I learned early in my tax-exempt bond practice that interest rate swaps are one of the most consistently under-documented areas of governmental and nonprofit bond compliance – not because the filers don’t know the agreements exist, but because the annual reporting obligation often falls into a gap between the bond counsel, the financial advisor, and the accounting firm, and nobody owns it cleanly. Form 15358 sits right in that gap.
Key Takeaways
- Form 15358 is an annual information listing that tax-exempt bond issuers must file to disclose interest rate agreements – swaps, caps, collars, and similar hedges – connected to outstanding bond issues.
- Who files: State and local government entities, conduit issuers, and qualifying 501(c)(3) organizations that are issuers of tax-exempt bonds with active or recently terminated interest rate agreements.
- Why it matters: Failure to report these agreements can jeopardize the tax-exempt status of the associated bonds – a consequence far more serious than a typical information return penalty.
- Annual obligation: The form must be filed each year that a covered interest rate agreement remains in place, not just at issuance. Agreements that were terminated during the year may also require reporting.
- Main pitfall: Treating Form 15358 as a one-time filing when it is an annual obligation as long as the agreement is outstanding.
- SOP tip: Build a complete inventory of all outstanding interest rate agreements for each bond client at the start of each calendar year, before annual compliance deadlines approach.
What Form 15358 Is and When to Use It
Form 15358, “Annual Listing of Interest Rate Agreements for Tax-Exempt Bonds,” is an IRS information disclosure form used by issuers of tax-exempt bonds to report the existence, terms, and status of interest rate hedging agreements entered into in connection with their bond issues. The IRS uses this information to monitor the tax compliance of tax-exempt bond issuances and to verify that interest rate agreements do not create prohibited private use, arbitrage, or other conditions that would compromise the bonds’ tax-exempt status.
The form is part of the broader IRS tax-exempt bond compliance framework, which also includes Form 8038 (filed at issuance of private activity bonds) and Form 8038-G (for governmental bonds). While those forms capture initial issuance information, Form 15358 provides the ongoing annual tracking of interest rate agreement activity over the life of the bond issue.
Tax-exempt bond issuers enter into interest rate agreements for legitimate economic reasons – managing variable rate risk, locking in fixed payments, or reducing overall interest cost. But these agreements have federal tax implications. The IRS requires annual disclosure to ensure that the agreements are properly integrated with the bond issue under the applicable Treasury regulations and do not create issues such as excess arbitrage earnings, private business use, or impermissible benefit to private parties.
Who the Filing Obligation Falls On
The filing obligation is on the issuer of the tax-exempt bonds – the governmental entity, conduit issuer, or qualifying organization whose name appears as the issuer on the original bond issue. Where bonds are issued through a conduit structure (such as a state housing authority issuing bonds for the benefit of a qualifying 501(c)(3) hospital), the filing obligation typically belongs to the conduit issuer, though the conduit borrower may provide much of the underlying data.
When the Annual Filing Is Required
Form 15358 must be filed for each tax year in which a covered interest rate agreement is outstanding. The obligation does not expire simply because the original bond issue has seasoned or because the bond series is partially redeemed. The filing continues as long as the agreement itself is outstanding and connected to a qualifying tax-exempt bond issue. A new obligation is triggered each year, making this a recurring compliance item rather than a one-time disclosure.
How to Complete Form 15358
The form captures identifying information about the bond issue, the counterparty to the interest rate agreement, and the key economic terms of the agreement. Here is a section-by-section walkthrough.
| Section / Field | What to Provide | Practitioner Tip |
|---|---|---|
| Issuer Name and EIN | Legal name and EIN of the tax-exempt bond issuer | Match exactly to the Form 8038 or 8038-G filed at issuance |
| Bond Issue Identification | Name of bond issue, date of issuance, CUSIP numbers if applicable | Pull from the original closing documents – bond counsel can provide this |
| Agreement Type | Specify whether the agreement is a swap, cap, collar, floor, or other hedge type | Review the executed agreement document – do not rely on informal descriptions |
| Counterparty Information | Name and identifying information for the financial institution serving as counterparty | Confirm the legal entity name – not just the trading name – from the ISDA master agreement |
| Notional Amount | The notional principal amount as of the reporting period | If the notional amount amortizes, use the balance as of the end of the reporting year |
| Payment Terms | Fixed and variable rate terms, payment frequency, rate index | Pull directly from the executed agreement; do not summarize from memory |
| Termination Provisions | Any termination events, early termination payments, or modifications during the year | If the agreement was modified, consult bond and tax counsel on whether the modification creates a new hedge identification requirement |
| Hedge Identification Status | Whether the issuer has made a formal hedge identification election under Treas. Reg. § 1.148-4(h) | This election must have been made on or before the date the hedge was entered into – retroactive identification is not permitted |
Gathering the Underlying Documentation
Form 15358 is only as accurate as the underlying documentation it is based on. Issuers should maintain a complete file for each interest rate agreement including the executed ISDA Master Agreement and Schedule, the trade confirmation, any amendments or novations, and all payment records. If the original closing binder from the bond issue is not readily accessible, bond counsel’s records are often the most reliable source.
