What is arbitrage?
What are the rebate requirements for tax-exempt debt issues?
What documents are needed for an arbitrage rebate calculation?
Our Arbitrage Rebate Practice provides clients a full range of arbitrage compliance services. Our specialists have extensive training, participate on numerous industry expert panel discussions (including the National Association of Bond Lawyers and state and national health-care and governmental industry groups), use the most modern computer technology to enhance service delivery capabilities, maintain a current working knowledge of the regulatory requirements, and are committed to delivering timely quality services to our clients.
Our Group’s goals are to ensure federal tax compliance with the Internal Revenue Code and Income Tax Regulations in relation to the arbitrage rebate requirements as well as to maintain client satisfaction for each rebate engagement. The Arbitrage Rebate Practice represents a wide variety of clients throughout the nation. We have prepared rebate computations for bond issues such as municipal, airport and transportation, health care, higher education, water and wastewater, housing, sports facilities and convention centers, and school districts.
Experience Since 1998
Our specialized training and experience enables us to handle a wide variety of complex arbitrage issues affecting a rebate calculation such as allocation of commingled funds, transferred proceeds computations, yield restriction analyses, late filing issues, and multipurpose issues. Each of our rebate reports include our findings, independent calculation of bond yield, calculation of the arbitrage amount, which is the difference between the actual and allowable earnings on the bond proceeds, and a summary of the information and computational assumptions affecting the calculations.
Scope of Arbitrage Rebate Services
As members of The Arbitrage Group, Inc., the following services have been provided for thousands of engagements:
- Calculation of the arbitrage rebate or yield reduction amount potentially due to the IRS where proceeds received from tax-exempt debt have been invested in non-purpose investments;
- Calculation of the bond yield for fixed and variable rate bond issues;
- Calculation of the overall investment yield;
- Preparation of IRS Form 8038-T with complete filing instructions;
- Review closing documents associated with an issuance of tax-exempt debt to identify and advise of related arbitrage rebate requirements;
- Planning to ensure arbitrage rebate requirements will be timely addressed, including maximization of allowable earnings;
- Calculation of yield reduction payments, if required;
- Calculation of the penalty in lieu of rebate amount where the issuer has made such an election;
- Review of allowable Income Tax methodologies to minimize positive arbitrage;
- Review potential exceptions to the rebate requirements, such as, 6-month, 18-month, and 24-month spending exceptions, small issuer exemption, exception for investments in tax-exempt securities, and bona fide debt service fund exclusion;
- Review of commingled funds, refunding issues, and transferred proceeds;
- Where an overpayment of rebate has occurred, calculate such overpayment and complete applicable IRS Form 8038-T along with respective filing instructions;
- Maintenance of a “tickler system” to advise of upcoming required computation dates and deadlines;
- Ongoing consultation of the rebate and yield restriction requirements including current developments affecting arbitrage rebate.
Quality Service Tailored To Your Needs
The Arbitrage Rebate Practice is managed by H. Troy Merrill, and Gregory A. Ichel. We offer quality services tailored to your business needs at very competitive rates. Please contact us to request an independent no-cost/no-obligation fee quote or to answer questions you may have. Generally, all that is needed and most useful for a fee quote is the initial IRS Form 8038 and Tax Agreement.