IRS Form 8038 – IRS Forms, Instructions, Pubs 2026 – In the world of tax-exempt financing, IRS Form 8038 plays a crucial role for issuers of private activity bonds. This information return helps the Internal Revenue Service (IRS) monitor compliance with tax laws and ensures that bonds maintain their tax-exempt status. Whether you’re a municipal issuer, a nonprofit organization, or a financial advisor, understanding Form 8038 is essential for navigating tax-exempt private activity bond issues effectively. In this comprehensive guide, updated for 2026, we’ll cover everything from the form’s purpose to filing deadlines, required information, and recent updates.
What Is IRS Form 8038?
IRS Form 8038, officially titled “Information Return for Tax-Exempt Private Activity Bond Issues,” is a required filing for issuers of certain tax-exempt bonds. It provides the IRS with details about the bond issue under Internal Revenue Code (IRC) section 149(e) and helps ensure adherence to sections 141 through 150, which govern private activity bonds. These bonds are typically used to finance projects that benefit private entities while qualifying for tax-exempt interest.
The form collects data on the bond’s type, proceeds, uses, and compliance with volume caps and other regulations. Unlike tax returns that calculate liability, Form 8038 is purely informational but critical for maintaining the bonds’ tax-exempt status. Failure to file can lead to penalties or loss of tax benefits, though specific penalties aren’t detailed in the form’s overview—issuers may seek relief for late filings under Revenue Procedure 2002-48.
Key purposes include:
- Reporting bond details to the IRS.
- Monitoring arbitrage rebate requirements.
- Ensuring bonds meet private activity limits (e.g., no more than 10% private business use or security).
For bonds issued after 1986, a separate Form 8038 must be filed for each issue.
Who Must File IRS Form 8038?
Issuers of tax-exempt private activity bonds are required to file Form 8038. This includes state and local governments, nonprofit organizations under section 501(c)(3), and other entities issuing bonds for private activities. Private activity bonds are defined as those where more than 10% of proceeds are used for private business purposes or secured by private payments, or where proceeds fund loans to non-governmental persons exceeding the lesser of 5% or $5 million.
Common issuers include:
- Municipalities financing airports, hospitals, or housing projects.
- 501(c)(3) organizations for educational or healthcare facilities.
- Entities issuing qualified small issue bonds for manufacturing.
If your bonds are governmental (not private activity), use Form 8038-G instead. For small governmental issues, Form 8038-GC may apply. Bonds under transitional rules from the Tax Reform Act of 1986 are reported on those forms, not 8038.
Types of Tax-Exempt Private Activity Bonds Covered by Form 8038
Form 8038 covers a wide range of bond types, each with specific qualifications. In Part II of the form, issuers report the issue price and check the applicable type:
| Bond Type | Description | Key Requirements |
|---|---|---|
| Exempt Facility Bonds | Finance facilities like airports, docks, sewage systems, or solid waste disposal. Includes new spaceports (added by P.L. 119-21). | 95%+ net proceeds for qualified facilities under IRC section 142. |
| Qualified Mortgage Bonds | For owner-occupied residences. | All proceeds (minus costs/reserves) for mortgages; meets IRC section 143. |
| Qualified Veterans’ Mortgage Bonds | For veterans’ housing. | 95%+ proceeds for residences; state volume cap applies. |
| Qualified Small Issue Bonds | For manufacturing or farming. | Up to $1 million (or $10 million with election); 95%+ for qualified property. |
| Qualified Student Loan Bonds | For educational loans. | 90-95% proceeds for loans under Higher Education Act or state programs. |
| Qualified Redevelopment Bonds | For blighted areas. | 95%+ for redevelopment under IRC section 144(c). |
| Qualified 501(c)(3) Bonds | For nonprofits, including hospitals and nonhospitals. | Property owned by 501(c)(3) or government; limits on private use. |
| Nongovernmental Output Property Bonds | For utilities or similar. | Meets specific output property rules. |
| Other | Includes reissuances or unspecified types like carbon dioxide capture. | Describe in detail on the form. |
Recent update: For spaceport bonds, report on Line 11q and write “Spaceport” in the text box.
Key Sections of IRS Form 8038: What Information Is Required?
Form 8038 is divided into parts that capture detailed bond information. Complete based on facts as of the issue date. Here’s a breakdown:
Part I: Reporting Authority
- Issuer’s name, EIN, address, and contact details.
- Issue date, name, CUSIP number.
- Check if amended return.
Part II: Type of Issue
- Select bond type and enter issue price.
- Elections (e.g., arbitrage rebate).
Part III: Description of Bonds
- Final maturity date, issue price, redemption price, weighted average maturity, and yield.
Part IV: Uses of Proceeds
- Breakdown: Accrued interest, issuance costs, credit enhancement, reserves, refundings.
- Calculate nonrefunding proceeds.
Part V: Description of Property Financed
- Skip for certain bonds; otherwise, detail land, buildings, equipment.
- NAICS codes for projects.
Part VI: Description of Refunded Bonds
- For refundings: Maturity, call dates, issue dates.
Part VII: Miscellaneous
- Approvals, elections (e.g., penalty in lieu of rebate), hedges, GICs, procedures for compliance.
- Private user details if applicable.
Part VIII: Volume Caps
- Allocations from state caps, exemptions (e.g., carryforwards, refundings).
Signature and Consent
- Authorized signature under penalties of perjury; paid preparer info if used.
Round amounts to whole dollars and attach schedules as needed (e.g., for multiple projects).
When to File IRS Form 8038?
File by the 15th day of the 2nd calendar month after the close of the calendar quarter in which the bonds were issued. For example:
- Issued January 1–March 31: Due May 15.
- Issued April 1–June 30: Due August 15.
- Issued July 1–September 30: Due November 15.
- Issued October 1–December 31: Due February 15.
The form cannot be filed before the issue date. For late filings, request relief by attaching a letter explaining the delay and noting if under IRS examination.
How to File IRS Form 8038
- Download the Form and Instructions: Get the latest version (Rev. September 2025) from IRS.gov/Form8038.
- Complete the Form: Use the official instructions for line-by-line guidance.
- Mail It: Send to Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201. Use certified mail or approved private delivery services for proof.
- Electronic Filing: As of 2026, e-filing is not mandatory for Form 8038 but is encouraged for related forms like 8038-CP. Check IRS.gov for updates.
- Amended Returns: File a new form marked “Amended” with changes explained.
Do not include trust indentures or bond documents unless requested.
Recent Updates to IRS Form 8038 for 2026
The form was revised in September 2025 to include exempt facility bonds for spaceports under P.L. 119-21. Issuers must report spaceport financing on Line 11q with “Spaceport” noted. Other updates clarify line entries for facility types and emphasize compliance procedures. Always review the latest instructions for changes, as ambiguities in prior versions have led to inconsistent reporting.
Common Mistakes and Tips for Compliance
- Avoid Rounding Errors: Round only after adding amounts.
- Track Volume Caps: Attach certifications for allocations.
- Monitor Post-Issuance: Establish procedures for arbitrage and private use monitoring.
- Seek Professional Help: Consult bond counsel or tax advisors for complex issues.
- Stay Updated: Visit IRS.gov for bulletins and guidance.
By filing Form 8038 accurately and on time, issuers ensure their bonds remain tax-exempt, benefiting investors and projects alike. For more details, refer to related publications like Publication 4078, Tax-Exempt Private Activity Bonds Compliance Guide. If you’re dealing with a specific bond issue, download the form PDF at https://www.irs.gov/pub/irs-pdf/f8038.pdf.