Form 8038-B - Information Return for Build America Bonds and Recovery Zone Economic Development Bonds

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Instructions for Form 8038-B

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12:43 - 16-OCT-2009

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Instructions for Form 8038-B

Department of the Treasury
Internal Revenue Service

(Rev. January 2010)
Information Return for Build America Bonds and Recovery Zone Economic
Development Bonds
Section references are to the Internal
Revenue Code unless otherwise noted.

General Instructions
What’s New
The American Recovery and
Reinvestment Act of 2009 created three
types of Build America Bonds. Section
54AA added both Tax Credit and Direct
Pay Build America Bonds. Section
1400U-2 added Recovery Zone Economic
Development Bonds, a form of Direct Pay
Build America Bonds. Notice 2009-26
required that, subject to updated IRS
information reporting forms or
procedures, all three types of Build
America Bonds issued were to be
reported on Form 8038-G.

Purpose of Form
Beginning January 1, 2010, Form 8038-B
is to be used by issuers of Build America
Bonds (Tax Credit) and Build America
Bonds (Direct Pay) and Recovery Zone
Economic Development Bonds to provide
the IRS with the information required by
section 149(e).

Who Must File
Governmental issuers of Build America
Bonds and Recovery Zone Economic
Development Bonds must file a separate
Form 8038-B for each issue of Build
America Bonds and Recovery Zone
Economic Development Bonds issued
after January 1, 2010.

When To File
File Form 8038-B on or before the 15th
day of the 2nd calendar month after the
close of the calendar quarter in which the
bond was issued. Form 8038-B may not
be filed before the issue date and must be
completed based on the facts as of the
issue date. For Build America Bonds
(Direct Pay) and for Recovery Zone
Economic Development Bonds, Form
8038-B must be filed at least 30 days
prior to the submission of the first Form
8038-CP, Return for Credit Payments to
Issuers of Qualified Bonds, that is filed to
request payment with respect to an
interest payment date for that issue.
Late filing An issuer may be granted an
extension of time to file Form 8038-B
under Section 3 of Rev. Proc. 2002-48,
2002-37 I.R.B. 531, if it is determined that
the failure to file timely is not due to willful
neglect. Type or print at the top of the
form, ÷“Request for Relief under Section
3 of Rev. Proc. 2002-48”, and attach a
letter explaining why Form 8038-B was

not filed on time. Also indicate whether
the bond issue in question is under
examination by the IRS. Do not submit
copies of the trust indenture or other bond
documents.
Note. If Form 8038-B is filed late, it still
must be filed 30 days prior to the
submission of the first 8038-CP for that
issue.

Where To File
File Form 8038-B and any attachments
with the Department of the Treasury,
Internal Revenue Service Center, Ogden,
UT 84201-0020.

Other Forms That May Be
Required
For issuers who elect under section 6431
to receive a direct payment from the
Federal Government equal to a
percentage of the interest payment, the
payment must be requested on Form
8038-CP. Each Form 8038-CP can only
relate to the interest paid on a single bond
issue.
For rebating arbitrage (or paying a
penalty in lieu of arbitrage rebate) to the
Federal Government, use Form 8038-T,
Arbitrage Rebate, Yield Reduction and
Penalty in Lieu of Arbitrage Rebate.

Rounding to Whole Dollars
You may show amounts on this return as
whole dollars. To do so, drop amounts
less than 50 cents and increase amounts
from 50 cents through 99 cents to the
next higher dollar.

Definitions
Build America Bond (Tax Credit). This
is an issue of taxable state or local
governmental bonds (excluding private
activity bonds under section 141) as
defined in section 54AA(d) that provide a
tax credit to the holder of the bond.
Build America Bond (Direct Pay). This
is an issue of taxable state or local
governmental bonds (excluding private
activity bonds under section 141) as
defined in section 54AA(g) the issuer of
which elects to receive a refundable credit
under section 6431 in lieu of tax credits to
the holder of the bond.
Recovery Zone Economic
Development Bond. This is an issue of
taxable state or local governmental bonds
that meet the requirements under section
1400U-2 that may be used to finance
certain qualified economic development
purposes as defined under section
Cat. No. 54165A

