Form 8038-T Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate OMB No. 1545-1219 (Rev. March 1993)

© Under Sections 143(g)(3) and 148(f)

and sections 103(c)(6)(D) and 103A(i)(4) of the Internal Revenue Code of 1954 Department of the Treasury

Internal Revenue Service

Reporting Authority

1 Issuer’s name 2 Issuer’s employer identification number

3 Number and street (or P.O. box no. if mail is not delivered to street address) 4 Report number

5 City or town, state, and ZIP code 6 Date of issue

7 Name of issue 8 CUSIP number

Arbitrage Rebate

9 Type of issue © Issue price © $

10 If Form 8038, Form 8038-G, or Form 8038-GC was not filed for this issue, check box ©

13 Amount of rebate being paid with this form © $

14 Period to which payment relates © From: Month Day Year

15 Amount of rebate previously paid with respect to this issue © $

Elections by the Issuer (see instructions)

Please check the “Yes” or “No” box for each question. Yes No

21 Did you “elect in”? (See instructions)

22 Did you elect to treat a transitioned variable yield issue as a fixed yield issue?

23 Did you make a bond year election?

24 Did you elect to treat a variable yield bond that is not a tender bond as a fixed yield bond after it converted to a fixed rate?

25 Did you elect to continue treating an issue as a variable yield issue after all the bonds in the issue converted to a fixed rate?

26 Did you elect to recompute the yield on a transitioned fixed yield issue?

Under penalties of perjury, I declare that I have examined this return, and accompanying schedules and statements, and to the best of my knowledge

and belief, they are true, correct, and complete. Please

sign

here

Signature of officer Date Type or print name and title

Form 8038-T (Rev. 3-93)

Part I

Part II

©

Cat. No. 11545Y

Room/suite

11 Date of the most recently filed Form 8038-T for this issue: Month Day Year

12 Is this the final Form 8038-T for this issue? © Yes © No

Part III Penalty in Lieu of Arbitrage Rebate

16 Check the appropriate box © 6 months 12 months 18 months 24 months Other

© Check box if this part applies

Part IV

If other, give the number of months since date of issue ©

17 Available construction proceeds © $ Unspent © $

18 If you elected to terminate the election to pay penalty in lieu of arbitrage rebate,

check one of the following (see instructions): © A B Date election was terminated © 

19 Penalty in lieu of rebate © $ or upon termination © $ Total © $

20 Penalty for failure to pay on time (attach statement) © $

Expires 9-30-95

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 rebatable arbitrage and

penalty in lieu of arbitrage rebate.

General Instructions

Note: Use a separate Form 8038-T for

each issue.

The time needed to complete and file

this form will vary depending on

individual circumstances. The estimated

average time is:

Recordkeeping 8 hr., 37 min.

Purpose of Form

Learning about the

law or the form 3 hr., 28 min.

Preparing, copying,

assembling, and sending

the form to the IRS 3 hr., 46 min.

If you have comments concerning the

accuracy of these time estimates or

suggestions for making this form more

simple, we would be happy to hear from

you. You can write to both the Internal

Revenue Service, Washington, DC

20224, Attention: IRS Reports Clearance

Officer, T:FP; and the Office of

Management and Budget, Paperwork

© Check box if this part applies

1. Use Form 8038-T to pay the arbitrage

rebate to the United States.

To: Month Day Year

Reduction Project (1545-1219),

Washington, DC 20503. DO NOT send

the form to either of these offices.

Instead, see Where To File on page 3.

(Section references are to the Internal

Revenue Code of 1986 unless otherwise

noted. )
Form 8038-T (Rev. 3-93) 

Qualified mortgage bonds and

qualified veterans’ mortgage bonds.—

Section 143(g)(3) and section 103A(i)(4)

of the 1954 Code provide the arbitrage

rebate rules for qualified mortgage

bonds issued before July 1, 1992, and

qualified veterans’ mortgage bonds

issued after August 15, 1986. 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.

Industrial development bonds.—

Obligations that are part of an issue of

industrial development bonds issued

before January 1, 1986 (other than

housing obligations described in section

103(b)(4)(A) of the 1954 Code or section

11(b) of the Housing Act of 1937) are

subject to the rebate requirements of

section 103(c)(6)(D) of the 1954 Code.

However, see line 21 and related

instructions.

Penalty in Lieu of Arbitrage

Rebate

Generally, the “ava

proceeds” are the iss

construction issue, (a

earnings on the issue 

amounts in any reaso

reserve or replaceme

from the issue, and e

the foregoing earning

by the amount of the 

reasonably required re

replacement fund and 

costs financed by the 

148(f)(4)(C)(vi).