Deadlines and Filing Requirements
Form 15358 is an annual information filing with specific submission requirements. Unlike most tax returns, it is submitted directly to the IRS Tax Exempt and Government Entities (TE/GE) division rather than through standard filing channels.
| Requirement | Detail |
|---|---|
| Filing Frequency | Annual – due each year the agreement is outstanding |
| Reporting Period | Calendar year for most governmental issuers; fiscal year for conduit borrowers may differ |
| Submission Channel | Submitted to IRS TE/GE division; confirm current submission address with bond counsel |
| Consequence of Non-Filing | IRS compliance review of the bond issue; potential jeopardy to tax-exempt status of the bonds |
| Extension | No standard extension mechanism for Form 15358 – consult bond counsel if a filing delay is anticipated |
| Retention | Retain copies of all Form 15358 filings and underlying agreement documentation for the life of the bond issue plus applicable statute periods |
The Stakes of Non-Compliance
In the tax-exempt bond context, information reporting failures are not just administrative violations. The IRS Tax Exempt Bond (TEB) function uses Form 15358 data as part of its post-issuance compliance monitoring. Issuers who fail to file, or who file inaccurately, risk attracting a TEB examination that could result in a finding that the interest rate agreement creates impermissible arbitrage or other violations – potentially causing the bonds’ interest to become taxable. Bond counsel should be involved in reviewing any Form 15358 before it is filed.
Types of Interest Rate Agreements Covered
Understanding what types of agreements must be reported is the first step in building an accurate Form 15358 inventory for your issuer clients.
Interest Rate Swap Agreements
The most common type. In a standard fixed-to-variable swap, the issuer pays a fixed rate to a counterparty and receives a variable rate payment (often tied to SOFR, SIFMA, or a percentage of LIBOR’s historical benchmark). The net result economically transforms the issuer’s variable-rate bond obligation into a synthetic fixed-rate obligation. These swaps must be disclosed on Form 15358 regardless of whether they are “in the money” or “out of the money” from the issuer’s perspective.
Interest Rate Cap Agreements
A cap agreement limits the issuer’s maximum interest rate exposure on variable-rate bonds. The issuer pays an upfront premium (or periodic payments) to the cap provider, and in exchange receives payments if the reference rate exceeds the cap strike rate. Cap agreements must be tracked and reported annually even if they have never been triggered.
Collar and Floor Agreements
A collar combines a cap and a floor, creating a band within which the issuer’s effective rate will fall. Floor agreements, less common on the issuer side, guarantee minimum payments and are often embedded in more complex structures. All of these agreement types are subject to Form 15358 disclosure if connected to a tax-exempt bond issue.
Swaptions and Forward-Starting Agreements
A swaption is an option to enter a swap at a future date – commonly used to lock in swap terms in advance of a bond issuance. Forward-starting swaps similarly begin at a future date. The Form 15358 disclosure obligation for these instruments begins when the agreement is entered into, not when it becomes effective.
Tax-Exempt Bond Compliance Framework
Form 15358 does not exist in isolation. It is one component of a broader post-issuance compliance framework that every tax-exempt bond issuer should be operating under the moment the bonds close.
The Post-Issuance Compliance Obligation
Under IRS guidance, tax-exempt bond issuers are responsible for maintaining compliance with applicable federal tax requirements for the entire life of the bond issue – which can be 30 years or more. This includes arbitrage rebate calculations and payments, private use monitoring, record retention, and annual information reporting (including Form 15358 for interest rate agreements). Issuers that lack a formal post-issuance compliance policy are at elevated risk of IRS scrutiny.
The IRS TEB Compliance and Education Function
The IRS Tax Exempt Bond function within TE/GE is responsible for examining tax-exempt bond compliance. TEB conducts both random and risk-based examinations of bond issues, and Form 15358 data is among the signals it uses to identify compliance risks. Issuers with interest rate agreements that have not been properly hedged or disclosed are common examination targets.
