Failure to calculate arbitrage rebate on
tax-exempt bonds may result in financial penalties from the IRS. Bingham can help.

Sections 103 and 148 of the Internal Revenue Code stipulate that any earnings over the declared yield of a tax-exempt bond issue must be rebated to the Federal Government. These excess earnings are defined as arbitrage.

The calculation needed to determine the amount, if any, that must be rebated is best performed by an outside agency with expertise in this field. This calculation must be performed at least every five years over the life of the issue, even if your issue does not earn arbitrage.

If you are an issuer of tax-exempt bonds, or an obligated party in a tax-exempt issue, let Bingham’s expertise help you navigate the complexities of arbitrage rebate compliance.

Download our free guide to achieving compliance, Navigating the Arbitrage Rebate Calculation.

Navigating the Arbitrage Rebate Calculation Booklet

Arbitrage rebate has been our unique focus for over 26 years.

Bingham is not a “big box” business. Our firm has a specialized focus on arbitrage rebate, verification, and IRS Schedule K (Form 990) support services. Consequently, Bingham has the specific expertise and experience needed to ensure regulatory compliance and precision reporting for every client. We offer quick turnaround and highly attentive service.

Bond issuers large and small trust Bingham with their arbitrage rebate calculations. Our firm has more than 500 active clients and performed calculations for a combined estimated $65,000,000,000 in bond proceeds. Since 1988, we’ve handled issues valued from $150,000 to $500,000,000 for organizations including public utilities, municipalities, counties, universities, airports, and private issuers.

Bingham means quality service. From pre-bond to post-bond and beyond.

We provide exceptional scrutiny of the many complex details associated with rebate computation, verification services, and completion of IRS Schedule K (Form 990). Our analysts alert clients to key reporting dates, can work directly with banks to access financial statements, and stand by all quotes.

Pre-bond Closing

Verification of refunding bond issues. Bingham provides comprehensive verification services for escrow funds to ensure mathematical accuracy. Using specialized expertise and customized software programs, we confirm the adequacy of cash and securities placed in escrow for bond retirement. We perform all verifications with a multi-level analysis and quality review process, both prior to pricing and on the day of pricing.

Ongoing Support

We will assist in responding to any inquiries from the IRS. Bingham maintains strong relationships with bond attorneys and financial advisors, enabling us to offer quality consultation in any matter relating to arbitrage rebate, verification services, post-issuance compliance, and IRS Schedule K (Form 990). We retain all past reports to facilitate future calculations.

Post-Bond Closing

Review and analysis. Bingham thoroughly reviews closing documents and investment activity to ascertain which funds are subject to the arbitrage rebate calculation. For those that are, we make the necessary comparisons to determine positive or negative arbitrage.

Arbitrage calculation. Bingham performs arbitrage rebate computations and spending exemption tracking on a wide variety of bond structures, including fixed rate, variable rate, and variable rate with swaps. We have specialized expertise in municipal, university, and not-for-profit [501(c)(3)s] issues. Our skilled professionals perform calculations with careful consideration of the potential to reduce rebate liability.

Compliance Preparation. Bingham helps clients to prepare for arbitrage rebate compliance and possible post issuance compliance questions or audits. We assist in creating an in-house record-keeping system that keeps the proper information easily accessible.

IRS Schedule K (Form 990). Nonprofit organizations [501(c)(3)] must complete IRS Schedule K (Form 990) regarding proceeds of tax- exempt bonds issued for their benefit. Incorrect completion could raise a red flag and potential for an audit. Bingham provides the expertise and assistance needed to address complexities on Schedule K Form 990 and ensure compliance, including comprehensive assessments of management practices and procedures.

Reporting. Bingham provides accurate reports corresponding with evaluation dates, including a fifth year comprehensive summary report and an IRS Form 8038-T if payment is due. If an exception is met, an Exception Report is provided. All reports are accompanied by our professional opinion guaranteeing mathematical accuracy and results consistent with Section 148(f) of the Internal Revenue Code.

The Bingham team. Let our experience work for you.

Kim A. Hoyt Portrait

Kim A. Hoyt

President

With an extensive background as an accountant and analyst in the banking industry, Kim has worked in arbitrage rebate for over 20 years. She has in-depth knowledge and experience with the different versions, amendments, and technical corrections of regulations that can affect arbitrage calculations. She understands the complex details associated with bond issues and arbitrage, including regulatory compliance and precision reporting for every client.

Kim is a recognized professional in the arbitrage field. She conducts specialized seminars for clients and the banking industry on topics such as bond yield, arbitrage rebate calculations, yield reduction, and recordkeeping. An active participant in financial conferences and seminars nationwide, Kim is a member of the Government Finance Officers Association, the Government Finance Officers Associations of Virginia, Georgia, North Carolina, Louisiana, Maryland, and the Council of Development Finance Agencies.

Kim is a graduate of Pennsylvania State University with a degree in Accounting.

Rebecca Quarles Portrait

Rebecca Quarles

Vice President

Rebecca has a solid background in financial analysis with experience in both investment banking and asset management settings. She is proficient in handling interest rate hedge transactions/swap transactions, commingled fund allocations, guaranteed investment contracts, and transferred proceeds calculations. As an account manager, Rebecca assists with all aspects of account evaluation, analysis, and compliance reporting.

