[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2446 Introduced in House (IH)]
106th CONGRESS
1st Session
H. R. 2446
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax to holders of Better America Bonds.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 1, 1999
Mr. Matsui (for himself, Mr. Doggett, Mr. Blumenauer, Mr. Gephardt, Mr.
Bonior, Mr. Rangel, Mr. Coyne, Mr. Levin, Mr. Cardin, Mr. Lewis of
Georgia, Mr. Neal of Massachusetts, Mr. Jefferson, Mrs. Thurman, Mr.
Becerra, Mr. Allen, Ms. Baldwin, Mr. Barrett of Wisconsin, Mr. Berman,
Ms. Brown of Florida, Mr. Brown of California, Mr. Brown of Ohio, Mrs.
Capps, Ms. Carson, Mrs. Christensen, Mr. Cummings, Ms. DeGette, Ms.
DeLauro, Mr. Dixon, Mr. Dooley of California, Mr. Doyle, Mr. Farr of
California, Mr. Fattah, Mr. Frost, Mr. Hinchey, Mr. Hoeffel, Mr. Holt,
Mr. Larson, Mr. Maloney of Connecticut, Mr. Meehan, Mr. Menendez, Ms.
Millender-McDonald, Mr. George Miller of California, Mrs. Napolitano,
Ms. Norton, Ms. Pelosi, Mr. Serrano, Ms. Schakowsky, Mr. Thompson of
Mississippi, Mr. Tierney, Mrs. Jones of Ohio, Mr. Udall of Colorado,
Mr. Udall of New Mexico, Mr. Waxman, Mr. Weygand, and Ms. Woolsey)
introduced the following bill; which was referred to the Committee on
Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax to holders of Better America Bonds.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Better America Bonds Act of 1999''.
SEC. 2. CREDIT TO HOLDERS OF BETTER AMERICA BONDS.
(a) In General.--Subpart B of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 is amended by adding at the end
the following new section:
``SEC. 30B. CREDIT TO HOLDERS OF BETTER AMERICA BONDS.
``(a) Allowance of Credit.--In the case of a taxpayer who holds a
Better America Bond on a credit allowance date of such bond which
occurs during the taxable year, there shall be allowed as a credit
against the tax imposed by this chapter for such taxable year an amount
equal to the sum of the credits determined under subsection (b) with
respect to credit allowance dates during such year on which the
taxpayer holds such bond.
``(b) Amount of Credit.--
``(1) In general.--The amount of the credit determined
under this subsection with respect to any credit allowance date
for a Better America Bond is 25 percent of the annual credit
determined with respect to such bond.
``(2) Annual credit.--The annual credit determined with
respect to any Better America Bond is the product of--
``(A) the applicable credit rate, multiplied by
``(B) the outstanding face amount of the bond.
``(3) Applicable credit rate.--For purposes of paragraph
(1), the applicable credit rate with respect to an issue is the
rate equal to an average market yield (as of the day before the
date of issuance of the issue) on outstanding long-term
corporate debt obligations (determined under regulations
prescribed by the Secretary).
``(4) Special rule for issuance and redemption.--In the
case of a bond which is issued during the 3-month period ending
on a credit allowance date, the amount of the credit determined
under this subsection with respect to such credit allowance
date shall be a ratable portion of the credit otherwise
determined based on the portion of the 3-month period during
which the bond is outstanding. A similar rule shall apply when
the bond is redeemed.
``(c) Better America Bond.--For purposes of this section--
``(1) In general.--The term `Better America Bond' means any
bond issued as part of an issue if--
``(A) 95 percent or more of the proceeds of such
issue are to be used for any qualified purpose,
``(B) the bond is issued by a State or local
government within the jurisdiction of which the
qualified purpose of the issue is to be carried out,
``(C) the issuer designates such bond for purposes
of this section,
``(D) the term of each bond which is part of such
issue does not exceed 15 years,
``(E) the requirements of section 147(f) are met
with respect to such issue, and
``(F) except in the case of the proceeds of such
issue which are to be used for the qualified purpose
described in paragraph (2)(A)(iv), the payment of the
principal of such issue is secured by taxes of general
applicability imposed by a general purpose governmental
unit.
