IRS announces changes to Form 8038-CP coming in January 2022

Bricker & Eckler LLP

Bricker & Eckler LLP

On November 16, 2021, the Internal Revenue Service (IRS) publicly previewed a draft of a revised Form 8038-CP (Return for Credit Payments to Issuers of Qualified Bonds), along with updated filing instructions and a new schedule that will impact some issuers starting in January 2022.

The form is used by issuers of qualified bonds to receive a credit. The credit amount, equal to a percentage of interest paid, varies depending on the type of bond. The form must be filed between 45 to 90 days prior to the relevant interest payment date. The new form must be filed for due dates after January 1, 2022.

The most notable change to the form is a new Schedule A, Specified Tax Credit Bonds Interest Limit Computation. Revised to further simplify credit claims and improve accuracy, Schedule A must be submitted with the core form by issuers of Build America Bonds (BABs) and Recovery Zone Economic Development Bonds (RZEDBs) issued before January 1, 2011, as well as by issuers of New Clean Renewable Energy Bonds (NCREBs), Qualified Energy Conservation Bonds (QECBs), Qualified Zone Academy Bonds (QZABs), and Qualified School Construction Bonds (QSCBs) issued before January 1, 2018.

The January 2022 revisions will require the issuer to assign a report number for each bond type and use that same number for future filings of Form 8038-CP.

The final version of the form is expected to be made available to issuers online at some point in December 2021. The IRS does not plan to send mailed notices to issuers. E-filing will be available sometime in 2022, and will be similar to other IRS forms wherein taxpayers will need to use e-filing software purchased from a vendor. Until then, taxpayers should continue to file via mail.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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