Rebecca is a graduate of Barnard College of Columbia University with a B.A. in Economics.

Catherine Boyle Portrait

Catherine Boyle

Business Development Manager

Catherine brings an extensive banking and business management and development background to Bingham. Catherine served as Vice President in various capacities at Suntrust Bank, including six years as bond trustee, two years as Strategic Marketing Product Development Manager and two years as Y2K Vendor and Event Manager. While in banking, she earned the designations of Chartered Bank Auditor and Certified Corporate Trust Specialist.

For three years Catherine served as Chief Operating Officer for a Richmond, Virginia-area ministry start-up and President of the ministry’s Board of Directors. Catherine has written one published book and related study and has contributed to several other published works.

Catherine earned a Bachelor’s degree in Business Administration (Accounting major) from James Madison University, and later earned a Master’s degree in Business Administration from Virginia Commonwealth University.

Meredith Fraley Portrait

Meredith Fraley

Vice President

Meredith is an integral part of Bingham's growth and client retention. With over fifteen years of experience in arbitrage rebate services, she has expert knowledge of the different versions, amendments, and technical corrections of regulations that can affect arbitrage calculations, as well as the completion of IRS Schedule K (Form 990). Meredith specializes in municipal, university, not-for-profit [501(c)(3)s], and multi-family issues. She is highly proficient in handling commingled fund allocations, guaranteed investment contracts, and transferred proceeds calculations. She performs the financial calculations involved for the arbitrage rebate requirement and interprets the corresponding treasury regulations. Meredith’s financial and software expertise ensures accuracy and clear reporting on all projects.

Meredith is a graduate of Virginia Polytechnic Institute and State University with a degree in Finance.

Patrick Bainter Portrait

Patrick Bainter

Vice President

Patrick joined Bingham in 1999 with a background in financial advisory and investment banking firms. He has extensive experience in dealing with the different versions, amendments, and technical corrections of regulations that can affect arbitrage calculations. Patrick provides comprehensive verification services to ensure compliance with the Internal Revenue Code and Income Tax Regulations, as well as assistance in the completion of IRS Schedule K (Form 990). He specializes in industrial development authority, municipal, university, not-for-profit [501(c)(3)s], and assisted living issues. Patrick is exceptionally proficient in handling interest rate hedge transactions and swap transactions. He also handles commingled fund allocations, guaranteed investment contracts, and transferred proceeds calculations. Patrick has the regulatory and technical expertise necessary to identify the lowest permissible arbitrage rebate and/or yield reduction liability for tax-exempt bond issues.

Patrick is a graduate of Radford University with a degree in Business Administration and a major in Finance.

Kenneth T. Chavious Portrait

Kenneth T. Chavious

Sales & Marketing Representative

With over 25 years of experience in governmental finance, Ken represents the firm in marketing endeavors. He previously served as Finance Director for Orange County, North Carolina. As Director, he was responsible for accounting, fiscal control, financial reporting, and debt management for the county’s $200 million+ operating budget and over $300 million in capital projects.

Considered among his peers to be one of the top Finance Directors in the state, he was president of both the North Carolina Government Finance Officers Association and the North Carolina Association of County Finance Officers. For 25 consecutive years, Kenneth achieved the Certificate of Achievement for Excellence in Financial Reporting presented by the Government Finance Officers Association of the United States and Canada.

Ken majored in Accounting and earned a B.S. in Business from Fayetteville State University.

Six tips for a smooth arbitrage rebate calculation.

Additionally, more detailed information is available from the Internal Revenue Service website, including tax forms and compliance questionnaires:

Information for the Tax-Exempt
Bond Community »

IRS Tax Form 8038-T »

IRS Tax Form 8038-R »

1. Be familiar with your documents, especially the Non-Arbitrage Certificate in your bond transcript.

2. Create a file to avoid backtracking through five years of “cold” paper trails when it’s time for calculation. You’ll be ready for arbitrage calculation immediately after your bond closing and prepared for the written procedures required by the new IRS Form 8038-G.

3. Schedule your calculation by notifying Bingham at least 60 days before each fifth year anniversary to avoid late payment interest charges.

4. Know your exceptions. If your bond counsel advises you that your issue meets an exception, find out which one. The most common are: Small Issuer, Six Month, Eighteen Month, and Two Year. Bingham can review your statements and provide a report demonstrating your compliance.

5. Keep your calculations current to be aware of the amount of arbitrage you are earning. This affords you the option to restructure your investments accordingly.

6. Ask questions. The more you understand about the rebate calculation, the better. Don't hesitate to call Bingham at (888) 900-5312 or send an email to for answers.

Request a quote for your tax-exempt bond issue.

At Bingham, fees are driven by the size and complexity of each issue. We make the cost more economical by offering annual calculations that eliminate time-consuming reconstruction of accounting records at the five-year mark.

To obtain a quote, use our online quote request form below or fax/email us a copy of the bond transcript's Table of Contents. Quotes are usually available within 48 hours of our receipt of complete information.