Colorado Arbitrage Rebate and Bond Compliance Services
Colorado cities, counties, school districts, special districts, and other public issuers rely on tax-exempt bonds to finance essential capital projects, from water and wastewater systems to schools, roads, and public safety facilities. Protecting the tax-exempt status of those bonds through proper arbitrage rebate compliance is critical to avoiding IRS penalties and maintaining public trust.
With more than 35 years of experience focused on tax-exempt bond compliance, Arbitrage Compliance Specialists (ACS) provides Colorado arbitrage rebate services tailored to the needs of local issuers. Our team combines deep technical expertise with responsive client service to deliver accurate, efficient arbitrage rebate and bond compliance support across the state.
Arbitrage Rebate Services in Colorado
ACS offers a comprehensive suite of Colorado arbitrage rebate services, including arbitrage rebate calculations, yield restriction calculations, spending exception calculations, and preparation of IRS Forms 8038-T and 8038-R.
Arbitrage Rebate & Yield Restriction Calculations
Our specialists perform detailed arbitrage rebate calculations to determine whether investment earnings on bond proceeds exceed permitted limits and, if so, how much must be rebated to the IRS. We also conduct yield restriction calculations to assess whether investments remain within allowable yields. Together, these services help support Colorado issuers’ compliance with federal arbitrage requirements.
Spending Exception Calculations
ACS tests each bond issuance to determine eligibility for exemptions such as the 6-month, 18-month, or 2-year spending exception. When the applicable requirements are met, these provisions can reduce or eliminate rebate liability and may allow issuers to retain excess investment earnings as permitted under the Internal Revenue Code.
Preparation and Filing Form 8038-T & 8038-R
When rebate or yield reduction payments are required, ACS prepares IRS Form 8038-T, ensuring the correct amounts are calculated, documented, and submitted on time. If prior payments were overstated or eligible for recovery, we assist with Form 8038-R to request applicable refunds. Our team works closely with Colorado issuers to keep filings complete, accurate, and aligned with IRS expectations.
Additional Compliance Support for Colorado Issuers
In addition to our core Colorado arbitrage rebate services, ACS offers broader post-issuance bond compliance support, including ongoing monitoring, training, and consulting. These services help Colorado municipalities, school districts, special districts, and other issuers maintain continuous IRS compliance and stay current with regulatory developments that may affect their bond programs.
Post-Issuance Monitoring
Maintaining compliance over the life of a tax-exempt bond issue requires consistent tracking of key dates, investment activity, and documentation. ACS provides customized post-issuance monitoring services for Colorado issuers, including reminders for key rebate and yield restriction calculation dates, periodic reviews of investment records, and guidance on document retention. Our process helps issuers build and maintain a robust compliance file that can withstand IRS review.
Bond Compliance Training
ACS provides a broad range of bond compliance training materials, including an all-encompassing policy manual to bring your internal arbitrage rebate program up to speed with current regulations. We also host local and regional seminars across the state. These resources help staff understand arbitrage rebate requirements, documentation expectations, and the day-to-day practices needed to support ongoing compliance.
Ongoing Consulting Services
From issuance through final maturity or redemption, ACS works alongside Colorado issuers and their financing teams, providing ongoing consulting and coordination with municipal advisors, bond counsel, trustees, and auditors. Our goal is to ensure that every party involved in your Colorado bond issuance has the information needed to manage arbitrage rebate and related compliance responsibilities effectively.
Trusted Support for Colorado Issuers
While ACS serves clients nationwide, we have a long history of working with public issuers throughout Colorado. Our team understands the funding needs of Colorado municipalities, school districts, and special districts and brings that experience to each engagement. Contact a dedicated member of our Colorado team today to get started.
Nicole McKenna (Pahnke)
Director
Areas of Expertise: Pre/Post Issuance Compliance, Client Education, Relationship Management, Debt Portfolio Analysis, Rebate Minimization, Quality Assurance, Bonds All Issuers
800.672.9993 ext.7520
Matt Collins
Vice President
Areas of Expertise: Pre/Post Issuance Compliance, Debt Portfolio Analysis, Municipal Industry Analysis, Relationship Management, Tax Credit Bonds, Colorado, Midwest and Texas Bond Issuers
800.672.9993 ext. 7538
FAQs
What is Yield Restriction?
Yield restriction limits the earnings on certain municipal bond proceeds to prevent excessive arbitrage profits. For Colorado cities, counties, school districts, and special districts, unspent funds that remain beyond allowed periods must be invested at or below the bond yield or adjusted through payments (Arbitrage Rebate) to the IRS to help preserve tax-exempt status. To learn more about yield restriction and how it affects Colorado issuers, please visit our blog.
Do you provide ongoing Bond Compliance Services for Colorado issuers?
We do. ACS maintains a detailed record of your tax-exempt bond issues, including performing necessary calculations for Colorado arbitrage rebate services and yield restriction analysis. As part of our bond compliance program, we evaluate arbitrage rebate and yield restriction requirements for each Colorado bond issuance and provide recommendations for minimizing liabilities through applicable temporary periods and spending exceptions.
What are Arbitrage Rebate requirements?
State and local government issuers in Colorado benefit from lower borrowing costs through tax-exempt debt issuances. Bondholders investing in these offerings generally exclude the interest received on their federal income tax returns, creating a mutually beneficial relationship. Arbitrage rebate requirements consist of rules that, when applied, determine whether bonds are treated as arbitrage bonds.
If Colorado issuers do not carefully follow these rules, their bonds can lose tax-exempt status and may become taxable retroactive to the date of issuance, an outcome that can be costly and difficult to plan for.
Do you offer Form 8038 consulting for Colorado issuers?
Yes! As part of our calculation services, ACS prepares your Form 8038-T for submission to the IRS on behalf of Colorado issuers. Form 8038-T accompanies your payment of any rebate or yield restriction liability. All you have to do is sign and send it off with a smile.
We also offer Form 8038-R consulting for recoverable overpayments. Our team assists Colorado issuers in requesting refunds from the IRS when an overpayment may have been made. Refund requests must generally be filed no later than two years and 60 days after the final computation date.