How to File IRS Form 8038-G for Tax-Exempt Bonds

To file IRS Form 8038-G, a state or local government issuer completes the paper return for its tax-exempt governmental bond issue and mails it to the IRS Service Center in Ogden, Utah, by the 15th day of the second calendar month after the close of the quarter in which the bonds were issued.¹ The form is required for governmental bond issues with an issue price of $100,000 or more, and filing it on time is what keeps the interest on those bonds exempt from federal income tax.²

Under IRC Section 149(e), interest on a bond is not exempt from federal income tax unless the issuer submits the required information return. The Treasury regulation carrying out that section states that interest “is included in gross income” when the information is not reported.³ The filing itself is administrative; the stakes are not.

Confirm Form 8038-G Is the Right Form

Form 8038-G is for tax-exempt governmental bonds issued by states, counties, cities, school districts, and other political subdivisions for traditional public purposes such as roads, schools, utilities, and government buildings, with an issue price of $100,000 or more.²

Two nearby situations use a different return. Governmental issues under $100,000 use Form 8038-GC, a simplified consolidated return.⁴ Tax-exempt private activity bonds use Form 8038 entirely.⁵ The line between the two turns on the private business use test in IRC Section 141(b): more than 10 percent of proceeds used for a private business use, combined with more than 10 percent of debt service secured by or derived from payments tied to that private use, pushes an issue into private activity territory. A stricter 5 percent threshold applies when the private business use is unrelated to the governmental purpose the bonds finance.⁶ Leases to private tenants, management contracts, and other nongovernmental use of financed facilities are what typically trigger this analysis.

What You Need to Complete the Form

Section 149(e) sets the baseline for what must be reported: the issuer’s name and address, issue date, net proceeds, stated interest rate, term and face amount of each bond, issuance costs, and reserves.⁷ The form asks for more than that, and it helps to have the following ready before you start.

Issuer and Bond Identification

The issuer’s legal name, address, and EIN, plus contact information for the person responsible for the issue. The CUSIP number for each obligation, the issue date, and the total issue price, which accounts for any original issue discount or premium.

You also calculate the weighted average maturity: take the issue price of each maturity, multiply by the number of years to that maturity, and divide by the total issue price of the entire issue.⁸

Use of Proceeds

Break out the amounts allocated to issuance costs, credit enhancement, debt service reserve funds, and the capital projects being financed. Indicate the interest rate structure: fixed, variable, or another calculation method. Leases and installment sales follow different rules for several of these fields.

Compliance Certifications

The last sections address federal tax compliance. You certify whether the issue meets private business use limits, report information relevant to arbitrage, and describe the governmental purpose the proceeds will fund. These certifications are evaluated as of the issue date, based on facts and reasonable expectations at that time, not what happens later.⁸

When and Where to File

The filing is due by the 15th day of the second calendar month after the close of the quarter in which the bonds were issued.⁷ In calendar terms:

Q1 (January–March): due May 15
Q2 (April–June): due August 15
Q3 (July–September): due November 15
Q4 (October–December): due February 15 of the following year

The form cannot be filed before the issue date, and it must reflect the facts as of that date.¹

Filing is on paper. Mail the completed form to the Internal Revenue Service Center in Ogden, UT 84201.¹ An IRS-designated private delivery service also satisfies the timely mailing as timely filing rule, which is useful when the deadline is close and you need proof of submission. Private delivery services cannot deliver to PO boxes, so use the street address the IRS lists for that purpose.

If You Miss the Deadline

Because Section 149(e) conditions tax-exempt status on timely information reporting, a late filing puts the entire issue’s exemption at risk. The statute authorizes the Secretary to grant extensions, but only when the delay was not caused by willful neglect.⁷

The IRS instructions direct issuers seeking late-filing relief to follow Revenue Procedure 2002-48. Type or print “Request for Relief under section 3 of Rev. Proc. 2002-48” at the top of the form, attach a letter explaining why the filing was late, and indicate whether the bond issue is currently under IRS examination.¹ A generic “we forgot” is unlikely to succeed. Issuers who can point to staff turnover, a vendor error, or a misunderstanding about which form was required tend to fare better.

Late filers may also face financial penalties under IRC Section 6652 for failure to file required information returns, which accumulate on a per-day basis until the form is submitted. Filing as quickly as possible after the mistake is discovered limits both the penalty exposure and the period during which the bonds’ status is in question.

Two Related Filings Not to Confuse With 8038-G

Form 8038-G is a one-time filing at issuance. Two other obligations sit alongside it and get confused with it.

Arbitrage rebate is separate. Under IRC Section 148, if an issuer invests bond proceeds in securities that yield more than the bonds themselves pay, the excess earnings must be rebated to the U.S. Treasury, or the bonds become arbitrage bonds and lose their tax-exempt status. Rebate installments are due at least once every five years while the bonds are outstanding, with a final payment no later than 60 days after the last bond is redeemed.⁹ Those payments are made on Form 8038-T, not on 8038-G.¹⁰

If you later discover a violation of the federal tax rules governing the bonds, whether a missed filing, excess private business use, or an arbitrage problem, the IRS’s Tax Exempt Bonds Voluntary Closing Agreement Program (TEB VCAP) lets you approach the IRS before an audit and resolve the issue through a formal closing agreement. The program covers tax-exempt bonds, tax credit bonds, and direct pay bonds. The issuer submits a detailed request describing the violation, includes a model closing agreement, and works with the IRS toward a resolution that preserves tax-advantaged status where possible. A VCAP closing agreement resolves the specific violation conclusively, but it does not provide guidance on future events that might affect the bonds.¹¹

1
Internal Revenue Service. Instructions for Form 8038-G (Rev. October 2021)
2
Internal Revenue Service. About Form 8038-G, Information Return for Tax-Exempt Governmental Obligations
3
eCFR. 26 CFR 1.149(e)-1 – Information Reporting Requirements for Tax-Exempt Bonds
4
Internal Revenue Service. Form 8038-GC – Information Return for Small Tax-Exempt Governmental Bond Issues, Leases, and Installment Sales
5
Internal Revenue Service. About Form 8038, Information Return for Tax-Exempt Private Activity Bond Issues
6
Office of the Law Revision Counsel. 26 USC 141 – Private Activity Bond; Qualified Bond
7
Office of the Law Revision Counsel. 26 USC 149 – Bonds Must Be Registered To Be Tax Exempt; Other Requirements
8
Internal Revenue Service. Instructions for Form 8038-G (10/2021)
9
Office of the Law Revision Counsel. 26 USC 148 – Arbitrage
10
Internal Revenue Service. About Form 8038-T, Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate
11
Internal Revenue Service. TEB Voluntary Closing Agreement Program