What Is Form 8038 and How Do I File It?

Form 8038 is an information return filed with the Internal Revenue Service (IRS) for certain tax-exempt bond issues. Mandated by Internal Revenue Code section 149, its function is to provide the government with details about the financing arrangement. Filing this return is a step for issuers to maintain the tax-exempt status of the interest paid to bondholders. The form captures data about the issuer, the bonds, and the financed projects, allowing the IRS to confirm that bond proceeds are used for qualified purposes and meet all regulatory requirements.

Determining Which Form 8038 to File

The “Form 8038” designation refers to a series of forms, and selecting the correct one depends on the bond type. The main distinction is between governmental bonds and private activity bonds (PABs). The standard Form 8038 is for PABs, which are bonds issued by a state or local government where proceeds are used for a project substantially benefiting a private, non-governmental entity.

Form 8038-G is the information return for most tax-exempt governmental obligations. These are bonds where the proceeds are used for general public purposes, such as building roads or public schools, with benefits directed to the public rather than a specific private business.

Form 8038-GC is a consolidated return for small tax-exempt governmental bond issues with an issue price of less than $100,000. This form simplifies reporting by allowing an issuer to report multiple small issues at once. Determining if the bond benefits a private party or the public is the first step in selecting the correct form.

Information Required to Complete Form 8038

Completing Form 8038 requires gathering detailed information for its various sections. You should download the most current version of the form and its instructions from the IRS website before beginning.

Part I, “Reporting Authority,” requires identification details of the issuer, including the legal name, address, and Employer Identification Number (EIN). You must also provide the name and telephone number of a contact person.

Part II, “Type of Issue,” asks for the issue date and the CUSIP number for the bonds, which is a unique nine-character identifier assigned to the security.

Part III, “Description of Bonds,” requires a breakdown of the bond’s financial structure. This includes the principal amount, issue price, stated interest rates, final maturity date, and the weighted average maturity of the issue in years.

Part IV details the “Uses of Proceeds,” where you must allocate the bond funds. This involves separating the amount used for the project from issuance costs, such as underwriter’s fees and legal expenses. You must also report any proceeds deposited into a reserve or sinking fund.

Part V covers arbitrage, requiring the calculation and reporting of the bond yield. Arbitrage rules prevent issuers from investing bond proceeds in higher-yielding investments for profit. Part VIII relates to the “Volume Cap,” the federal limit on the amount of certain PABs that can be issued annually; you must report the volume cap allocated and attach a copy of the state certification.

The Filing Process for Form 8038

The filing deadline for Form 8038 is the 15th day of the second calendar month after the end of the calendar quarter in which the bond was issued. For example, if a bond is issued on February 10th, during the first quarter, the form is due by May 15th. The completed Form 8038 and any necessary attachments must be mailed to the IRS service center listed in the form’s instructions.

After mailing, the issuer should retain a complete copy of the filing and proof of mailing for their records. The IRS does not send a confirmation of receipt, so this documentation serves as evidence of compliance. If the IRS has questions, they will contact the person listed in Part I. An amended return can be filed by checking the “Amended Return” box on a new form and submitting it.