``(2) Qualified purpose.--
``(A) In general.--The term `qualified purpose'
means any of the following:
``(i) The acquisition of land for use as
open space, wetlands, public parks, or
greenways, and the provision of visitor
facilities (such as campgrounds and hiking or
biking trails) for land so used, but only if--
``(I) such land and facilities are
to be owned by the issuer or a
qualified owner, and
``(II) the initial owner of such
land and facilities records pursuant to
State law a qualified restrictive
covenant with respect to such land and
facilities.
``(ii) The remediation of land acquired
under clause (i) (or other publicly owned land)
to enhance water quality by--
``(I) restoring hydrology or
planting trees or other vegetation,
``(II) undertaking reasonable
measures to control erosion,
``(III) restoring wetlands, or
``(IV) remediating conditions
caused by the prior disposal of toxic
or other waste.
``(iii) The acquisition by the issuer or
any qualified owner of any restriction on
privately owned open land which
prevents commercial development and any substantial change in the use
or character of the land if such restriction would, if contributed by
the owner of the open land to a qualified organization (as defined in
section 170(h)(3)), be a qualified conservation contribution (as
defined in section 170(h)).
``(iv) The environmental assessment and
remediation of real property owned by any State
or local government if--
``(I) such property was acquired by
such government as a result of being
abandoned by the prior owner, and
``(II) such property is located in
an area at or on which there has been a
release (or threat of release) or
disposal of any hazardous substance (as
defined in section 198).
``(B) Remediation of national priorities listed
sites not qualified purpose.--Subparagraph (A)(ii)
shall not apply to remediation of any site which is on,
or proposed for, the national priorities list under
section 105(a)(8)(B) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980.
``(C) Qualified owner.--For purposes of this
paragraph, the term `qualified owner' means any
organization described in section 501(c)(3) whose
exempt purpose includes environmental protection.
``(D) Qualified restrictive covenant.--For purposes
of subparagraph (A)(i)(II), the term `qualified
restrictive covenant' means, with respect to land or
facilities, any covenant which prohibits the person who
owns such land or facilities at the end of the term of
the bond from selling or otherwise permitting a use of
such land or facilities which is not described in
subparagraph (A) unless--
``(i) a reasonable period is allowed for a
qualified owner to purchase such land or
facilities,
``(ii) the purchase price is not greater
than the price originally paid in conjunction
with the expenditure of bond proceeds, and
``(iii) the purchaser records pursuant to
State law a covenant with respect to the
purchased land and facilities which protects in
perpetuity the use of such land and facilities
for a use described in subparagraph (A).
``(3) Public availability requirement, etc.--
``(A) In general.--The term `Better America Bond'
shall not include any bond which is part of an issue
if--
``(i) any portion of the proceeds of the
issue are to be used for any private business
use (as defined in section 141(b)(6)), or
``(ii) the payment of the principal of, or
the interest on, any portion of such proceeds
is (under the terms of such issue or any
underlying arrangement) directly or indirectly
secured or to be derived as described in
subparagraph (A) or (B) of section 141(b)(2).
``(B) Exception.--Subparagraph (A) shall not apply
to proceeds used for a qualified purpose described in
paragraph (2)(A)(iv).
``(d) Limitation on Amount of Bonds Designated.--
``(1) In general.--The maximum aggregate face amount of
bonds issued during any calendar year which may be designated
under subsection (c)(1) by any issuer shall not exceed the
limitation amount allocated under paragraph (3) for such
calendar year to such issuer.
``(2) National limitation on amount of bonds designated.--
There is a national Better America Bond limitation for each
calendar year. Such limitation is--
``(A) $1,900,000,000 for each of calendar years
2000, 2001, 2002, 2003, and 2004, and
``(B) except as provided in paragraph (4), zero
after 2004.
``(3) Allocation of limitation among states and local
governments.--
``(A) In general.--The national Better America Bond
limitation for any calendar year shall be allocated by
the EPA Administrator to States and local governments
having approved applications. As part of the
competitive application process, the Environmental
Protection Agency should, when possible, allocate such
limitation on a per capita basis.
