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Form 8038T: Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate
Internal Revenue Service Form 8038-T is used by issuers of tax‑exempt and other section 148 bonds to report and pay arbitrage rebates, yield‑reduction payments, and penalties, with rebate installments due within 60 days after each computation date.
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IRS Form 8038T - Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate
Internal Revenue Service Form 8038-T is used by issuers of tax‑exempt and other section 148 bonds to report and pay arbitrage rebates, yield‑reduction payments, and penalties, with rebate installments due within 60 days after each computation date.
Risk Radar
Scan points- 1Missing the 60‑day rebate deadline triggers a 50 % penalty plus interest.
- 2Filing one Form 8038‑T for multiple bond issues instead of a separate form per issue.
- 3Using a single Form 8038‑T for a period longer than six months without checking the “Other” box.
- 4Missing the 60‑day payment deadline after a computation date, which incurs a 50 % penalty plus interest.
- 5Failing to attach the required explanation for a failure to pay when seeking a waiver on Line 20.
Plain English
This form tells the IRS how much money an issuer must pay back because the bond’s earnings exceed the tax‑exempt limit. It covers the rebate, any yield‑reduction payment, and any penalty instead of a rebate. The issuer fills in bond details, calculates the amounts, and signs the form before mailing it.
Submission Date
- Filing date: 2021-10-12 22:13:34
- Preparation window: collect IDs, supporting records, and signatures in advance.
- Final review: verify names, dates, and required fields before submission.
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What this form is for
- Use this form when an issuer of a tax‑exempt or other section 148 bond must pay an arbitrage rebate, a yield‑reduction payment, a penalty in lieu of arbitrage rebate, or related penalties and interest.
Form selector
Use this form or another form?
Arbitrage rebate installment due
Payment must be made within 60 days after each computation date
✓ Verify rebate due date
Yield‑reduction payment required after temporary period ends
Must file to comply with yield‑restriction rules
✓ Confirm yield‑reduction calculation
Penalty in lieu of arbitrage rebate or termination of election
Penalty must be paid within 90 days of the end of the spending period
✓ Ensure penalty amount matches line 21
Deadline or filing window
Each computation date initiates a filing requirement. The issuer must submit Form 8038‑T and pay the rebate within 60 days after that date. No automatic extension is provided; the deadline must be met to avoid the 50 % penalty and interest.
Checklist
What you need before filling it out
Issuer’s name
Legal name of the bond issuer · Form line 1
Employer identification number (EIN)
Issuer’s EIN · Form line 2
Arbitrage rebate amount
Rebate calculation worksheet · Part V line 13
Yield‑reduction payment amount
Yield‑restriction supporting schedule · Part V line 14
Penalty in lieu amount
Penalty election documentation · Part V line 15
Before you submit
- 1Enter the issuer’s legal name on line 1.
- 2Enter the issuer’s EIN on line 2.
- 3Complete line 13 with the calculated arbitrage rebate amount.
- 4Complete line 14 with any required yield‑reduction payment.
- 5Complete line 15 with the penalty in lieu amount, if applicable.
- 6Compute interest on late payments on line 22 as instructed.
- 7Combine all payment amounts on line 23 and attach a check or money order payable to the United States Treasury.
- 8Sign the form where indicated before mailing.
How to file this form
- 1Fill in the issuer’s name and EIN on lines 1‑2.
- 2Calculate and enter all required payment amounts on lines 13‑22.
- 3Add the total on line 23 and attach a check or money order payable to the United States Treasury.
- 4Sign the form, retain a copy for your records, and mail it to the IRS Center in Ogden, UT 84201‑0027, obtaining proof of mailing.
Known limitations
- 1The form does not apply to bonds that are not subject to Internal Revenue Code section 148.
- 2The form cannot be used for multiple bond issues on a single submission; each issue requires its own Form 8038‑T.
- 3The form is limited to reporting arbitrage rebate, yield‑reduction payments, and related penalties, not regular interest payments.
- 4For qualified mortgage bonds and qualified veterans’ mortgage bonds, separate rules in section 143(g)(3) apply, so Form 8038‑T does not cover those calculations.
Field map
Compact field-by-field guide
General Info
2 items
Full legal name and taxpayer identification number (SSN or EIN).
Current mailing address.
Details
2 items
Complete all applicable sections of this form according to the official IRS instructions.
Enter the relevant dollar amount if this form involves tax calculation.
Certification
1 items
Read and acknowledge any certifications required by this form.
Signatures
1 items
Sign and date. Unsigned forms cannot be processed.
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Fillable formOpen in Editor->Form 8038‑T is revised in October 2021. The instructions direct users to www.irs.gov/Form8038T for the latest information.
What changed or needs a fresh check
- Edition date — confirm the revision reads October 2021
- Fee — Not stated in the official source
- Mailing address — confirm IRS Center Ogden, UT 84201‑0027
- Signature — Not stated in the official source
Quick Facts
Downloads
After you file
- 1Retain a copy of the completed Form 8038‑T and all supporting schedules for at least three years.
