To assure uniformity in complying with the reporting requirements of the Tax Reform Act of 1986, this bulletin sets forth procedures that took effect on January 1, 1990, with respect to any obligations issued in the form of lease-purchases or installment purchases by state agencies.

Pursuant to the Tax Reform Act of 1986, all governmental issuers of tax exempt obligations, with respect to any such obligations issued on or after January 1, 1987, must file one of two informational returns with the Internal Revenue Service (IRS) as illustrated below:

Form 8038-G -- Information Return for Tax Exempt Governmental Bond Issues
Where the issue price is $100,000 or more, file Form 8038-G on or before the fifteenth day of the second calendar month after the close of the calendar quarter in which the obligations are issued.

Form 8038-GC -- Consolidated Information Return for Small Tax Exempt Governmental Bond Issues
Where the issue price is less than $100,000, file Form 8038-GC on or before February 15 after the close of the calendar year in which such obligations are issued. All calendar year issuance of obligations less than $100,000 should be reported on this form.

The Office of the State Comptroller already undertakes the necessary reporting with respect to any state obligations (i.e., general obligation bonds, notes, certificates of participation, etc.) issued by the Comptroller. However, the reporting requirements imposed by the Tax Reform Act of 1986 apply to all tax exempt obligations, including those issued in the form of leas-purchase agreements and installment purchases by individual state agencies. Thus, transactions involving contractual obligations created by an agency's acquisition of property (e.g., computers or photocopiers), which are financed by the vendor or an intermediary credit entity and paid for on a periodic basis by the agency over period of time, are required to be reported to the IRS as well. Since 1987, this office has been working with individual agencies to assure that proper forms are filed timely for each such transaction.

Accordingly, beginning January 1, 1990:

• Whenever any agency contract involving a lease-purchase or installment purchase agreement in the amount of $100,000 or more is submitted to this office for the Comptroller's approval, it must be accompanied by a copy of a completed Form 8038-G. A copy of the form, along with instructions, is attached to the bulletin. Any questions concerning completion of the form may be addressed to the Bureau of State Expenditures at (518)473-6765.
  
• Once approval of the contract is obtained from this office, the form should be mailed to the Department of the Treasury, Internal Revenue Service Center, Philadelphia, Pennsylvania, 19255, along with a stamped self-addressed envelope to request an acknowledged copy of the filing. When received, a copy of the acknowledged copy should be sent to this office.
  
• Since, pursuant to Section 167-a of the State Finance Law, the State Comptroller is, beginning in fiscal year 1989-90, precluded from approving any financed equipment acquisition where the outright purchase cost of the equipment is less than $100,000, such transaction must be effectuated by outright purchase or rental. Accordingly, there should not be presented any occasion after the end of calendar year 1989 where a Form 8038-GC is required to be filed by a state agency. Of course, Form 8038-GC should be filed for any finance acquisitions of less than $100,000, which were effectuated in calendar year 1989 prior to the start of the state's 1989-90- fiscal year (i.e., April 1). This office will be contacting the relevant state agencies with regard to any such acquisition.