Voluntary Closing Agreement Program (VCAP)
If an issuer discovers that it has failed to file Form 15358 for prior years or has improperly identified or accounted for a hedge, the IRS Voluntary Closing Agreement Program (VCAP) provides a mechanism to resolve the issue before an examination occurs. VCAP resolutions typically involve a payment and an agreement to implement proper post-issuance compliance procedures. Proactive self-correction through VCAP is almost always preferable to waiting for an IRS examination to surface the issue.
Hedge Identification and Integration Rules
One of the most technically demanding aspects of interest rate agreement compliance for tax-exempt bonds is the hedge identification and integration rules under Treasury Regulation § 1.148-4(h).
What Hedge Identification Means
If an issuer properly identifies a qualifying interest rate agreement as a hedge under Treas. Reg. § 1.148-4(h), the hedge and the hedged bonds are “integrated” for arbitrage purposes. This means that the payments under the hedge agreement are taken into account in computing the yield on the bonds – a significant advantage that can substantially reduce arbitrage rebate obligations. Without proper hedge identification, the swap payments are not integrated, and the issuer must compute arbitrage yield without considering the economic effect of the hedge.
The Identification Deadline Is Strict
The identification election must be made on or before the date the hedge is entered into. There is no procedure for retroactive identification of a qualifying hedge. Missing this window permanently forecloses the integration benefit for that agreement. Quick rule you can copy into your SOP: the hedge identification documentation should be prepared and executed simultaneously with the closing of the interest rate agreement, not weeks later when the closing binder is assembled.
Termination and Modification Effects
If a hedge is terminated early or materially modified, the integration may end or the modification may be treated as a new agreement requiring a new identification election. Issuers and their advisors should review any agreement modifications with bond counsel before executing them to understand the arbitrage and Form 15358 implications.
Connection to Form 8038 and Annual Reporting
Practitioners working in the tax-exempt bond space need to understand how Form 15358 fits into the overall reporting picture alongside Form 8038 and Form 8038-G.
Form 8038 and Initial Disclosure
Form 8038 (for private activity bonds) and Form 8038-G (for governmental bonds) are filed at the time of issuance and include information about the bond issue. Some versions of Form 8038 ask about the existence of hedge agreements at issuance. This initial disclosure is not a substitute for the annual Form 15358 filing – it simply captures the state of affairs at closing.
Form 8038-T and Arbitrage Rebate
Form 8038-T is used to pay arbitrage rebate to the IRS. For issuers with integrated hedges, the arbitrage computation methodology differs from unhedged bonds. The existence of a Form 15358 obligation for a given bond issue typically signals that the arbitrage rebate computation for that issue needs to incorporate hedge integration analysis – a point often missed by arbitrage rebate providers who are not aware of the swap structure.
Record Retention Across All Bond Forms
All bond-related filings – Forms 8038, 8038-G, 8038-T, and 15358 – should be retained for the life of the bond issue plus three years following final maturity or redemption. Interest rate agreement documentation should be retained for the same period. These records are the foundation of any TEB examination defense.
What Happens if an Agreement Is Terminated
Termination of an interest rate agreement creates a distinct set of reporting and compliance considerations that are often handled inconsistently in practice.
Termination During the Year
If an interest rate agreement is terminated during the reporting year, Form 15358 should reflect the agreement as terminated and include information about any termination payment received or paid. Termination payments have their own arbitrage treatment – amounts received by the issuer may be treated as replacement proceeds of the bond issue depending on how they are used, and amounts paid may affect the arbitrage yield calculation.
Replacement Proceeds Analysis
When an issuer receives a termination payment from a counterparty, bond counsel and tax counsel should analyze whether that payment constitutes replacement proceeds of the bond issue. If it does, the issuer must use the payment in compliance with the permitted use restrictions applicable to the bond issue (for example, within a prescribed timeframe for capital expenditure bonds). Failure to properly handle termination payments is a common source of bond compliance violations.
Filing Obligation After Final Termination
Once an interest rate agreement is fully terminated and all related payments have been settled, the Form 15358 filing obligation for that specific agreement ends. However, the issuer should maintain documentation of the termination and its tax treatment for the full bond record retention period in case the issue is later examined.
Common Mistakes That Slow Things Down
- Treating Form 15358 as a one-time filing – The obligation recurs annually for as long as the agreement is outstanding. Build it into your bond compliance calendar as a recurring annual task.
- Failing to inventory all outstanding agreements at year-end – Issuers with multiple bond series and multiple agreements often lose track. A complete master tracking list prevents gaps.
- Missing the hedge identification deadline – The Treas. Reg. § 1.148-4(h) identification election must be made at closing. If it was missed, the integration benefit cannot be claimed retroactively.
