rp-24-37.pdf

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Part III

Administrative, Procedural, and Miscellaneous

26 CFR 601.601: Rules and regulations.
(Also Part 1, §§103, 148; 1.148-3, 1.148-5, 1.148-7, 1.148-10, 1.148-11, 1.148-13T.)

Rev. Proc. 2024-37

SECTION 1. PURPOSE
This revenue procedure provides guidance to issuers of tax-exempt and other tax-
advantaged bonds (as defined in § 1.150-1(b) of the Income Tax Regulations
1
)
regarding the procedures for filing claims for recovery of overpayments (as defined in
§ 1.148-3(i)(1)) of amounts paid to the United States with respect to the rebate
requirement under § 148(f) for excess investment earnings, the penalty in lieu of rebate
provisions under § 148(f)(4)(C)(vii) and (viii), or the yield reduction payment provisions
under § 1.148-5(c). This revenue procedure modifies and supersedes Rev. Proc. 2008-
37, 2008-2 (Vol.1) C.B. 137, as modified by Rev. Proc. 2017-50, 2017-37 I.R.B. 234,

1
Unless otherwise specified, all “section” or “§” references are to sections of the Internal Revenue Code
or the Income Tax Regulations (26 CFR part 1).

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and supersedes Rev. Proc. 2017-50.
SECTION 2. BACKGROUND
.01 Under § 103(b)(2), the exclusion from gross income of interest on any State or
local bond under § 103(a) does not apply to interest on an arbitrage bond within the
meaning of § 148.
.02 The requirements of § 148 apply to tax-exempt bonds and, generally, to other
tax-advantaged bonds.
.03 Section 148(f)(1) generally provides that a bond that is part of an issue is treated
as an arbitrage bond, unless the issuer pays to the United States any rebate amounts
described in § 148(f)(2) (rebate) for the issue in accordance with § 148(f)(3).
.04 Section 148(f)(3) provides, in part, that, except to the extent provided by the
Secretary of the Treasury or her delegate, rebate must be paid in installments that are
made at least once every five years. The last installment must be made no later than
60 days after the date on which the last bond of the issue is redeemed.
.05 Section 148(f)(4)(C)(vii) and (viii) permit issuers of construction issues (as
defined in § 148(f)(4)(C)(iv)) to elect to pay a penalty in lieu of rebate in the manner and
amount described in § 148(f)(4)(C)(vii) and (viii).
.06 Section 1.148-5(c)(1) permits issuers to pay yield reduction payments to the
United States that may be taken into account in determining the yield on an investment
for purposes of § 148 in the circumstances and manner described in § 1.148-5(c).
.07 Section 1.148-3(i)(1) provides that, in general, an issuer may recover an
overpayment of rebate by establishing to the satisfaction of the Commissioner of
Internal Revenue or his delegate (Commissioner) that the overpayment occurred. An

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overpayment is the excess of the amount paid to the United States for an issue over the
sum of the “rebate amount” (as defined in §§ 1.148-1(b) and 1.148-3(b)) as of the most
recent “computation date” (as defined in § 1.148-3(e)) and all amounts that are
otherwise required to be paid under § 148 as of the date the recovery is requested.
Under § 1.148-3(e)(2), the final computation date generally is the date that an issue is
discharged.
.08 In general, overpayments of the penalty in lieu of rebate and yield reduction
payments are treated in the same manner as overpayments of rebate. See generally,
§§ 1.148-3(i)(1), 1.148-3(i)(2)(ii), 1.148-5(c)(1) and (2), and 1.148-7(k)(3) and (m).
.09 Section 1.148-3(i)(3)(i) provides that an issuer must request a refund of an
overpayment (claim) no later than the date that is two years after the final computation
date for the issue to which the overpayment relates (filing deadline). The claim must be
made using the form provided by the Commissioner for this purpose.
.10 Section 1.148-3(i)(3)(ii) provides that the Commissioner may request additional
information to support a claim. The issuer must file the additional information by the
date specified in the Commissioner’s request, which date may be extended by the
Commissioner if unusual circumstances warrant. An issuer will be given at least 21
calendar days to respond to a request for additional information.
.11 Section 1.148-3(i)(3)(iii) provides that a claim described in either § 1.148-
3(i)(3)(iii)(A) or (B) that has been denied by the Commissioner may be appealed to the
Independent Office of Appeals (Appeals). A claim is described in § 1.148-3(i)(3)(iii)(A) if
the Commissioner asserts that the claim was filed after the filing deadline. A claim is
described in § 1.148-3(i)(3)(iii)(B) if the Commissioner asserts that additional

