By Attorney Kristin Cooper
IRS Form 8038-CP is used by issuers of Build America bonds, recovery zone economic development bonds, and specified tax credit bonds who are electing to receive a direct credit payment equal to a percentage of the interest payments on the bonds from the federal government ("subsidy" payment). The IRS has released a revised Form 8038-CP and instructions as of January 2020. The IRS requires that Issuers begin using the revised form of 8038-CP for new submissions, and that using an old version may result in a delay for credit payment/subsidy. However, the IRS advises that Issuers should not submit a second, new filing using the updated form if an older version of the form has already been mailed to the IRS.
The new Form 8038-CP includes two new questions, found in lines 23 and 24.
- Line 23 asks you to check "Yes" or "No" as to whether the debt service schedule has changed. If the debt service schedule most recently filed with the IRS is incorrect, you must check "Yes" and attach a revised debt service schedule. A revised debt service schedule may be required to be filed, for example, if you have retired or defeased a portion of the bonds. The instructions provide further guidance on how and when to submit a revised debt service schedule.
- Line 24 asks you to confirm that you have already paid or reasonably expect to pay all of the interest payable to bondholders on or before the reported interest payment date. If the answer is "No" that you do not reasonably expect to pay all of the interest payable to bondholders on or before the reported interest payment date, the instructions direct you to attach an explanation detailing the circumstances surrounding the nonpayment, including when you expect to resume interest payments. This explanation should be titled "Nonpayment Explanation."
If, after submission of the form, a subsidy payment has not been received, TEGE Customer Service may be contacted at 1-877-829-5500, so long as the return has been filed at least 45 days before the interest payment date, and it is less than 3 weeks before the interest payment date.
Please consult with Bond Counsel if you have any questions on the revised Form 8038-CP or the tax credit payment process.
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