in
accordance with a 2-year expenditure
schedule measured from the issue date.
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201–0027
Failure To Pay Timely
In general, a failure to pay the required
amounts of arbitrage rebate, yield
reduction, or penalty payments on time
may cause bonds to be treated as not
being, and as never having been,
tax-exempt.
See section 148(f)(4)(C) and
Regulations section 1.148-7(a), (b), and
(e)–(j).
Private delivery services. You can use
certain private delivery services (PDS)
designated by the IRS to meet the “timely
mailing as timely filing/paying” rule for tax
returns and payments. Go to IRS.gov/PDS
for the current list of designated services.
Exception for certain investments. The
rebate requirement generally does not
apply to gross proceeds that are invested
in certain tax-exempt bonds, certain
tax-exempt mutual funds, or certain
demand deposit securities purchased
directly from the United States Treasury.
If the failure is not due to willful neglect,
the failure will be disregarded if the issuer
promptly pays a penalty to the United
States.
The PDS can tell you how to get written
proof of the mailing date.
For the IRS mailing address to use if
you’re using PDS, go to IRS.gov/
For governmental and qualified 501(c)
(3) bonds, the penalty equals 50% of the
rebate amount not paid when required to
be paid, plus interest on that amount.
Otherwise, the penalty equals 100% of the
rebate amount not paid when required to
be paid, plus interest on that amount.
Penalty in Lieu of Arbitrage
Rebate
PDS can’t deliver items to P.O.
boxes. You must use the U.S.
!
Penalty. An issuer may elect to pay a
penalty in lieu of rebating arbitrage for the
available construction proceeds of an
issue if the spending requirements of the
2-year exception are not satisfied. The
penalty is equal to 11/2% of the amount of
the available construction proceeds that
do not meet the spending requirements.
CAUTION
Postal Service to mail any item to
an IRS P.O. box address.
The penalty is generally waived if the
rebate amount plus interest is paid within
180 days of discovery of the failure. See
Regulations section 1.148-3(h) and Rev.
Proc. 2005-40, 2005-2 C.B. 83.
When To File
Arbitrage rebate. An issuer must pay
rebate in installments for computation
dates that occur at least once every 5
years. Rebate payments are due within 60
days after each computation date. The
final rebate payment for an issue is due
within 60 days after the issue is
See section 148(f)(4)(C)(vii) and
For issues to which the 1992
Regulations section 1.148-7(k).
Regulations apply, see 1992 Regulations
section 1.148-1(c) for rules relating to
innocent failure, willful neglect,
Election to terminate 11/2% penalty. An
issuer may terminate the election to pay
penalty in lieu of arbitrage rebate by
paying an amount equal to 3% of the
unspent available construction proceeds
multiplied by the number of years in the
initial temporary period. The termination
election also requires other actions, such
as yield restricting the unspent proceeds
and using such proceeds to redeem
bonds.
discharged.
computation of the correction amount, and
penalty and interest. In general, these
rules also apply to the Penalty in Lieu of
Arbitrage Rebate and the Termination
Penalty. See 1992 Regulations section
1.148-6(n)(4).
See Regulations section 1.148-3(e)
through (g).
Special rules. For an issue retired
within 3 years of issuance, the final rebate
payment need not occur before the end of
8 months after the issue date or during the
period the issuer expects to meet any of
the spending exceptions under
Recovery of Overpayment
In general, an issuer may recover an
overpayment for an issue of tax-exempt
bonds by establishing to the IRS that an
overpayment occurred. Payments that
may be recovered include:
Regulations section 1.148-7.
See Code section 148(f)(4)(C)(viii) and
(ix) and Regulations section 1.148-7(l).
For rules concerning qualified
mortgage bonds and qualified veterans'
mortgage bonds see section 143(g)(3).
Yield Reduction Payments
Arbitrage rebate,
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Bond proceeds may be invested in higher
yielding investments only during a
temporary period described in Regulations
section 1.148-2(e). After expiration of an
applicable temporary period, proceeds
must be yield restricted.
Yield reduction,
Penalty in lieu of arbitrage rebate and
termination penalty. Penalty in lieu of
arbitrage rebate payments must be paid
within 90 days of the end of the applicable
spending period.
Penalty in lieu of arbitrage rebate, and
Penalty to terminate penalty in lieu of
arbitrage rebate.
See Regulations section 1.148-3(i) and
Payment of the 3% penalty to terminate Form 8038-R, Request for Recovery of
One method of complying with the yield
restriction requirement is to make “yield
reduction payments.” For certain
the penalty in lieu of arbitrage rebate
election must be made within 90 days of
(a) the end of the initial temporary period if
the termination election was made under
section 148(f)(4)(C)(viii), or (b) the date of
the termination election if it was made
under section 148(f)(4)(C)(ix).
Overpayments Under Arbitrage Rebate
Provisions.
investments, a yield reduction payment is
taken into account in computing the yield
on that investment. See Regulations
section 1.148-5(c).