1400U-2(c) the issuer of which receives a
refundable credit under section 6431.
Arbitrage rebate. The issuer of a Build
America Bond or Recovery Zone
Economic Development Bond must
rebate to the United States arbitrage
profits earned from investing proceeds of
the bond in higher yielding nonpurpose
investments. See section 148(f).
Gross proceeds. Gross proceeds
means any proceeds and replacement
proceeds of an issue as defined under
Regulations section 1.148-1(b).
Sale proceeds. Sale proceeds are
determined under Regulations section
1.148-1(b) as any amount actually or
constructively received from the sale of
the issue, including amounts used to pay
underwriters’ discount or compensation
and accrued interest, other than
pre-issuance accrued interest. Sale
proceeds also include, but are not limited
to, amounts derived from the sale of a
right that is associated with a bond, and
that is described in Regulations section
1.148-4(b)(4). Sale proceeds shall also
include the proceeds from the sale of
credit strips. See Regulations section
1.148-4(h)(5) treating amounts received
upon the termination of certain hedges as
sale proceeds.
Issue. Generally, bonds are treated as
part of the same issue if they are issued
by the same issuer, on the same date,
and in a single transaction, or series of
related transactions.
Issue price. The issue price of
obligations is generally determined under
Regulations section 1.148-1(b). Thus,
when issued for cash, the issue price is
the price at which a substantial amount of
the obligations are sold to the public. To
determine the issue price of an obligation
issued for property, see sections 1273
and 1274 and the related Regulations.

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
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

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Instructions for Form 8038-B

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reason for the amended return and write
across the top, “Amended Return
Explanation.”
Line 1. The issuer’s name is the name of
the entity issuing the bonds, not the name
of the entity receiving the benefit of the
financing. For a lease or installment sale,
the issuer is the lessee or the purchaser.
Line 2. An issuer that does not have an
employer identification number (EIN)
should apply for one on Form SS-4,
Application for Employer Identification
Number. You can get this form on the IRS
website at www.irs.gov or by calling
1-800-TAX-FORM (1-800-829-3676). You
may receive an EIN by telephone by
following the instructions for Form SS-4.
Line 4. Enter two self-designated digits
after the preprinted 3. If filing multiple
Form 8038-Bs for separate bond issues
during the calendar year, number reports
consecutively in the order of issue date
(for example, 314, 315, etc.). If the return
is amending a previously filed Form
8038-B, use the same report number that
was used on the original filing.
Line 7. The date of issue is generally the
date on which the issuer exchanges the
bonds for the underwriter’s (or other
purchaser’s) funds. For a lease or
installment sale, enter the date interest
starts to accrue.
Line 8. If there is no name of the issue,
please provide other identification of the
issue.
Line 9. Enter the CUSIP (Committee on
Uniform Securities Identification
Procedures) number of each bond. If
some or all of the tax credits are stripped,
attach a schedule with the name of each
purchaser of the tax credit bonds or tax
credit strips, each purchaser’s EIN and
the CUSIP numbers associated with the
bonds and the stripped tax credits. If the
issue does not have a CUSIP number,
write, “None”. If the issue either has no
CUSIP number or is privately placed,
attach a schedule with each purchaser’s
EIN, name, and address.

Part II—Types of Bonds

!

CAUTION

Elections referred to in Part II are
made on the original bond
documents, not on this form.

Line 1. You must identify the type of
bonds issued by checking the
corresponding box. If box 1b or 1c is
checked, complete lines 2 and 3.
Line 2. Enter the first interest payment
date. An interest payment date is the date
on which interest is payable by the
governmental issuer to the holders of the
bonds. (For variable rate issues, enter the
last interest payment date applicable to
the quarterly period for which the first
8038-CP for the issue will relate.)

Part III—Type of Issue
Line 1. For Build America Bonds identify
the type of issue and enter the issue price
allocable to each type of project
expenditure.

Line 2. For Recovery Zone Economic
Development Bonds identify the type of
issue and enter the issue price allocable
to each type of expenditure.
Lines 3. See Issue Price under
Definitions on page 1. For Build America
Bonds, the amounts under Line 1a
through 1h, or for Recovery Zone
Economic Development Bonds, the
amounts under Line 2a through 2d, must
total the issue price of the entire issue
entered in Line 3. In addition, issuers of
Build America Bonds (Direct Payment)
and Recovery Zone Economic
Development Bonds must attach a
schedule to the Form 8038-B which
contains the information described below
for the bond issue:
1. For fixed-rate bonds, attach a
complete debt service schedule titled
“Fixed Rate Bond-Debt Service Schedule”
that provides a list of each interest
payment date, the total interest payable
on such date, the total principal amount of
bonds expected to be outstanding on
such date, the credit payment expected to
be requested from the IRS on such date,
and the earliest date that the bonds can
be called.
2. For variable rate bonds, attach a
debt service schedule titled “Variable
Rate Bond-Debt Service Schedule” that
provides a list of each interest payment
date, the total principal amount of bonds
expected to be outstanding on such date,
and a description of how interest on the
bonds is computed.

