How to Issue Build America Bonds

The biggest winners in the Stimulus bill that was signed by president Obama is state and local governments because they can now issue Build America Bonds. President Obama's focus in the stimulus plan was not only to get the economy out of recession, but to build a better America. Follow these steps to learn more about how to issue Build America Bonds to invest in your community.

Difficulty: Moderately Challenging

Instructions

1. Learn what Build America Bonds can do. Build America Bonds were enacted in the American Recovery and Reinvestment Act of 2009 (Stimulus bill) and provide funding for state and local governments at much lower borrowing costs. Build America Bonds should be issued to pay for public projects such as courthouses, schools, roads, transportation projects, police stations, fire departments, and water and sewer system projects.

2. Learn how Build America Bonds provide special tax subsidies. Build America Bonds provide more tax benefits than traditional tax-exempt bonds. For example, the Treasury Department will make direct payments or tax credits to issuers of Build America Bonds. They will inject payments in an amount equal to 35 percent of the interest payment on the Build America Bonds. This provides a lower net borrowing benefit for state and local governments that issue Build America Bonds. This type of offer is tough to pass up, and many communities should take advantage of it as soon as possible.

3. Learn more about how to request the IRS subsidy. For a state and local government to get the federal subsidy, they need to apply to the IRS on Form 8038-CP, which is available on the IRS website. They must do this by 45 days before an interest payment date to get these payments from the IRS. The IRS will begin making payments to state and local Build America Bond issuers on July 1, 2009.

4. Build America Bond issuers are also required to report the issuance of the bonds on an IRS form called the 8038-G, the Information Return for Tax-Exempt Governmental Obligations. This form 8038-G must be filed 30 days before the first Form 8038-CP to request payment from the IRS.

5. Check out the references at the bottom of the page to see more information related to the Build American Bonds.

Resources

• Treasury Fact Sheet for Build America Bonds

[Mitestarossa]

on 4/4/2009 Excellent information on build America bonds.