- Inconsistent reporting between Form 8038 and Form 15358 – Information about a hedge disclosed at issuance on Form 8038 should be consistent with what is reported annually on Form 15358. Inconsistencies attract TEB scrutiny.
- Not reporting terminated agreements – A terminated agreement during the year still needs to be included in the Form 15358 filing for that year, along with any termination payment information.
- Failing to consult bond counsel on modifications – Any material modification of an interest rate agreement can trigger a new hedge identification requirement. Never execute a modification without reviewing the tax implications first.
- Overlooking VCAP as a remediation path – If prior-year filings were missed or inaccurate, proactive correction through VCAP is far preferable to waiting for an IRS examination.
Practical Checklists You Can Reuse
Copy these into your internal wiki or SOP.
Annual Form 15358 Preparation Checklist
- Pull the complete inventory of all active interest rate agreements for each bond client
- Confirm the reporting period and current IRS submission deadline with bond counsel
- Obtain the current notional amount for each agreement (after any scheduled amortization)
- Confirm payment terms, rate index, and counterparty information from the executed documents
- Identify any agreements that were terminated or modified during the year
- Review hedge identification documentation for each agreement
- Prepare the Form 15358 and route for review by bond counsel before filing
- Submit to IRS TE/GE and retain a copy with the bond compliance file
Hedge Identification Documentation Checklist (At Closing)
- Confirm the executed ISDA Master Agreement and trade confirmation are in hand
- Prepare and execute the hedge identification statement per Treas. Reg. § 1.148-4(h) on the date the agreement is entered into
- Verify that the hedged bond issue is specifically identified in the identification statement
- Confirm the tax identification of the counterparty
- File the identification statement in the permanent bond record
- Note the first Form 15358 due date in the post-issuance compliance calendar
Year-End Bond Compliance Review Checklist
- Confirm all Forms 15358 have been filed for the year across all active bond issues
- Review arbitrage rebate computations for bond issues with integrated hedges
- Assess any agreements modified or terminated during the year for proper tax treatment
- Review termination payment handling for replacement proceeds analysis
- Update the master bond and hedge agreement tracking log
- Confirm record retention compliance for all bond-related documents
For Accounting Firms – Keep Delivery Smooth While You Scale
Tax-exempt bond compliance – including annual Form 15358 preparation, hedge identification documentation, and arbitrage rebate coordination – is specialized, documentation-intensive work. Firms that serve governmental entities and nonprofits with bond-funded projects often find this compliance backlog building up precisely when tax season is consuming the rest of the team’s capacity. Accountably provides structured offshore delivery support that helps firms clear compliance backlogs, maintain annual filing calendars, and support bond counsel review without adding local headcount.
We keep this mention brief on purpose, your process comes first.
FAQs About Form 15358
Who is required to file Form 15358?
Form 15358 must be filed by issuers of tax-exempt bonds that have entered into interest rate agreements – such as swaps, caps, collars, or floors – in connection with those bonds. This typically includes state and local government entities, conduit issuers, and other governmental or 501(c)(3) organizations with outstanding tax-exempt bond issues subject to interest rate hedging arrangements.
What types of interest rate agreements must be listed on Form 15358?
The form covers interest rate swap agreements, interest rate cap agreements, interest rate floor agreements, collar agreements, swaptions, and forward-starting agreements entered into in connection with tax-exempt bonds. Agreements that have been terminated during the reporting year must also be disclosed, along with any associated termination payments.
When is Form 15358 due?
Form 15358 is an annual filing requirement. Issuers should confirm the current year’s deadline with bond counsel and the IRS TE/GE division. There is no standard extension mechanism, so calendar management is essential to avoid late filing. The obligation continues each year the agreement remains outstanding.
What are the consequences of failing to file Form 15358?
Failure to file or incomplete filing can trigger IRS TEB compliance review of the associated bond issue. More significantly, non-compliance with interest rate agreement disclosure requirements can jeopardize the tax-exempt status of the bonds – a consequence far more serious than any information return penalty. Voluntary correction through VCAP is available for prior-year failures.
Is Form 15358 connected to Form 8038?
Yes. Form 8038 is the information return filed at issuance of tax-exempt private activity bonds, and it includes disclosures about certain hedge agreements at closing. Form 15358 provides the annual ongoing tracking of those agreements after issuance. Both forms are part of the IRS tax-exempt bond compliance framework, and inconsistencies between them can attract IRS scrutiny during a TEB examination.
This article is educational, not tax advice. Rules change, and states differ. Confirm thresholds, deadlines, and elections against the current IRS instructions for your year and facts.