Specific Instructions
Part I—Reporting Authority
Amended return. An issuer may file an
amended return to change or add to the
information reported on a previously filed
return for the same date of issue. If you
are filing to correct errors or change a
For investments with excess yield that
are not eligible for yield reduction
Yield reduction payments. Yield
reduction payments are payable at the
same time as arbitrage rebate payments.
payments (such as an incorrectly invested
advance refunding escrow fund), see
Notice 2008-31, Voluntary Closing
See Regulations section 1.148-5(c)(2).
Instructions for Form 8038-T (Rev. 10-2021)
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previously filed return, check the
“Amended Return” box in the heading of
the form.
The amended return must provide all
the information reported on the original
return, in addition to the new or corrected
information. Attach an explanation of the
reason for the amended return.
filing for this issue. For QZABs issued
under section 1397E or section 54E, enter
“qualified zone academy bond—section
1397E” or “qualified zone academy
bond—section 54E” and the total issue
price.
Part IV— Late Payments
Line 20. Under the current regulations, in
order to qualify for a waiver of penalty, a
failure to pay must not be due to willful
neglect. Attach an explanation of the
failure and the basis for concluding that
the failure is not due to willful neglect. See
Rev. Proc. 2005-40 for more information.
Part II—Arbitrage Rebate and
Yield Reduction Payments
Line 21. For a failure that does not qualify
for a waiver of penalty, the failure will be
disregarded if the issuer pays a penalty to
the United States. For governmental and
qualified 501(c)(3) bonds, the penalty
equals 50% of the rebate amount not paid
timely plus interest on that amount. For
other bonds, the penalty is 100% of the
rebate amount not paid timely plus interest
on that amount.
Line 12. Enter the computation date to
which this payment relates. The first
rebate installment payment must be made
for a computation date that is not later
than 5 years after the issue date.
Lines 1–10
General. Enter the same information that
was entered on the “initial filing” of the
following forms. Make any necessary
changes, for example, a change of
address.
Subsequent rebate installment payments
must be made for a computation date that
is not later than 5 years after the previous
computation date for which an installment
payment was made.
Form 8038, Information Return for
Tax-Exempt Private Activity Bond
Issues;
•
Form 8038-B, Information Return for
Build America Bonds and Recovery
Zone Economic Development Bonds;
Form 8038-G, Information Return for
Tax-Exempt Governmental Bonds;
Form 8038-GC, Information Return for
Small Tax-Exempt Governmental
Bond Issues, Leases, and Installment
Sales; or
•
Line 13. Enter the amount of the rebate
payment. A rebate installment payment
must be in an amount that, when added to
the future value, as of the computation
date, of previous rebate payments made
for the issue, equals at least 90% of the
rebate amount as of that date. A final
rebate payment must be paid in an
amount that, when added to the future
value of previous rebate payments made
for the issue, equals 100% of the rebate
amount as of that date.
Note. The calculation for late interest is
included under line 22 only, not under
line 21.
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•
Line 22. Compute interest at the
underpayment rate under section 6621,
beginning on the date the correct rebate
amount is due and ending on the date 10
days before it is paid.
For issues to which the 1992
Regulations apply, see 1992 Regulations
section 1.148-1(c)(2) for computation of
the correction amount.
Form 8038-TC, Information Return for
Tax Credit Bonds and Specified Tax
Credit Bonds.
•
Line 1. Enter the name of the
See Regulations section 1.148-3(f).
governmental entity that issued the bonds,
not the name of the entity receiving the
benefit of the financing or the eligible
taxpayer claiming a tax credit.
For issues to which the 1992
Regulations apply, see 1992 Regulations
section 1.148-1(b)(3).
Part V—Total Payment
Line 23. Combine all payment amounts
on lines 13, 14, 15, 17, 19, 21, and 22.
Enclose a check or money order for the
total amount made payable to the “United
States Treasury.” Include the issuer's
name, address, EIN, “Form 8038-T,” and
the date on the check or money order.
Line 14. For investments covered by the
special yield reduction rule, rebate and
yield reduction payments are included in
the computation of yield for that
investment.
Line 4. This line is for IRS use only. Do
not make an entry.
Lines 9 and 10. Enter the name, title,
and telephone number of the officer or
other employee of the issuer whom the
IRS may call for more information. If the
issuer wishes to designate a person other
than an officer or other employee of the
issuer (including a legal representative or
paid preparer) whom the IRS may call for
more information about this return, enter
the name, title, and telephone number of
such person here.
See Regulations section 1.148-5(c).
Part VI—Miscellaneous
Line 15. For QZABs issued under section
1397E or section 54E, if applicable, enter
the amount equal to 100% of the
investment earnings in a QZAB
defeasance escrow.
Line 24. Enter the amount of proceeds
(consisting of sale, investment, and
transferred proceeds) not allocated to
expenditures for a governmental purpose
of the issue.
Part III—Penalty in Lieu of
Arbitrage Rebate
Line 25. Enter the amount of proceeds
used to pay principal of and call premiums
on the bonds for which this form is being
filed.
Note. By authorizing a person other than
an authorized officer or other employee of
the issuer to communicate with the IRS
and whom the IRS may call for more
information about this return, the issuer
authorizes the IRS to communicate
directly with the individual listed on line 9
and consents to the disclosure of the
issuer's return information to that
individual, as necessary to process this
return.
