The IRS published a guidance (Rev. Proc. 2024-37) for issuers of tax-exempt and other tax-advantaged bonds for claiming refunds of any overpayment of certain amounts paid to the US government on 18 September 2024.
The guidance pertains to issuers of tax-exempt and other tax-advantaged bonds (Treasury Regulation (Treas. Reg.) 1.150-1(b)). It outlines the procedures for filing claims for the recovery of overpayments [Treas. Reg. 1.148-3(i)(1)] made to the United States regarding the following:
- The rebate requirement under Internal Revenue Code (IRC) section 148(f) for excess investment earnings;
- The penalty in lieu of rebate provisions under IRC sections 148(f)(4)(C)(vii) and (viii) ; or
- The yield reduction payment provisions under Treas. Reg. 1.148-5(c).
Under the guidance, a claim must be made by completing and timely filing Form 8038-R, Request for Recovery of Overpayments Under Arbitrage Rebate Provisions, and any attachments to it with the Internal Revenue Service under the Form 8038-R instructions.
An issuer must file a claim for a refund of an overpayment with respect to an issue of bonds no later than two years after:
- The date that is 60 days after the final computation date of the issue to which the payment relates; or;
- With respect to the portion of the overpayment paid more than 60 days after the final computation date, the date that the payment was made to the United States.
The Commissioner may allow a claim, reject a claim under the circumstances described in section 4.03(1) of this revenue procedure (Claim Rejection), or deny a claim in full or in part as described in section 4.03(2) of this revenue procedure (Claim Denial).
The Commissioner may reject a claim based on an issuer’s:
- Failure to follow procedures or requirements for filing or supporting the claim or;
- Submission of a claim that relies on substantive matters previously reviewed and resulted in a Claim Denial or a closing agreement.
If a claim is rejected, the Commissioner will notify the issuer by letter explaining the reasons for the rejection.