- 2Keep records of the payment made (e.g., bank receipt) to match the amount reported on the form.
- 3Expect an acknowledgment from the IRS confirming receipt of the form and any payment.
- 4If an error is discovered, file an amended Form 8038‑T to correct or add information for the same issue date.
- 5Store the IRS‑issued confirmation of any amended filing together with the original return.
Sources
- SRCInstructions p.1 — issuers of tax‑exempt bonds and any other bonds subject to section 148 must file Form 8038‑T.
- SRCInstructions p.1 — use a separate Form 8038‑T for each issue.
- SRCInstructions p.2 — penalty in lieu of arbitrage rebate equals 1 ½ % of the amount of available construction proceeds that do not meet the spending requirements.
- SRCInstructions p.2 — termination election requires payment equal to 3 % of the unspent available construction proceeds multiplied by the number of years in the initial temporary period.
- SRCInstructions p.2 — final rebate payment for an issue is due within 60 days after the issue is discharged.
- SRCInstructions p.2 — for an issue retired within 3 years, the final rebate payment need not occur before the end of 8 months after the issue date.
- SRCInstructions p.2 — penalty in lieu of arbitrage rebate payments must be paid within 90 days of the end of the applicable spending period.
- SRCInstructions p.2 — 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.
- SRCInstructions p.3 — Lines 9 and 10 require the name, title, and telephone number of the officer or other employee the IRS may call for more information.
- SRCInstructions p.3 — Line 26 reports qualified administrative costs taken into account in computing the rebate amount.
Common confusion points
Do I need a separate Form 8038‑T for each bond issue?
The instructions require one form per issue.
→ Verify that each issue has its own completed Form 8038‑T.
When is the final rebate payment due?
The deadline is 60 days after the issue is discharged, but a different timing applies if the issue retires within three years.
→ Confirm the discharge date and calculate 60 days, or check the 8‑month rule for early retirements.
What is the penalty rate if I elect to pay a penalty in lieu of rebate?
The penalty equals 1 ½ % of the available construction proceeds that do not meet spending requirements.
→ Calculate 1.5 % of the unspent construction proceeds and compare to the amount entered.
How can I terminate the penalty election?
Termination requires payment of 3 % of the unspent proceeds multiplied by the number of years in the initial temporary period.
→ Multiply the unspent proceeds by 3 % and then by the number of years, and verify the result matches the payment.
Do I need to report qualified administrative costs on Line 26?
Line 26 is designated for qualified administrative costs taken into account in computing the rebate amount.
→ Ensure any qualified administrative costs are entered on Line 26 as required.
Can I file an amended return if I made a mistake?
The instructions allow filing an amended return to change or add information for the same issue date.
→ Submit an amended Form 8038‑T with corrected data and indicate it is an amendment.
Workflow map
Related forms and next steps
Before
Current
After
Often used with
⚠ If something goes wrong
- file an amended Form 8038‑T – to correct errors or add information for the same issue date.
Questions about IRS Form 8038T
What is IRS Form 8038T used for?
This form tells the IRS how much money an issuer must pay back because the bond’s earnings exceed the tax‑exempt limit. It covers the rebate, any yield‑reduction payment, and any penalty instead of a rebate. The issuer fills in bond details, calculates the amounts, and signs the form before mailing it.
Who must file IRS Form 8038T?
Issuers of tax‑exempt bonds and any other bonds subject to section 148 must file Form 8038‑T, including issuers of qualified private activity bonds that have a defeasance escrow.
What information does IRS Form 8038T require?
The form collects the issuer’s name (Line 1), contact information for an officer or designated person (Lines 9‑10), the calculated rebate, yield‑reduction and penalty amounts, and any required explanations (Lines 20‑21).
When is IRS Form 8038T due?
Rebate installments are required for computation dates that occur at least once every 5 years, and each payment is due within 60 days after the computation date.
Where do I file IRS Form 8038T?
Mail the completed Form 8038‑T to the IRS Center in Ogden, UT 84201‑0027. Private delivery services may be used, but if the address is a P.O. box the U.S. Postal Service must be used.
How do I complete IRS Form 8038T?
Enter the governmental entity’s name on Line 1, then provide the officer’s name, title and phone number on Lines 9‑10. Calculate the arbitrage rebate, any yield‑reduction payment and any penalty, and report them on the appropriate lines, attaching an explanation if a waiver is claimed (Line 20). Complete Part IV for late‑payment details and sign and date the form, printing the signer’s name and title.
What happens if IRS Form 8038T is filed incorrectly?
Late or incorrect payments trigger penalties and interest; for governmental and qualified 501(c)(3) bonds the penalty equals 50 % of the unpaid rebate plus interest.
Do I need a separate Form 8038‑T for each bond issue?
The instructions require one form per issue. Verify that each issue has its own completed Form 8038‑T.
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