Complete this section only if, on or before
the issue date of the bonds, an election
was made under section 148(f)(4)(C)(vii).
Line 26. Under Regulations section
1.148-5(e)(2), qualified administrative
costs are taken into account in
Line 16. Check the appropriate box for
the number of months between the issue
date of the bonds and the end of the
spending period for which this Form
8038-T is being filed. For periods greater
than 24 months, check the box marked
“Other” and fill in the number of months
since the date of issue.
determining payments and receipts on
nonpurpose investments. Regulations
section 1.148-5(e)(2)(iii) provides special
rules for qualified administrative costs for
guaranteed investment contracts (GICs)
and yield restricted defeasance escrows.
Enter the amount of any qualified
Line 11. Enter the same type of issue that
was entered on Form 8038, 8038-B,
administrative costs taken into account in
computing the rebate amount under these
special rules.
Note. File a separate Form 8038-T for
8038-G, or 8038-TC. For bonds previously
reported on Form 8038-GC, enter “small
governmental bond.” Also enter the total
issue price that was listed on the initial
each 6-month spending period.
Lines 17–19. See Penalty in Lieu of
Arbitrage Rebate, earlier.
Line 27. Under Regulations section
1.148-4(f)(1), fees properly allocable to
Instructions for Form 8038-T (Rev. 10-2021)
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payments for a qualified guarantee for an
issue are treated as additional interest in
computing the yield on that issue. Enter
the amount of such fees.
Signature and Consent
Paperwork Reduction Act Notice. We
ask for the information on this form to carry
out the Internal Revenue laws of the
United States. You are required to give us
the information. We need it to ensure that
you are complying with these laws and to
allow us to collect the right amount of
arbitrage rebate, yield reduction
An authorized representative of the issuer
must sign and date Form 8038-T and any
applicable certification. Also print the
name and title of the person signing Form
8038-T. The authorized representative of
the issuer signing this form must have the
authority to consent to the disclosure of
the issuer's return information, as
Line 28. Enter “Yes” if the issue is a
variable rate issue. A variable rate issue is
an issue that contains a bond that has a
yield that is not fixed and determinable on
the issue date.
payments, and penalties.
necessary to process this return, to the
person(s) that has been designated in
Form 8038-T.
Line 29. Enter “Yes” if the issuer entered
into a qualified hedge. In general,
payments made or received by an issuer
under a qualified hedge are taken into
account to determine the yield on the
issue. A hedge may be entered into
before, at the same time as, or after the
date of issue. See Regulations section
1.148-4(h)(1). Enter the name of the
provider of the hedge and term of the
hedge to the nearest tenth of a year (for
example, 2.4 years). Attach additional
sheets if necessary.
You are not required to provide the
information requested on a form that is
subject to the Paperwork Reduction Act
unless the form displays a valid OMB
control number. Books or records relating
to a form or its instructions must be
retained as long as their contents may
become material in the administration of
any Internal Revenue law. Generally, tax
returns and return information are
Note. If authority is granted in Part I, lines
9 and 10, for the IRS to communicate with
a person other than an officer or other
employee of the issuer, by signing this
form, the issuer's authorized
representative consents to the disclosure
of the issuer's return information, as
necessary to process this return, to such
person.
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated burden for
tax-exempt organizations filing this form is
approved under OMB control number
1545-0047 and is included in the
Paid Preparer
Line 30. Enter “Yes” if any gross
If an authorized officer of the issuer filled in
this return, the paid preparer's space
should remain blank. Anyone who
prepares the return but does not charge
the organization should not sign the
return. Certain others who prepare the
return should not sign. For example, a
regular, full-time employee of the issuer,
such as a clerk, secretary, etc., should not
sign.
proceeds of the issue were invested in a
guaranteed investment contract (GIC). A
GIC includes any nonpurpose investment
that has specifically negotiated withdrawal
or reinvestment provisions and a
estimates shown in the instructions for
their information return.
specifically negotiated interest rate, and
also includes any agreement to supply
investments on two or more dates (for
example, a forward supply contract). See
Regulations section 1.148-1(b). Enter the
name of the provider of the GIC and term
of the GIC to the nearest tenth of a year.
Attach additional sheets if necessary.
If you have suggestions for making this
form simpler, we would be happy to hear
from you. You can send us comments
can write to:
Generally, anyone who is paid to
prepare a return must sign it and fill in the
other blanks in the Paid Preparer Use Only
area of the return.
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224
Line 31. Enter “Yes” if any gross
proceeds were invested beyond the
temporary periods set forth in Regulations
section 1.148-2(e) or 1.148-9(d).
The paid preparer must:
Sign the return in the space provided
for the preparer's signature (a
•
Do not send Form 8038-T to this address.
Instead, see Where To File, earlier.
Line 32. Indicate who prepared the
calculations necessary for the filing of this
form. If other than the issuer, indicate the
name of the entity or the individual
preparing the calculations.
facsimile signature is acceptable),
Enter the preparer information, and
Give a copy of the return to the issuer.
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Instructions for Form 8038-T (Rev. 10-2021)
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