Form 1097-BTC, Bond Tax Credit

2016

Department of the Treasury
Internal Revenue Service

Instructions for Form
1097-BTC
Bond Tax Credit
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments

For the latest information about developments related to
Form 1097-BTC and its instructions, such as legislation
enacted after they were published, go to www.irs.gov/
form1097btc.

Reminder

In addition to these specific instructions, you should also
use the 2016 General Instructions for Certain Information
Returns. Those general instructions include information
about the following topics.
Who must file (nominee/middleman).
When and where to file.
Electronic reporting requirements.
Corrected and voided returns.
Statements to recipients.
Taxpayer identification numbers.
Backup withholding.
Penalties.
Other general topics.
You can get the general instructions at www.irs.gov/
form1097btc.

Specific Instructions

Issuers of certain tax credit bonds (or their agents) and
recipients of Form 1097-BTC from the bond issuer or
agent, such as mutual funds or partnerships, who are
further distributing the credit must file Form 1097-BTC for
each tax credit distributed from the following tax credit
bonds.
New clean renewable energy bonds.
Qualified energy conservation bonds.
Qualified zone academy bonds.
Qualified school construction bonds.
Clean renewable energy bonds.
Build America bonds (Tax Credit).
For tax credit bonds issued with two or more maturities,
each maturity must be reported separately on the Form
1097-BTC issued by the bond issuer or its agent.
Note. Issuers that have elected to issue build America
bonds (Direct Pay) under section 54AA(g) or specified tax
credit bonds under section 6431(f) to receive a refundable
credit under section 6431(a) in lieu of tax credits under
section 54A should not file Form 1097-BTC.

Definitions
Tax credit bond. Generally, a tax credit bond is an
obligation issued under sections 54, 54A, 54AA, 1397E,
Aug 06, 2015

or 1400N(l) that entitles the taxpayer holding such bond
on one or more credit allowance dates occurring during
any tax year to a credit against the federal income tax
imposed for that tax year.
Qualified tax credit bond. Qualified tax credit bonds
under section 54A include new clean renewable energy
bonds under section 54C, qualified energy conservation
bonds under section 54D, qualified zone academy bonds
under section 54E, and qualified school construction
bonds under section 54F.
New clean renewable energy bond. An obligation that
is part of an issue, 100% of the available project proceeds
of which are to be used for capital expenditures incurred
by governmental bodies, public power providers, or
cooperative electric companies for one or more qualified
renewable energy facilities, as defined in section 54C.
The annual credit allowed is 70% of the annual credit
amount determined by applying 54A(b).
Qualified energy conservation bond. An obligation
that is part of an issue, 100% of the available project
proceeds of which are to be used for one or more qualified
energy conservation purposes, as defined in section 54D.
The annual credit allowed is 70% of the annual credit
amount determined by applying 54A(b).
Qualified zone academy bond. An obligation that is
part of an issue, 100% of the available project proceeds of
which are to be used for a qualified purpose for a qualified
zone academy established by an eligible local education
agency, as provided in section 54E; or an obligation that is
part of an issue, 95% or more of the proceeds of which
are to be so used and issued before October 4, 2008, as
provided by section 1397E.
Qualified school construction bond. An obligation that
is part of an issue, 100% of the available project proceeds
of which are to be used for the construction, rehabilitation,
or repair of a public school facility or for the acquisition of
land on which such a facility is to be constructed with the
proceeds, as provided in section 54F.
Clean renewable energy bond. An obligation that is
part of an issue, 95% or more of the proceeds of which
are used for capital expenditures incurred by qualified
borrowers for one or more qualified projects, as defined in
section 54.
Build America bond (Tax Credit). An obligation issued
by a state or local government (excluding private activity
bonds under section 141) as defined in section 54AA(d).

Who Must Receive Form 107-BTC

Each person who is allowed a tax credit as a holder,
directly or indirectly, of a tax credit bond or a stripped

Cat. No. 54657F

credit coupon on one or more credit allowance dates
during the calendar year in an amount of at least $10 must
be issued Form 1097–BTC. Filings of Form 1097-BTC
with respect to a bond, by the issuer or the issuer's agent,
must be made on a separate Form 1097-BTC for each
bond. Recipients of Form 1097-BTC from the bond issuer
or agent, such as brokers, nominees, mutual funds, or
partnerships, who are further distributing the credit must
file only one Form 1097-BTC per recipient or account,
aggregating credit from all applicable bonds.