``(B) Approved application.--For purposes of
subparagraph (A), the term `approved application' means
an application which is approved by the EPA
Administrator and includes such information as the EPA
Administrator shall specify.
``(4) Carryover of unused limitation.--If for any calendar
year--
``(A) the amount allocated under paragraph (4) to
any State or local government, exceeds
``(B) the amount of bonds issued during such year
which are designated under subsection (c)(1) pursuant
to such allocation,
the limitation amount under paragraph (3) for such State or
local government for the following calendar year shall be
increased by the amount of such excess.
``(e) Limitation Based on Amount of Tax.--
``(1) In general.--The credit allowed under subsection (a)
for any taxable year shall not exceed the excess of--
``(A) the sum of the regular tax liability (as
defined in section 26(b)) plus the tax imposed by
section 55, over
``(B) the sum of the credits allowable under part
IV of subchapter A (other than subpart C thereof,
relating to refundable credits).
``(2) Carryover of unused credit.--If the credit allowable
under subsection (a) exceeds the limitation imposed by
paragraph (1) for such taxable year, such excess shall be
carried to the succeeding taxable year and added to the credit
allowable under subsection (a) for such taxable year.
``(f) Other Definitions.--For purposes of this section--
``(1) Credit allowance date.--The term `credit allowance
date' means--
``(A) March 15,
``(B) June 15,
``(C) September 15, and
``(D) December 15.
Such term includes the last day on which the bond is
outstanding.
``(2) Bond.--The term `bond' includes any obligation.
``(3) State.--The term `State' includes the District of
Columbia, any possession of the United States, and any Indian
tribal government (within the meaning of section 7871).
``(4) Local government.--The term `local government'
means--
``(A) any county, city, town, township, parish,
village, or other general purpose political subdivision
of a State, and
``(B) any combination of political subdivisions
described in subparagraph (A) recognized by the EPA
Administrator.
``(5) EPA administrator.--The term `EPA Administrator'
means the Administrator of the Environmental Protection Agency.
``(g) Credit Included in Gross Income.--Gross income includes the
amount of the credit allowed to the taxpayer under this section
(determined without regard to subsection (e)) and the amount so
included shall be treated as interest income.
``(h) Special Rules Relating to Arbitrage.--
``(1) In general.--A bond shall not be treated as failing
to meet the requirements of subsection (c)(1) solely by reason
of the fact that the proceeds of the issue of which such bond
is a part are invested for a temporary period (but not more
than 36 months) until such proceeds are needed for the purpose
for which such issue was issued.
``(2) Reasonable expectation and binding commitment
requirements.--Paragraph (1) shall apply to an issue only if,
as of the date of issuance--
``(A) the issuer reasonably expects that--
``(i) at least 95 percent of the proceeds
of the issue will be spent for a qualified
purpose within the 3-year period beginning on
such date, and
``(ii) property financed with such proceeds
will be used for qualified purposes for at
least 15 years after being so financed,
``(B) there is a binding commitment with a third
party to spend at least 10 percent of the proceeds of
the issue for qualified purposes within the 6-month
period beginning on such date, and
``(C) the issuer reasonably expects that the
remaining proceeds of the issue will be spent with due
diligence for qualified purposes.
``(3) Earnings on proceeds.--Any earnings on proceeds
during the temporary period shall be treated as proceeds of the
issue for purposes of applying subsection (c)(1) and paragraph
(1) of this subsection.
``(i) Denial of Deduction for Environmental Remediation
Expenditures.--Expenditures financed by any Better America Bond shall
not be allowed as a deduction under section 198.
``(j) Other Special Rules.--
``(1) Bonds held by regulated investment companies.--If any
Better America Bond is held by a regulated investment company,
the credit determined under subsection (a) shall be allowed to
shareholders of such company under procedures prescribed by the
Secretary.