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information to support the claim was not submitted within the time specified in the
request for information or in any extension of such specified time period. The
procedures for an issuer of tax-advantaged bonds to request an administrative appeal
to Appeals are provided in Rev. Proc. 2021-10, 2021-4 I.R.B. 503. When an appeal of a
claim described in either § 1.148-3(i)(3)(iii)(A) or (B) is determined in favor of the issuer,
Appeals must return the case to the office that is responsible for examinations of tax-
advantaged bonds (presently the Office of Tax Exempt Bonds) for further consideration
of the substance of the claim.
.12 Section 1.148-11(k)(3)(i) provides that § 1.148-3(i)(3)(i) applies to claims for
recovery of overpayments arising from an issue of bonds to which § 1.148-3(i) applies
and for which the final computation date is after June 24, 2008. For purposes of
§ 1.148-3(k)(3)(i), issues for which the actual final computation date is on or before June
24, 2008, are deemed to have a final computation date of July 1, 2008, for purposes of
applying § 1.148-3(i)(3)(i).
.13 Section 1.148-11(k)(3)(ii) provides that § 1.148-3(i)(3)(ii) and (iii) apply to claims
arising from an issue of bonds to which § 1.148-3(i) applies and for which the final
computation date is after September 16, 2013.
.14 Section 1.148-13T of the Temporary Income Tax Regulations (1992 regulations),
which was published in the Federal Register on May 18, 1992 (T.D. 8418, 1992-1 C.B.
29 [57 F.R. 20971]), provides rules for recovering an overpayment of rebate or penalty
in lieu of rebate with respect to certain bonds issued before July 1, 1993. Under
§ 1.148-13T(a) and (c)(1) of the 1992 regulations, an issuer may recover an
overpayment of rebate or penalty in lieu of rebate to the extent that recovery on the date

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requested would not result in an additional rebate amount as of the date requested if the
issuer proves to the satisfaction of the Commissioner that the overpayment occurred
and was paid because of a mistake.
.15 Rev. Proc. 2008-37 sets forth procedures for filing claims for the refund of
overpayments of rebate, penalty in lieu of rebate, or yield reduction payments. Rev.
Proc. 2008-37 imposes the same deadline for filing such claims as the filing deadline in
§ 1.148-3(i)(3)(i). Section 1.148-10(g) provides authority to the Commissioner to waive
regulatory limitations under certain circumstances. Specifically, § 1.148-10(g) provides
that, notwithstanding any specific provision in §§ 1.148-1 through 1.148-11, the
Commissioner may prescribe extensions of temporary periods, larger reasonably
required reserve or replacement funds, or consequences of failures or remedial action
under § 148 in lieu of or in addition to other consequences of those failures, or take
other action, if the Commissioner finds that good faith or other similar circumstances so
warrant, consistent with the purposes of § 148. In the interest of sound tax
administration and in reliance on the authority provided under § 1.148-10(g), Rev. Proc.
2017-50 extends the time for filing claims to recover overpayments under § 148 to
ensure that issuers have a reasonable opportunity to recover overpayments made both
before and after the final computation date. Rev. Proc. 2017-50 adds 60 days to the
existing two-year deadline under § 1.148-3(i)(3)(i) and provides a new two-year
deadline with respect to the payments made after the date that is 60 days after the final
computation date.
SECTION 3. SCOPE
This revenue procedure applies to claims submitted pursuant to § 1.148-3(i) of any

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overpayment of an amount paid by an issuer of tax-exempt and other tax-advantaged
bonds to the United States to meet the requirements of § 148, including a payment of
rebate, a payment of a penalty in lieu of rebate, and a yield reduction payment. Claims
that are made under the 1992 regulations will be treated in the same manner as claims
made under § 1.148-3(i).
SECTION 4. PROCEDURE FOR CLAIMS FOR RECOVERY OF OVERPAYMENT OF
REBATE, PENALTY IN LIEU OF REBATE, AND YIELD REDUCTION PAYMENTS

