Special rules for refunding of pre-2003 issues.

Bonds issued after December 31, 2002, to refund bonds issued before January 1, 2003, have special reporting requirements. Such refunding bonds are subject to the generally applicable reporting requirements of Parts I, II, and IV. However, the organization need not complete lines 1 through 9 of Part III to report private business use information for the issue for such refunding bonds. These special rules don't apply to bonds issued after December 31, 2002, to refund directly or through a series of refunding bonds that were also originally issued after 2002.

Columns (a) and (b).

Enter the name and employer identification number (EIN) of the issuer of the bond issue. The issuer's name is the name of the entity that issued the bond issue (typically, a state or local governmental unit). The issuer's name and EIN should be identical to the name and EIN listed on Form 8038, Part I, lines 1 and 2, filed for the bond issue.

Column (c).

Enter the Committee on Uniform Securities Identification Procedures (CUSIP) number on the bond with the latest maturity. The CUSIP number should be identical to the CUSIP number listed on Form 8038, Part I, line 9, filed for the bond issue. If the bond issue wasn't publicly offered and there is no assigned CUSIP number, enter zeros in place of the CUSIP number.

Column (d).

Enter the issue date of the obligation. The issue date should be identical to the issue date listed on Form 8038, Part I, line 7, filed for the bond issue. The issue date is generally the date on which the issuer receives the purchase price in exchange for delivery of the evidence of indebtedness (for example, a bond). In no event is the issue date earlier than the first day on which interest begins to accrue on the bond for federal income tax purposes. See Regulations section 1.150-1(b).

Column (e).

Enter the issue price of the obligation. The issue price should generally be identical to the issue price listed on Form 8038, Part III, line 21(b), filed for the bond issue. The issue price is generally determined under Regulations sections 1.148-1(b) and 1.148-1(f). If the issue price isn't identical to the issue price listed on the filed Form 8038, use Part VI to explain the difference.

Column (f).

Describe the purpose of the bond issue, such as to construct a hospital or provide funds to refund a prior issue. If any of the bond proceeds were used to refund a prior issue, enter the date of issue for each of the refunded issues. If the issue has multiple purposes, enter each purpose. If the issue financed various projects or activities corresponding to a related purpose, only enter the purpose once. For example, if proceeds are used to acquire various items of office equipment, the amount of such expenditures should be aggregated and identified with the stated purpose of “office equipment.” Alternatively, if proceeds are used to construct and equip a single facility, the expenditures should be aggregated and identified with the stated purpose of “construct & equip facility” where the identification of the facility is distinguishable from other bond-financed facilities, if any. Use Part VI if additional space is needed for this purpose.

Column (g).

Check “Yes” or “No” to indicate whether a defeasance escrow or refunding escrow has been established to irrevocably defease any bonds of the bond issue.

Column (h).

Check “Yes” if the organization acted as an “on behalf of issuer” in issuing the bond issue. Check “No” if the organization only acted as the borrower of the bond proceeds under the terms of a conduit loan with the governmental issuer of the bond issue.

An “on behalf of issuer” is a corporation organized under the general nonprofit corporation law of a state whose obligations are considered obligations of a state or local governmental unit. See Rev. Proc. 82-26, 1982-1 C.B. 476, for a description of the circumstances under which the IRS will ordinarily issue a letter ruling that the obligations of a nonprofit corporation will be issued on behalf of a state or local governmental unit. See also Rev. Rul. 63-20, 1963-1 C.B. 24; Rev. Rul. 59-41, 1959-1 C.B. 13; and Rev. Rul. 54-296, 1954-2 C.B. 59. An “on behalf of issuer” also includes a constituted authority organized by a state or local governmental unit and empowered to issue debt obligations in order to further public purposes. See Rev. Rul. 57-187, 1957-1 C.B. 65.

Column (i).

Check “Yes” or “No” to indicate if the bond issue was a pooled financing issue.

Line 1.

Enter the cumulative principal amount of bonds of the issue that have been retired as of the end of the 12-month period used in completing this schedule.

Line 2.