the stated redemption prices at maturity
of each bond issued as part of the issue.
For a lease or installment sale, write “N/
A”.
Line 2. Enter the last date on which any
of the bonds will mature.
Line 3. The weighted average maturity is
the sum of the products of the issue price
of each maturity and the number of years
to maturity (determined separately for
each maturity and by taking into account
mandatory redemptions), divided by the
issue price of the entire issue (from Part
III, Line 3.) For a lease or installment sale,
enter instead the total number of years
the lease or installment sale will be
outstanding.
Line 4. The yield is generally the
discount rate that when used to compute
the present value of all payments of
principal and interest to be paid on the
obligation, produces an amount equal to
the issue price, including accrued interest.
See Regulations section 1.148-4 for
specific rules to compute the yield on an
issue. If the issue is a variable rate issue,
write “VR” as the yield of the issue. For
other than variable rate issues, carry the
yield out to four decimal places (for
example, 5.3125%). If reporting Build
America Bonds (Direct Pay) or Recovery
Zone Economic Development Bonds the
yield is reduced by the amount of credit
payments received under section 6431. If
the issue is a lease or installment sale,
enter the effective rate of interest being
paid.

Line 4. If obligations are Tax Anticipation
Notes (TANS) or Revenue Anticipation
Notes (RANS), check box 4a. Check this
box if property other than cash is
exchanged for the obligation, for example,
acquiring a police car, a fire truck, or
telephone equipment through a series of
monthly payments. (This type of
obligation is sometimes referred to as a
“municipal lease”.) Also check this box if
real property is directly acquired in
exchange for an obligation to make
periodic payments of interest and
principal. Do not check this box if the
proceeds of the obligation are received in
the form of cash, even if the term “lease”
is used in the title of the issue.
Line 5. Check this box if property other
than cash is exchanged for the obligation,
for example, acquiring a police car, a fire
truck, or telephone equipment through a
series of monthly payments. (This type of
obligation is sometimes referred to as a
“municipal lease”.) Also check this box if
real property is directly acquired in
exchange for an obligation to make
periodic payments of interest and
principal. Do not check this box if the
proceeds of the obligation are received in
the form of cash, even if the term “lease”
is used in the title of the issue.

Part V—Use of Proceeds of
Issue

Part IV—Description of
Obligations
Line 1. The stated redemption price at
maturity of the entire issue is the sum of

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For a lease or installment sale, write “N/A”
in the space to the right of the title for Part
V.
Line 1. See Sale Proceeds under
definitions on page 1.
Line 2. Estimate reasonably expected
investment proceeds on the sales
proceeds in Line 1.
Line 3. Enter the amount of proceeds
that will be used to pay interest from the
date the bonds are dated to the date of
issue.
Line 4. Enter the amount of the
proceeds that will be used to pay bond
issuance costs, including underwriter1s
fees, fees for trustees, and bond counsel.
Note. Costs of issuance are limited to
not more than 2 percent of sale proceeds
for Build America Bonds (Direct Pay) and
Recovery Zone Economic Development
Bonds.
Line 5. Enter the amount of the
proceeds that will be used to pay fees for
credit enhancement that are taken into
account in determining the yield on the
issue for purposes of section 148(h), for
example, bond insurance premiums and
certain fees for letters of credit.
Line 6. Enter the amount of the
proceeds that will be allocated to a
reasonably required reserve fund. See
funding limitations for such a reserve
under Regulations section 1.148-2(f).

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Instructions for Form 8038-B

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Line 9. Enter the amount of the
proceeds that will be used to pay
principal, interest, or call premium on any
other issue of bonds within 90 days of the
date of issue.
Note. This applies only to Build America
Bonds (Tax Credit).
Line 10. Enter the amount of the
proceeds that will be used to pay
principal, interest, or call premium on any
other issue of bonds after 90 days of the
date of issue, including proceeds that will
be used to fund an escrow account for
this purpose.
Note. This applies only to Build America
Bonds (Tax Credit).