Reporting period:

To recipient (on or before):

1 Quarter: January – March

May 15*

2 Quarter: April – June

August 15*

3rd Quarter: July – September

November 15*

Annual/4 Quarter: October –
December

February 15*

st

nd

th

*Dates may change due to weekends or holidays

Credit Allowance Dates

For the first three quarters, report to the recipient only
the amounts for the months of the applicable quarter. Box
1 should not be completed and box 6 is optional.

The tax credit from tax credit bonds or stripped credit
coupons is allowed on each credit allowance date for
which the bond was outstanding or to which the stripped
credit coupon corresponds. For qualified tax credit bonds
and clean renewable energy bonds the credit allowance
dates are March 15, June 15, September 15, December
15, and the last day on which the bond is outstanding. For
bonds issued during the 3-month period ending on a
credit allowance date, the amount of the credit is
determined ratably based on the portion of the 3-month
period during which the bond is outstanding. The same
ratable determination of credit applies when a bond is
redeemed or matures. For build America bonds (Tax
Credit), the credit allowance dates are the interest
payment dates. For qualified zone academy bonds issued
before October 4, 2008, the credit allowance date is the
last day of the 1-year period beginning on the issue date
of the bond and each anniversary of such day thereafter.

You are not required to furnish a report solely for the
fourth quarter because the fourth quarter amounts are
reported with the annual filing. For the annual filing, report
the credits for each month in boxes 5a–5l; report the total
of those amounts in box 1; and complete the rest of the
form as applicable. Furnish the annual filing to the
recipient by February 15, 2017.
If any amounts previously furnished for the first three
quarters need to be corrected, report the correct amounts
for the annual reporting and explain the correction to the
recipient; no explanation is required for the IRS filing.
For the report furnished to the recipient (quarterly or
annual), you may use Copy B or your own substitute
statement reporting all the same applicable information
(the reporting for the first three quarters may be furnished
electronically). See Publication 1179, General Rules and
Specifications for Substitute Forms 1096, 1098, 1099,
5498, and Certain Other Information Returns, for specific
rules about providing substitute statements to recipients.

The tax credit allowed to holders of any tax credit
bonds or stripped credit coupons is treated as interest
which is included in gross income and must be reported
as interest income on a Form 1099-INT or Form
1099-OID, as applicable. For more information on
reporting the tax credit treated as interest income paid
from tax credit bonds, see the Instructions for Forms
1099-INT and 1099-OID.

The IRS encourages Form 1097-BTC issuers to
provide the credit information to the recipient monthly if
applicable, and as soon after the end of the month in
which a credit arises as possible.

When To File

For more information about the requirement to furnish a
statement to the recipient, see part M in the 2016 General
Instructions for Certain Information Returns.

File Copy A of Form 1097-BTC with the IRS by February
28, 2017 (March 31, 2017, if filed electronically). See
Statement to Recipient below for furnishing statements to
recipients.

Bond Issuer. If issuing the Form 1097-BTC as an issuer
of the bond or its agent, box 2a of the form will always
reflect code “C” and box 2b must reflect the CUSIP
number for the bond or stripped coupon, unless a CUSIP
number was not issued for the bond. See the instructions
for boxes 2a and 2b.

Penalties for Failure To File

There are penalties for failure to file correct information
returns by the due date and for failure to furnish correct
payee statements. See part O in the 2016 General
Instructions for Certain Information Returns for details.
The failure to file Forms 1097-BTC also includes the
requirement to file electronically. For more information on
penalties for failure to file electronically, see part F in the
2016 General Instructions for Certain Information Returns.

Form 1097-BTC Issuer's Name, Address, and
Telephone Number
Enter the name, street address, city or town, state or
province, country, ZIP or foreign postal code, and
telephone number of the entity issuing the Form
1097-BTC.

Statement to Recipient

If required to file Form 1097-BTC, you must furnish a
statement to the recipient quarterly for each credit amount
indicated on or before the 15th day of the 2nd calendar
month after the close of the calendar quarter in which the
credit was allowed.

Enter the entity's true name (as set forth in the legal
documents creating it). Enter the address of the entity's
principal office or place of business. Include the suite,
room, or other unit number after the street address. If the
post office does not deliver mail to the street address and
the entity has a P.O. box, show the box number instead.
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Instructions for Form 1097-BTC (2016)

This box should be only filled out when filing Copy A
and when the annual statement (Copy B of the form) is
sent to the recipient. See Statement to Recipient, earlier.