``(2) Credits may be stripped.--Under regulations
prescribed by the Secretary--
``(A) In general.--There may be a separation
(including at issuance) of the ownership of a Better
America Bond and the entitlement to the credit under
this section with respect to such bond. In case of any
such separation, the credit under this section shall be
allowed to the person who on the credit allowance date
holds the instrument evidencing the entitlement to the
credit and not to the holder of the bond.
``(B) Certain rules to apply.--In the case of a
separation described in subparagraph (A), the rules of
section 1286 shall apply to the Better America Bond as
if it were a stripped bond and to the credit under this
section as if it were a stripped coupon.
``(3) Treatment for estimated tax purposes.--Solely for
purposes of sections 6654 and 6655, the credit allowed by this
section to a taxpayer by reason of holding a Better America
Bond on a credit allowance date shall be treated as if it were
a payment of estimated tax made by the taxpayer on such date.
``(4) Credit may be transferred.--Nothing in any law or
rule of law shall be construed to limit the transferability of
the credit allowed by this section through sale and repurchase
agreements.
``(5) Reporting.--Issuers of Better America Bonds shall
submit reports similar to the reports required under section
149(e).
``(k) Recapture of Portion of Credit Where Cessation of Qualified
Use.--
``(1) In general.--If any bond which when issued purported
to be a Better America Bond ceases to meet the requirements of
subsection (c), the issuer shall pay to the United States (at
the time required by the Secretary) an amount equal to the aggregate of
the credits allowable under this section (determined without regard to
subsection (e)) for taxable years ending during the calendar year in
which such cessation occurs and the 2 preceding calendar years.
``(2) Failure to pay.--If the issuer fails to timely pay
the amount required by paragraph (1) with respect to any issue,
the tax imposed by this chapter on each holder of any bond
which is part of such issue shall be increased (for the taxable
year of the holder in which such cessation occurs) by the
aggregate decrease in the credits allowed under this section to
such holder for taxable years beginning in such 3 calendar
years which would have resulted solely from denying any credit
under this section with respect to such issue for such taxable
years.
``(3) Special rules.--
``(A) Tax benefit rule.--The tax for the taxable
year shall be increased under paragraph (2) only with
respect to credits allowed by reason of this section
which were used to reduce tax liability. In the case of
credits not so used to reduce tax liability, the
carryforwards and carrybacks under section 39 shall be
appropriately adjusted.
``(B) No credits against tax.--Any increase in tax
under paragraph (2) shall not be treated as a tax
imposed by this chapter for purposes of determining--
``(i) the amount of any credit allowable
under this part, or
``(ii) the amount of the tax imposed by
section 55.
``(l) Termination.--This section shall not apply to any bond issued
after December 31, 2004.''
(b) Reporting.--Subsection (d) of section 6049 of such Code
(relating to returns regarding payments of interest) is amended by
adding at the end the following new paragraph:
``(8) Reporting of credit on better america bonds.--
``(A) In general.--For purposes of subsection (a),
the term `interest' includes amounts includible in
gross income under section 30B(g) and such amounts
shall be treated as paid on the credit allowance date
(as defined in section 30B(f)(1)).
``(B) Reporting to corporations, etc.--Except as
otherwise provided in regulations, in the case of any
interest described in subparagraph (A) of this
paragraph, subsection (b)(4) of this section shall be
applied without regard to subparagraphs (A), (H), (I),
(J), (K), and (L)(i).
``(C) Regulatory authority.--The Secretary may
prescribe such regulations as are necessary or
appropriate to carry out the purposes of this
paragraph, including regulations which require more
frequent or more detailed reporting.''
(c) Conforming Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 of such Code is amended by adding
at the end the following new item:
``Sec. 30B. Credit to holders of Better
America Bonds.''
(d) Effective Date.--The amendments made by this section shall
apply to obligations issued after December 31, 1999.
(e) Guidelines for Applications.--Not later than January 1, 2000,
guidelines specifying the criteria to be used in approving applications
under section 30B(d)(3) of the Internal Revenue Code of 1986 (as added
by this Act) shall be developed and published by the Administrator of
the Environmental Protection Agency in the Federal Register.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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