Part VI— Description of
Refunded Bonds
Complete this part only if the bonds are to
be used to refund a prior issue of
governmental bonds.
Note. Pursuant to Notice 2009-26, and
Notice 2009-50, refinancing of certain
short term indebtedness with Build
America Bonds (Direct Pay), and
Recovery Zone Economic Development
Bonds is not treated as a refunding.
Lines 1 and 2. The remaining weighted
average maturity is determined without
regard to the refunding. The weighted
average maturity is determined in the
same manner as for Part IV, Line 3.
Line 3. Enter the last date on which any
of the bonds being refunded will be
called.
Line 4. If more than a single issue of
bonds will be refunded, enter the date of
issue of each of the issues to be refunded
on a schedule.

Part VII—Miscellaneous
Line 1. Enter the amount of volume cap
allocated to the issue of Recovery Zone
Economic Development Bonds. Attach a
copy of the certification of the volume cap
allocation by the state, county, or large
municipality. Also attach a copy of the
certification of the Recovery Zone
designation by the issuer. Failure to
attach the required certifications will delay
the processing of this return.
Line 2. See Gross Proceeds under
Definitions on page 1. If any portion of the
gross proceeds of the issue is or will be
invested in a guaranteed investment
contract, as defined in Regulations
section 1.148-1(b), enter the amount of
the gross proceeds so invested, as well
as the final maturity date of the
guaranteed investment contract and the
name of the provider of such contract.
Line 3. Enter the amount of proceeds of
this issue used to fund a loan to another
governmental unit.

Line 4. If this issue is a loan of proceeds
from another governmental issue, check
box 4a and enter the date of issue, EIN,
and name of the issuer of the master pool
obligation.
Line 5. Check this box if the issuer has
identified a hedge on its books and
records in accordance with Regulation
sections 1.148-4(h)(2)(viii) and
1.148-4(h)(5) that require an issuer of
bonds to identify a hedge in order for it to
be included in bond yield calculations for
purposes of section 148.
Line 6. In determining if the issuer has
super-integrated a hedge, apply the rules
of Regulations section 1.148-4(h)(4). If
the hedge is super-integrated, check the
box.
Line 7. Check this box if the issue is a
construction issue as defined in
Regulations section 1.148-7(f) and an
irrevocable election to pay a penalty in
lieu of arbitrage rebate has been made on
or before the date the bonds were issued.
The penalty is payable with a Form
8038-T for each 6-month period after the
date the bonds are issued. Do not make
any payment of penalty in lieu of arbitrage
rebate with this form. See Rev. Proc.
92-22, 1992-1 C.B. 736 for rules
regarding the “election document.”
Line 8. An issue is an issue of private
activity bonds if the issuer takes a
deliberate action defined in Regulations
section 1.141-2(d)(3) as any action taken
by the issuer that is within its control,
regardless of whether such act was
intended to violate the private business
use test or the private loan financing test.
Regulations section 1.148-12 sets forth
certain remedial actions that prevent a
deliberate action with respect to property
financed by an issue from causing that
issue to meet the private business use
test or the private loan financing test.
Check the box if the issuer has
established procedures to ensure
remedial action with respect to all
nonqualified bonds in accordance with
Regulations section 1.141-12.
Line 9. Check the box if the issuer has
established procedures to monitor
compliance with the arbitrage, yield
restriction, and rebate requirements of
section 148.

Part VIII— Consent to
Disclosure of Certain
Information From This Return
Line 1. If the issuer of a Build America
Bond (Tax Credit) consents to the IRS’s

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publication, through a website or other
publication, of it is name and address,
name and description of the bond issue,
date of issuance, CUSIP number, final
maturity date, and stated redemption
price at maturity, in order to assist the IRS
in the proper reporting of interest, tax
credits or other benefits under section
6049, and the regulations thereunder,
check the box next to “YES” on Line 1.

Signature
An authorized representative of the issuer
must sign Form 8038-B and any
applicable certification. Also print the
name and title of the person signing Form
8038-B.
Privacy Act and 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. Section 6109
requires paid preparers to provide their
identifying number.
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
confidential, as required by section 6103.
The time needed to complete and file
this form will vary depending on individual
circumstances. The estimated average
time is:
Recordkeeping . . . . . . . . .
Learning about the law or the
form . . . . . . . . . . . . . . . . .
Preparing, copying,
assembling, and sending the
form to the IRS . . . . . . . . . .

x hr., xx min.
xx min.
xx min.

If you have comments concerning the
accuracy of these time estimates or
suggestions for making this form simpler,
we would be happy to hear from you. You
can write to the Internal Revenue Service,
Tax Products Coordinating Committee,
SE:W:CAR:MP:T:T:SP, 1111 Constitution
Ave. NW, IR-6526, Washington, DC
20224. Do not send the form to this
address. Instead, see Where To File on
page 1.