Enter the cumulative principal amount of bonds of the issue that haven't been retired, but have been legally defeased through the establishment of a defeasance escrow or a refunding escrow, as of the end of the 12-month period.

Line 3.

Enter the total amount of proceeds of the bond issue as of the end of the 12-month period. If the total proceeds aren't identical to the issue price listed in Part I, column (e), use Part VI to explain the difference (for example, investment earnings).

Line 4.

Enter the amount of gross proceeds held in a reasonably required sinking fund, pledged fund, or reserve or replacement fund as of the end of the 12-month period. See Regulations sections 1.148-1(c)(2), 1.148-1(c)(3), and 1.148-2(f).

Line 5.

Enter the cumulative amount of proceeds used, as of the end of the 12-month period, to pay interest on the applicable portion of the bond issue during construction of a financed capital project.

Line 6.

Enter the amount of proceeds held in a refunding escrow as of the end of the 12-month period. For this purpose only, include investment proceeds without regard to the project period limitation found in the definition of proceeds.

Line 7.

Enter the cumulative amount of proceeds used to pay bond issuance costs, including (but not limited to) underwriters' spread as well as fees for trustees and bond counsel as of the end of the 12-month period. Issuance costs are costs incurred in connection with, and allocable to, the issuance of a bond issue. See Regulations section 1.150-1(b) for an example list of issuance costs.

Line 8.

Enter the cumulative amount of proceeds used to pay fees for credit enhancement that are taken into account in determining the yield on the issue for purposes of section 148(h) (for example, bond insurance premiums and certain fees for letters of credit) as of the end of the 12-month period.

Line 9.

Enter the cumulative amount of proceeds used to finance working capital expenditures as of the end of the 12-month period. However, don't report expenditures reported in lines 4, 6, 7, and 8. A working capital expenditure is any cost that isn't a capital expenditure (for example, current operating expenses). See Regulations section 1.150-1(b).

Line 10.

Enter the cumulative amount of proceeds used to finance capital expenditures as of the end of the 12-month period. Capital expenditures generally include costs incurred to acquire, construct, or improve land, buildings, and equipment. See Regulations section 1.150-1(b). However, don't report capital expenditures financed by a prior issue that was refunded by the bond issue or capitalized interest that was reported on line 5.

Line 11.

Enter the cumulative amount of proceeds used for any item not reported on lines 4 through 10 as of the end of the 12-month period. Include any proceeds used or irrevocably held to redeem or legally defease bonds of the issue.

Line 12.

Enter the amount of unspent proceeds as of the end of the 12-month period other than those amounts identified in lines 4, 6, and 11.

Line 13.

Enter the year in which construction, acquisition, or rehabilitation of the financed project was substantially completed. A project can be treated as substantially completed when, based upon all the facts and circumstances, the project has reached a degree of completion that would permit its operation at substantially its design level and it is, in fact, in operation at such level. See Regulations section 1.150-2(c). If the bond issue financed multiple projects, enter the latest year in which construction, acquisition, or rehabilitation of each of the financed projects was substantially completed. For example, if a bond issue financed the construction of three projects that were substantially completed in 2021, 2022, and 2023, respectively, then enter “2023.” If the bond issue financed working capital expenditures, provide the latest year in which the proceeds of the issue were allocated to those expenditures.

Line 14.

Check “Yes” if the bonds were issued after 2017 to refund tax-exempt bonds or if the bonds were issued prior to 2018 to currently refund tax-exempt bonds. Otherwise, check “No.”

Line 15.

Check “Yes” if the bonds were issued after 2017 to refund taxable bonds or if the bonds were issued prior to 2018 to advance refund tax-exempt bonds. Otherwise, check “No.”

Line 16.

Check “Yes” or “No” to indicate if the final allocation of proceeds has been made. Proceeds of a bond issue must be accounted for using any reasonable, consistently applied accounting method. Allocations must be made by certain applicable due dates and are generally not considered final until the expiration of such due dates. See Regulations section 1.148-6.

Line 17.

Check “Yes” or “No” to indicate if the organization maintains adequate books and records to support the final allocation of proceeds. Answer this question only with respect to the tax year applicable to this schedule.

