TaxNewsFlash-Exempt Organizations

June 24, 2008
No. 2008-55

PRINTABLE VERSION

IRS Procedures for Recovering Overpayments of Arbitrage Rebates and Similar Payments on Tax-Exempt Bonds

The IRS today released an advance copy of Rev. Proc. 2008-37 which provides procedures to issuers of tax-exempt bonds for filing claims for recovering overpayments of arbitrage rebates, penalties, and yield reduction payments.

Rev. Proc. 2008-37 also establishes a deadline for filing claims for recoveries of overpayments—generally, no later than the date that is two years after the final computation date with respect to the applicable issue of bonds or two years from July 1, 2008, for an issue of bonds whose final computation date is on or before June 24, 2008.

Finally, Rev. Proc. 2008-37 clarifies that claims for recovery of overpayments of rebate or penalty in lieu of rebate with respect to bonds will be treated in the same manner as claims for recovery of overpayments made under Reg. section 1.148-3(i).

For an electronic version of the nine-page guidance: Rev. Proc. 2008-37

Overview of Procedures, Deadlines

Rev. Proc. 2008-37 sets forth terms and procedures for filing claims for recovery of an overpayment of rebate, penalty, or yield reduction with respect to an issue (an overpayment amount).

To recover an overpayment amount, an issuer must duly file a claim for recovery of an overpayment amount (a refund claim) on the applicable form (form) and at the applicable place of filing. Currently, a refund claim is made by completing Form 8038-R, Request for Recovery of Overpayments Under Arbitrage Rebate Provisions, and filing it (and any attachments) with:

IRS Ogden Submission Processing Center
Ogden, Utah, 84201

The deadline for filing the refund claims on an overpayment amount generally must be filed by an issuer no later than the date that is two years after the final computation date for the applicable issue of bonds under Reg. section 1.148-3(e)(2).

Rev. Proc. 2008-37 includes a description of the IRS procedures for processing refund claims on overpayment amounts and concerning approval, rejection, or denial of the refund claim, as well as the administrative appeal rights.

Effect on Earlier Guidance; Future Regulations Expected

With today’s guidance, Rev. Proc. 92-83 is rendered obsolete.

Treasury and the IRS expect to issue regulations under section 148 and Reg. section 1.148-3(i) to provide that a claim for recovery of an overpayment of rebate, penalty, or yield reduction must be filed with the IRS Commissioner by no later than two years after the final computation date of the issue of bonds to which the refund claim relates.

Effective Date; Transition Date

Generally, Rev. Proc. 2008-37 applies to refund claims arising from an issue of bonds for which the final computation date is after June 24, 2008.

A transition rule applies for refund claims arising from an issue of bonds for which the final computation date is on or before June 24, 2008. In such cases, the two-year period begins on July 1, 2008.

Rev. Proc. 2008-37 will appear in Internal Revenue Bulletin 2008-29, dated July 21, 2008.

For more information, contact Rick Speizman, National Partner-In-Charge, KPMG’s Exempt Organizations Tax Practice (ExoTax), at (202) 533-3084 or rspeizma@kpmg.com

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