.01 Form 8038-R, Request for Recovery of Overpayments Under Arbitrage Rebate
Provisions. A claim must be made by completing and timely filing Form 8038-R,
Request for Recovery of Overpayments Under Arbitrage Rebate Provisions, and any
attachments thereto with the Internal Revenue Service in accordance with the Form
8038-R instructions (or the then-applicable form and instructions as may be announced
by the Internal Revenue Service from time to time).
.
02 Timely filing of a claim. An issuer must file a claim for refund of an overpayment
with respect to an issue of bonds no later than two years after:
(1) the date that is 60 days after the final computation date of the issue to which
the payment relates; or
(2) with respect to the portion of the overpayment paid more than 60 days after the
final computation date, the date that the payment was made to the United States.
.03 Processing claims. The Commissioner may allow a claim, reject a claim under
circumstances described in section 4.03(1) of this revenue procedure (Claim Rejection),
or deny a claim in full or in part as described in section 4.03(2) of this revenue
procedure (Claim Denial).
(1
) Claim Rejection. The Commissioner may reject a claim based on an issuer’s (i)

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failure to follow procedures or requirements for filing or supporting the claim, or (ii)
submission of a claim that relies on substantive matters that were previously reviewed
and resulted in a Claim Denial (without regard to whether the Claim Denial has become
final or not), or a closing agreement. If a claim is rejected, the Commissioner will notify
the issuer by letter explaining the reasons for the rejection.
(a) Failure to meet the requirements for processing a claim. If the issuer fails to
follow procedures or requirements for filing or supporting a claim (as described in
section 4.03(1)(i) of this revenue procedure), the Commissioner will notify the issuer by
letter describing any requirements that have not been satisfied and will provide the
issuer 45 calendar days from the date of the notification to satisfy the procedures and
requirements for filing or supporting a claim before notifying the issuer by letter of the
Claim Rejection (as described in section 4.03(1) of this revenue procedure).
(b) R
esubmission permitted after Claim Rejection. After a Claim Rejection based
on an issuer’s failure to follow procedures or requirements for filing or supporting the
claim, an issuer may resubmit the claim to address the basis for the rejection, provided
that the resubmitted claim is filed by the filing deadline as described in section 4.02 of
this revenue procedure.
(2
) Claim Denial. The Commissioner will notify the issuer of a Claim Denial by
letter explaining the reasons for the denial and informing the issuer of its right to request
an appeal (see section 4.04 of this revenue procedure). If a Claim Denial becomes final
under section 4.06 of Rev. Proc. 2021-10 (failure to make an appeals request) or
because Appeals sustains the Claim Denial in full or in part, the issuer may not submit
thereafter a claim for the arbitrage payment(s) with respect to claim(s) on which the

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Claim Denial became final and any such claim will be rejected under section 4.03(1) of
this revenue procedure.
.04 Appeals. An issuer is entitled to appeal a Claim Denial to Appeals under the
procedures set forth in Rev. Proc. 2021-10. When an appeal of a claim described in
either § 1.148-3(i)(3)(iii)(A) or (B) is determined in favor of the issuer, Appeals must
return the case to the office that is responsible for examinations of tax-advantaged
bonds (presently the Office of Tax Exempt Bonds) for further consideration of the
substance of the claim.
SECTION 5. EFFECT ON OTHER DOCUMENTS
This revenue procedure modifies and supersedes Rev. Proc. 2008-37, as modified
by Rev. Proc. 2017-50, and supersedes Rev. Proc. 2017-50 as of October 18, 2024.
SECTION 6. EFFECTIVE DATE
This revenue procedure applies to claims filed on or after October 18, 2024. An
issuer that files a claim prior to October 18, 2024 may apply this revenue procedure in
whole (and not in part) by affirmatively stating in the claim that it is applying Rev. Proc.
2024-37.
SECTION 7. PAPERWORK REDUCTION ACT
The collection of information contained in section 4 of this revenue procedure has
been previously reviewed and approved by the Office of Management and Budget in
accordance with the Paperwork Reduction Act (44 U.S.C. § 3507) under control number
1545-0047.
SECTION 8. DRAFTING INFORMATION
The principal author of this revenue procedure is Brian Choi, Office of Associate

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Chief Counsel (Financial Institutions and Products). For further information regarding
this revenue procedure, call Mr. Choi at 202-317-3154 (not a toll-free number).