Line 1.

Check “Yes” or “No” to indicate if the organization was at any time during the reporting period a partner in a partnership or a member of a limited liability company (LLC) which both owned property that was financed by the bond issue and included as partner(s) or member(s) entities other than a section 501(c)(3) organization.

Line 2.

Check “Yes” or “No” to indicate if any lease arrangements that may result in private business use were effective at any time during the year with respect to property financed by the bond issue. The lease of financed property to a nongovernmental person other than a section 501(c)(3) organization is generally private business use. Lease arrangements that constitute unrelated trade or business of the lessor, or that are for an unrelated trade or business of a section 501(c)(3) organization lessee, may also result in private business use. See Regulations sections 1.141-3(b)(3) and 1.145-2(b)(1).

Line 3a.

Check “Yes” or “No” to indicate if any management or service contract that may result in private business use was effective at any time during the year with respect to property financed by the bond issue. For this purpose, answer “Yes” even if the organization has determined that the management or service contract meets the safe harbor under Rev. Proc. 2017-13, 2017-6 I.R.B. 787, available at Rev. Proc. 2017-13, and won’t result in actual private business use. A management or service contract for the financed property can result in private business use of the property, based on all facts and circumstances. A management or service contract for the financed property generally results in private business use of that property if the contract provides for compensation for services rendered with compensation based, in whole or in part, on a share of net profits from the operation of the facility. See Regulations section 1.141-3(b)(4). See also Rev. Proc. 2016-44, 2016-36 I.R.B. 316, available at Rev. Proc. 2016-44.

Line 3b.

If line 3a was checked “Yes,” check “Yes” or “No” to indicate if, during the 12-month period used to report on the bond issue, the organization routinely engaged bond counsel or other outside counsel to review any management or service contracts relating to the financed property.

Line 3c.

Check “Yes” or “No” to indicate if any research agreement that may result in private business use was effective at any time during the year for property financed by the bond issue. For this purpose, answer “Yes” even if the organization has determined that the research agreement meets the safe harbor under Rev. Proc. 2007-47, 2007-29 I.R.B. 108, available at Rev. Proc. 2007-47, and won’t result in actual private business use. An agreement by a nongovernmental person to sponsor research performed by the organization can result in private business use of the property used for the research, based on all the facts and circumstances. A research agreement for the financed property will generally result in private business use of that property if the sponsor is treated as the lessee or owner of financed property for federal income tax purposes. See Regulations section 1.141-3(b)(6).

Line 3d.

If line 3c was checked “Yes,” check “Yes” or “No” to indicate if, during the 12-month period used to report on the bond issue, the organization routinely engaged bond counsel or other outside counsel to review any research agreements relating to the financed property.

Line 4.

Enter the average percentage during the year of the property financed by the bond issue that was used in a private business use by a nongovernmental person other than a section 501(c)(3) organization. See Regulations section 1.141-3(g)(4). The average percentage is determined by comparing (i) the amount of private business use (see Definitions, earlier) during the year to (ii) the total amount of private business use and use that isn't private business use during that year. Don't include costs of issuance reported in Part II in the amount of property used in a private business use (clause (i) of the preceding sentence), but do include such costs in the total amount of use (clause (ii)). Enter the yearly average percentage to the nearest tenth of a percentage point (for example, 8.9% (0.089)). For this purpose, don't include any use relating to either a management or service contract identified on line 3a that the organization has determined meets the safe harbor under Rev. Proc. 2017-13, or otherwise doesn't result in private business use. See also Rev. Proc. 2016-44. Similarly, don't include any use relating to a research agreement identified on line 3c that the organization has determined meets the safe harbor under Rev. Proc. 2007-47, or otherwise doesn't result in private business use.

Line 5.

Enter the average percentage during the year of the property financed by the bond issue that was used in an unrelated trade or business activity (a private business use) by the organization, another section 501(c)(3) organization, or a state or local governmental unit. See Regulations section 1.141-3(g)(4). Enter the yearly average percentage rounded to the nearest tenth of a percentage point (for example, 8.9% (0.089)).