The penalty in lieu 

is equal to 11⁄2% of th

construction proceed

certain spending requ

section 148(f)(4)(C) an

section 1.148-6 for th

construction proceed

construction proceed

requirements needed 

penalty in lieu of arbit

Penalty for the Ter

Election To Pay a 

of Arbitrage Rebat

You may terminate th

penalty in lieu of arbit

paying a 3% penalty. 

the penalty for the te

under section 148(f)(4

reference to the end o

temporary period. Se

and Regulations sect

definitions of a tempo

Compute the amount 

the termination electio

148(f)(4)(C)(ix) with ref

of the election. See s

148(f)(4)(C)(viii) and (ix

terminating an electio

in lieu of rebate.

Failure To Pay Pen

Failure to pay the pro

penalty on time (after 

election either to pay 

arbitrage rebate or to 

penalty) may cause th

refunding bond with r

be treated as not bein

having been, tax exem

not due to willful neg

be treated as not hav

addition to payment o

penalty, the issuer pa

penalty equal to the s

the amount that was 

and (2) interest (at the 

rate established unde

the amount that was 

date required for the 

on such date.

Further, the rebate requirement

generally does not apply to bond

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.

Computation of arbitrage rebate.—

The amount of the rebatable arbitrage is

(a) the excess of the amount earned on

all nonpurpose investments, over the

amount which would have been earned

if the nonpurpose investments were

invested at a rate equal to the bond

yield, plus (b) any income attributable to

the excess described in (a).

For rules on computing the arbitrage

rebate for bonds subject to section

148(f), see Regulations sections 1.148-1

through 1.148-8. For rules on computing

the arbitrage rebate for bonds subject to

section 143(g)(3) or section 103A(i)(4) of

the 1954 Code, 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. Also,

see line 21 and its instructions.

A “construction issue” is an issue of

tax-exempt bonds if (a) at least 75% of

the available construction proceeds of

such issue are to be used for

construction expenditures for property to

be owned by a governmental unit or a

501(c)(3) organization, and (b) all bonds

that are part of such issue are qualified

501(c)(3) bonds; bonds that are not

private activity bonds; or private activity

bonds issued to finance property to be

owned by a governmental unit or a

501(c)(3) organization.

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.

Arbitrage Rebate

2. Use Form 8038-T (a) to pay a

penalty in lieu of rebating arbitrage to

the United States, (b) to pay a penalty

to terminate the election to pay a

penalty in lieu of rebating arbitrage, or

(c) to pay a penalty for failing to pay

either penalty on time.

Exceptions.—There is no rebate

requirement under section 148(f) if the

exception for temporary investments

under section 148(f)(4)(B) applies or the

Also, the rebate requirement does not

apply to "available construction

proceeds" of a construction issue if

certain spending requirements are met;

or if those spending requirements are

not met, an election is made to pay a

penalty in lieu of arbitrage rebate. See

section 148(f)(4)(C).

The arbitrage rebate exception for a

construction issue only applies to

“available construction proceeds.” Other

proceeds of a construction issue do not

qualify for this exception.

In the case of a construction issue, an

exception from the rebate requirement is

provided under section 148(f)(4)(C) for

the available construction proceeds of

the issue if certain spending

requirements are met. Since this

exception only applies to available

construction proceeds, other proceeds

of a construction issue do not qualify for

this exception. Thus, rebatable arbitrage

may be owed for proceeds other than

available construction proceeds even if

this exception is satisfied for the

available construction proceeds. The

issuer may have elected to pay a

penalty in lieu of rebating arbitrage for

the available construction proceeds if

the spending requirements of section

148(f)(4)(C) are not satisfied. The penalty,

if any, is payable for each applicable

6-month period after the date the bonds

are issued. Detailed rules concerning

these provisions are contained in

Regulations section 1.148-6.

exception for governmental units issuing

$5 million or less of bonds under section

148(f)(4)(D) applies.
Form 8038-T (Rev. 3-93) 

Line 9—Type of issue.—Enter the type

of issue as was checked for this issue

on Form 8038 or Form 8038-G. For

bonds previously reported on Form

8038-GC, enter “Small Governmental

Bond.” Also enter the total issue price

that was listed on Form 8038, 8038-G,

or 8038-GC filed for this issue.

Line 11.—Enter the date of the most

recently filed Form 8038-T for this issue.