Note. Do not use the address of the registered agent for
the state in which the entity is incorporated. For example,
if a business is incorporated in Delaware or Nevada and
the corporation's principal office is located in Little Rock,
AR, the corporation should enter the Little Rock address.
If the entity receives its mail in care of a third party
(such as an accountant or an attorney), enter for the street
address “C/O” followed by the third party's name and
street address or P.O. box.

Box 2a. Code

Form 1097-BTC Issuer's Federal Identification
Number

Enter the unique identification number code. Enter “A” for
account number, “C” for CUSIP number, and “O” if the
unique identification number is not an account number or
a CUSIP number, such as a self-provided identification
number. If you checked the first box under Form
1097-BTC issuer, and a CUSIP number is assigned to the
bond(s), enter “C.” If no CUSIP number is assigned to the
bond(s) and you checked the first box under Form
1097-BTC issuer, use the account number as the unique
identifier and enter “A” or “O” if you are using any other
unique identifying number. See Box 2b. Unique Identifier
next.

Recipient's Federal Identification Number

The unique identification number is assigned by the Form
1097-BTC issuer and is limited to 39 alphanumeric
characters. It can be the account number, CUSIP number,
or any other unique identification number by which you
track the bond transactions.

Enter the Form 1097-BTC issuer's federal identification
number, such as an employer identification number (EIN).
Do not truncate the Form 1097-BTC issuer's federal
identification number. An issuer that does not have an EIN
should apply for one. See Form SS-4, Application for
Employer Identification Number, and its separate
instructions, available at www.irs.gov. Applications can be
submitted online, by phone, fax, or mail.

Box 2b. Unique Identifier

Enter the federal identification number, such as an EIN or
social security number, of the recipient of the distributed
(or stripped) credit from the tax credit bond. Do not
truncate the recipient's federal identification number on
the form filed with the IRS. Truncation of the recipient's
federal identification number is allowed on the statement
to the recipient. See 2016 General Instructions for Certain
Information Returns

For a bond issuer (or its agent) filing the 2016 Form
1097-BTC for a bond, the unique identification number
must start with the CUSIP number(s), if available, and
may be expanded by the account number or any other
self-provided number(s). If a CUSIP number was not
issued for the bond, the bond issuer may use or devise its
own unique identifier, preferably the account number or
other reference number by which you track and account
for the bond transaction. A recipient of a Form 1097-BTC
that issues its own Form 1097-BTC to further distribute
the credit may use or devise its own unique identifier
using whatever means it deems best.

Recipient's Name

Enter the name of the recipient of the distributed (or
stripped) credit from the tax credit bond. If not an
individual, enter the entity's true name (as set forth in the
legal documents creating it).

Recipient's Street Address (Including Apt. No.)

Box 3. Bond Type

Enter the street address, city or town, state or province,
country, and ZIP or foreign postal code of the recipient's
principal office or place of business. Include the suite,
room, or other unit number after the street address. If the
post office does not deliver mail to the street address and
the entity has a P.O. box, show the box number instead.

Enter code “101” for clean renewable energy bonds
issued under section 54. Enter code “199” for all other
bonds.
Multiple bond types can be entered on one Form
1097-BTC, other than clean renewable energy
bonds. Credits from clean renewable energy
bonds must be reported on a separate Form 1097-BTC.

TIP

Note. Do not use the address of the registered agent for
the state in which the recipient is incorporated.
If the recipient receives its mail in care of a third party
(such as an accountant or an attorney), enter for the street
address “C/O” followed by the third party's name and
street address or P.O. box.

Box 4.

Reserved.

Boxes 5a–5l.

Enter the amount of credit allowed for each month during
the calendar year, calculated by using steps 1 and 2,
following.

Check, as applicable, whether you are the issuer of the
bond (or its agent) filing the initial 2016 Form 1097-BTC
for the bond, or are an entity or a person that received or
should have received a 2016 Form 1097-BTC for credit(s)
that was or should have been reported.