Line 7.

Check “Yes” or “No” to indicate whether, as of the end of the 12-month period used to report on the bond issue, the bond issue met the private security or payment test of section 141(b)(2), as modified by section 145, to apply to qualified 501(c)(3) bonds. Generally, a qualified 501(c)(3) bond issue will meet the private security or payment test if more than 5% of the payment of principal or interest on the bond issue is either made or secured (directly or indirectly) by payments or property used or to be used for a private business use. See Regulations sections 1.141-4 and 1.145-2.

Line 8a.

Check "Yes" or "No" to indicate whether the owner of any of the financed property sold or transferred the property to an entity other than a state or local governmental unit or another section 501(c)(3) organization. For this purpose, report sales and transfers on a cumulative basis since the issuance of the bonds.

Line 8b.

If line 8a was checked "Yes," report the percentage of property sold or transferred, including prior transfers on a cumulative basis, since the issuance of the bonds.

Line 8c.

If line 8a was checked "Yes," state whether the organization took any remedial actions under the applicable regulations with respect to any nonqualified bonds that may have resulted from the transfer.

Line 9.

Check "Yes" or "No" to indicate whether the organization has established written procedures to ensure timely remedial action with respect to all nonqualified bonds in accordance with Regulations sections 1.141-12 and 1.145-2 or other additional remedial actions authorized by the Commissioner under Regulations section 1.141-12(h). Answer "Yes" only if the procedures applied to the bond issue during the 12-month period used to report on the bond issue.

Line 1.

Under section 148(f), interest on a state or local bond isn't tax exempt unless the issuer of the bond rebates to the United States arbitrage profits earned from investing proceeds of the bond in higher yielding nonpurpose investments. Issuers of tax-exempt bonds and any other bonds subject to the provisions of section 148 must use Form 8038-T, Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate, to make arbitrage rebate and related payments. Generally, rebate payments are due no later than 60 days after every fifth anniversary of the issue date and the final payment of the bonds. Check “Yes” or “No” to indicate whether the issuer has filed the Form 8038-T that would have been most recently due.

Lines 2a through 2c.

If the issuer hasn't filed Form 8038-T for the most recent computation date for which filing would be required if rebate were due, check “Yes” or “No” to indicate whether any of the explanations in lines 2a through 2c apply. If line 2c is checked “Yes,” use Part VI to provide the date of the rebate computation showing that no rebate was due for the applicable computation date.

Line 3.

Check “Yes” or “No” to indicate if the bond issue is a variable rate issue. A variable rate issue is an issue containing a bond with a yield not fixed and determinable on the issue date.

Lines 4a through 4e.

In general, payments made or received by a governmental issuer or borrower of bond proceeds under a qualified hedge are taken into account to determine the yield on the bond issue. A qualified hedge can be entered into before, at the same time as, or after the date of issue. Check “Yes” or “No” on line 4a to indicate if the organization or the governmental issuer has entered into a qualified hedge and identified it on the governmental issuer's books and records. See Regulations section 1.148-4(h). If the answer to line 4a is “Yes”:

Lines 5a through 5d.

Check “Yes” or “No” on line 5a to indicate if any gross proceeds of the bond issue were invested in a guaranteed investment contract (GIC). A GIC includes any nonpurpose investment that has specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate, including “negotiations” through requests for bids. It also includes any agreement to supply investments on two or more dates (for example, a forward supply contract). If the answer on line 5a is “Yes”:

Line 6.

Check “Yes” or “No” to indicate if any gross proceeds were invested beyond a temporary period (for example, the 3-year temporary period applicable to proceeds spent on expenditures for capital projects, or the 13-month temporary period applicable to proceeds spent on working capital expenditures), or if any gross proceeds were invested in a reserve or replacement fund in an amount exceeding applicable limits. See Regulations sections 1.148-2(e) and (f).

Line 7.

Check “Yes” or “No” to indicate if the organization has established written procedures to monitor compliance with the arbitrage, yield restriction, and rebate requirements of section 148. Answer “Yes” only if the procedures applied to the bond issue during the 12-month period are used to report on the bond issue.