Line 12.—In case of 

arbitrage, check the b

only if the issue has b

(redeemed, called, et

the payment of a pen

arbitrage rebate, chec

“Yes” only if the spen

section 148(f)(4)(C) ha

complied with or if a 

payment is made with 

other cases, check th

“No.”

Parts II and III—

Complete Part II, Arb

you are paying arbitra

complete Part III if yo

penalty in lieu of arbi

limited circumstances

rebating arbitrage and 

in lieu of rebating arb

Check the box for 

completed. If you che

“Penalty in Lieu of Ar

you are stating that t

made an election und

148(f)(4)(C)(vii).

Part II—Arbitra

Line 13.—Attach a ch

order for this amount 

the Internal Revenue 

Line 14.—Enter the p

relating to this rebate 

installment other than 

installment, the period 

reflect the bond years 

Line 15.—Enter the t

rebate payments mad

this issue.

Part III—Penalt

Arbitrage Reba

Line 16.—The expen

for available construc

change at the end of 

period following the d

issued. Check the ap

the number of month

that the bonds were 

of the reporting perio

Form 8038-T is being 

is over 24 months (2 

than that given for th

check the box marke

the number of month

issue.

Line 17.—Indicate th

construction proceed

available construction 

the end of the 6-mon

this Form 8038-T is f

Line 18.—

(1) Check box A if

● The election to term

penalty in lieu of arbi

made not later than 9

Where To File

File Form 8038-T with the Internal

Revenue Service Center, Philadelphia,

PA 19255.

Specific Instructions

Part I—Reporting Authority

Line 1.—Enter the name of the

governmental entity that issued the

bonds, not the name of the entity

receiving the benefit of the financing.

Line 4—Report number.—Enter the

report number from Form 8038,

Information Return for Tax-Exempt

Private Activity Bond Issues, or Form

8038-G, Information Return for

Tax-Exempt Governmental Obligations,

on which you reported this issue. If you

reported this issue on Form 8038-GC,

Information Return for Small Tax-Exempt

Governmental Bond Issues, Leases, and

Installment Sales, enter “GC” followed

by the calendar year for which Form

8038-GC was filed (e.g., GC1992).

Note: If you did not file a Form 8038,

8038-G, or 8038-GC, leave this line

blank and check the box on line 10.

Line 6—Date of issue.—Enter the date

of issue. This is generally the first date

on which there is a physical exchange of

the bonds for the purchase price.

Line 7—Name of issue.—Enter the

name of the issue. If there is no name,

please provide other identification of the

issue.

Line 8—CUSIP number.—Enter the

CUSIP (Committee on Uniform

Securities Identification Procedures)

number of the bond with the latest

maturity. If the issue does not have a

CUSIP number, enter “None.”

Penalties

Signature

Form 8038-T must be signed by an

authorized representative of the issuer.

Also type or print the name and title of

the person signing Form 8038-T.

Who Must File

Arbitrage Rebate

Issuers of tax-exempt bonds must file

Form 8038-T to pay the arbitrage rebate

to the United States under section

143(g)(3), section 148(f), or the

corresponding provisions of the 1954

Code. Payments may be made by a

person acting for the issuer for bonds

subject to section 103(c)(6)(D) of the

1954 Code.

Penalties

Issuers must also use Form 8038-T to

pay (a) the penalty in lieu of arbitrage

rebate, (b) the penalty to terminate the

election to pay a penalty in lieu of

arbitrage rebate, or (c) the penalty for

failing to pay a penalty on time.

When To File

Arbitrage Rebate

File Form 8038-T when paying the

arbitrage rebate to the United States.

Under section 148(f), the installments are

due 60 days after the end of every 5th

bond year during the term of the issue.

Each installment must be at least 90%

of the rebatable arbitrage as of the

computation date (i.e., the end of the

5-year period). The final installment is

due 60 days after the date the last bond

of the issue is discharged. The final

installment must include all of the

rebatable arbitrage as of the last

computation date, plus any income

attributable to the rebatable arbitrage.

Special rules.—For a tax and revenue

anticipation bond, you need not make

the last installment of arbitrage rebate

until at least 8 months after the bond

issue date. See also section 143(g)(3)

and section 103A(i)(4) of the 1954 Code

for rules concerning qualified mortgage

bonds and qualified veterans’ mortgage

bonds. See Temporary Regulations

section 1.103-15AT(e) for rules

concerning industrial development

bonds.

