Rebate Payments
If bond proceeds were invested at a yield higher than the bond yield, the excess earnings must be paid to the U.S. government in five-year installments. This is true even if the issuer was allowed to invest the bond proceeds at a higher yield because of an exception, such as the reserve fund or minor portion exceptions described above. These payments to the government are called rebate payments.
To determine the rebate payment, a municipality will typically perform a rebate calculation annually and excess amounts will be averaged over the five-year period.
An arbitrage rebate payment is required to be paid no later than 60 days after the end of every fifth bond year. The p