STEP 1. For each recipient, multiply the outstanding face
amount of the qualified tax credit bond, clean renewable
energy bond, or qualified zone academy bond issued
before October 4, 2008, by the applicable credit rate. The
outstanding face amount of the bond is the face amount of
the bond minus any principal that has been paid. The
credit rate for the qualified tax credit bond, clean
renewable energy bond, or qualified zone academy bond

Box 1. Total

Enter the total amount of credits distributed to the
recipient with respect to the amounts reported in boxes
5a–5l for the calendar year.
Instructions for Form 1097-BTC (2016)

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However, the 25% will be pro-rated for any credit
allowance date if a clean renewable energy bond or
qualified tax credit bond is issued, redeemed, or matures
during the 3-month period ending on a credit allowance
date with respect to which you are reporting the credit.
The percentage of credit allowed for that credit allowance
date is pro-rated for the number of days the bond was
outstanding during the 3-month period.

issued before October 4, 2008, is the rate published on
the Treasury Direct website under “IRS Tax Credit Bond
Rates” at www.treasurydirect.gov/govt/rates/
rates_irstcb.htm for the first day on which there is a
binding contract in writing for the sale or exchange of the
bond.
The credit rate for qualified zone academy bonds
issued before July 1, 1999, is 110% of the long-term
applicable federal rate (AFR), compounded annually, for
the month and year the bond is issued. The IRS
announces the long-term AFR monthly in a series of
revenue rulings published in the Internal Revenue Bulletin.
For build America bonds (Tax Credit), multiply by 35%
the amount of interest payable with respect to the interest
payment date for which you are filing Form 1097-BTC or
sending a statement to the credit recipient. Enter the
credit amount so determined in boxes 5a–5l for the month
in which the interest payment date occurred. Thus, if the
interest payment dates for a build America bond are June
30 and December 31, enter the credit amounts in boxes 5f
and 5l.
For qualified zone academy bonds issued before
October 4, 2008, enter the amount so determined in the
box 5 that corresponds to the credit allowance date.
When filing the annual Form 1097-BTC with the IRS, enter
the same amount in box 1.

Example. You issued a qualified energy conservation
bond on March 23, 2016. Since the bond was not
outstanding for the entire 3-month period on June 15,
2016, the pro-rated portion of the 25% is figured by
dividing (a) the number of days the bond was outstanding
beginning on the day after the date the bond was issued
and ending on the next credit allowance date by (b) the
number of days included in the 3-month period beginning
on the day after the prior (March 15) credit allowance date
and ending on the next (June 15) credit allowance date.
See below.
84 days (number of days from
March 24 through June 15)
92 days (number of days from
March 16 through June 15)

= 0.913 X 25% = 23%

Thus, for each credit allowance date with respect to the
3-month period in which the bond was issued, redeemed,
or matured, you would multiply the credit amount
determined in STEP 1 by the pro-rated percentage. In the
example above, for the 2nd quarter reporting period, due to
recipient by August 15, you would enter the amount
determined by multiplying 23% with the credit amount
determined in STEP 1 in box 5f. You would carry the same
percentage to the Total annual credit reported in box 1 for
the annual/4th quarter reporting period filed with the IRS
and sent to the recipient. Thus, in the example above, you
would enter in box 1 (73%) of the amount determined in
STEP 1.

STEP 2. For qualified tax credit bonds or clean
renewable energy bonds only, multiply the credit amount
so determined in STEP 1 by 25% for each credit
allowance date you hold a qualified tax credit bond or
clean renewable energy bond during your taxable year.
Enter the credit amount determined in STEP 2 in the box
for the month in which the credit allowance date occurred.
Example. You issued a qualified energy conservation
bond on March 16, 2016. For the Form 1097-BTC
statement for the June 15, 2016, credit allowance date,
due to recipient by August 15, you would enter 25% of the
amount computed in STEP 1 in box 5f. For the Form
1097-BTC statement for the September 15, 2016, credit
allowance date, due to recipient by November 15, you
would enter 25% of amount computed in STEP 1 in 5i. For
the annual Form 1097-BTC and December 15, 2016,
credit allowance date, due to recipient by February 15 and
to the IRS by February 28, 2017 (March 31, 2017, if filed
electronically), enter 25% of the credit amount determined
in STEP 1 in box 5l and 75% of the credit amount
determined in STEP 1 in box 1.

Note. For new clean renewable energy bonds issued
under section 54C and qualified energy conservation
bonds issued under section 54D, report the credit amount
after the 70% limit has been applied.

Box 6. Comments

Enter any additional information.

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Instructions for Form 1097-BTC (2016)