File Form 8038-T (a) to pay a penalty in

lieu of arbitrage rebate to the United

States, (b) to pay a penalty to terminate

the issuer’s obligation to pay a penalty in

lieu of arbitrage rebate, or (c) to pay a

penalty for failure to pay a penalty on

time.

Under section 148(f)(4)(C), the

payment of a penalty in lieu of arbitrage

rebate must be made no later than 90

days after the end of each 6-month

period relating to the penalty.

Payment of the 3% penalty to

terminate the penalty in lieu of arbitrage

rebate must be made to the United

States no later than 90 days after (a) the

See the instructions for line 20 for

paying a penalty for failure to pay on

time.

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).
Form 8038-T (Rev. 3-93) 

Line 21.—This election applies to a

bond to which section 103(c)(6)(D) of the

1954 Code applies. You may elect to

apply the rules in Regulations sections

1.148-1 through 1.148-8 to determine if

the bond complies with section

103(c)(6)(D) of the 1954 Code. Unless

you make this election, the rules in

Temporary Regulations section

1.103-15AT will apply. See Regulations

section 1.148-0(b)(2)(ii)(C).

Line 22.—You may e

variable yield issue so

May 15, 1989, and is

June 14, 1989, as a f

you make this electio

issue is computed ov

issue rather than per

Regulations section 1

Line 23.—You may e

day of any bond year 

issue as a computati

make this election, th

may be computed fo

than 5 years. This ele

under certain conditio

Regulations section 1

Line 24.—If you mak

variable yield bond th

bond is treated as a 

after the close of bus

day the bond would 

bond if issued immed

close of business on 

Regulations section 1

Line 25.—If you mak

variable yield issue th

converted to a fixed 

continue to be treate

issue. See Regulation

1.148-3(b)(3)(ii).

Line 26.—You may e

the yield on certain fi

sold on or before Ma

issued on or before J

Otherwise, you must 

computed as of the i

purposes. See Regul

1.148-3(c)(5).

Part IV—Elections

This part applies only if the bonds are

subject to the requirements of

Regulations sections 1.148-1 through

1.148-8.

Any election with respect to an issue

must be in writing and must be made on

or before the later of: (a) the date of

issue; and (b) if the issue is issued on or

before November 15, 1989, the first date

after June 14, 1989, that any amount

with respect to the issue is paid or

required to be paid to the United States.

Generally, an election, once made, is

irrevocable. See Regulations section

1.148-8(h).

In addition, attach a statement to this

Form 8038-T explaining why there was

no willful neglect in the issuer’s failure to

file the Form 8038-T timely and pay the

penalty due. Submit the statement

according to the format and procedures

of Section 3 of Revenue Procedure

88-10, 1988-1 C.B. 635.

● The issuer pays with this Form 8038-T

an amount equal to 3% of the available

construction proceeds of the issue that

have not been spent for the

governmental purpose of the issue as of

the close of the initial temporary period

multiplied by the number of years

(including fractions thereof) in the initial

temporary period.

(2) Check box B if:

● The election to terminate the 11⁄2%

penalty in lieu of arbitrage rebate was

made before the end of the initial

temporary period, and not later than 90

days after the date the construction was

substantially completed,

● The construction financed by the

construction issue has been

substantially completed before the end

of the initial temporary period,

● The issuer has identified on its records

an amount of available construction

proceeds that will not be spent for the

governmental purposes of the issue, and

● The issuer pays with this Form 8038-T

an amount equal to 3% of the available

construction proceeds of the issue that

have not been spent for the

governmental purpose of the issue as of

the close of the temporary period

(shortened as if the temporary period

ended as of the date the election was

made), multiplied by the number of

years (including fractions thereof) in the

initial temporary period.

Line 19.—Indicate the amount of penalty

being paid. If the payment is for a

penalty in lieu of arbitrage rebate or if

the payment is for a termination penalty,

enter the dollar amount. If the payment

represents payments for both, enter the

total of the penalty payments.

Line 20.—If the issuer failed to file a

Form 8038-T on time and to make the

appropriate penalty payment with the

form, see Failure To Pay Penalty on

Time in the General Instructions.

Compute the penalty for failure to pay

on time by adding one-half of the

amount on line 19 to the interest (at the

underpayment rate established under

section 6621) on the amount that was

not paid on the date required for the

period beginning on such date. Enter the

total on line 20 and attach a separate

check for that amount.

Enter the date on which the issuer

made the election to terminate the 11⁄2%

penalty in lieu of arbitrage rebate.

earlier of the end of the initial temporary

period or the date the construction is

substantially completed, and