[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2634 Introduced in House (IH)]
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117th CONGRESS
1st Session
H. R. 2634
To amend the Internal Revenue Code of 1986 to provide a credit for
American infrastructure bonds, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
April 16, 2021
Ms. Sewell 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 provide a credit for
American infrastructure bonds, and for other purposes.
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 ``Local Infrastructure Financing Tools
Act'', or the ``LIFT Act''.
SEC. 2. CREDIT TO ISSUER FOR CERTAIN INFRASTRUCTURE BONDS.
(a) In General.--Subchapter B of chapter 65 is amended by adding at
the end the following new section:
``SEC. 6431A. CREDIT ALLOWED TO ISSUER FOR AMERICAN INFRASTRUCTURE
BONDS.
``(a) In General.--In the case of an American infrastructure bond,
the issuer of such bond shall be allowed a credit with respect to each
interest payment under such bond which shall be payable by the
Secretary as provided in subsection (b).
``(b) Payment of Credit.--
``(1) In general.--The Secretary shall pay
(contemporaneously with each date on which interest is so
payable) to the issuer of such bond (or to any person who makes
such interest payments on behalf of such issuer) an amount
equal to the applicable percentage of such interest so payable.
``(2) Applicable percentage.--For purposes of this
subsection, except as provided in subsection (d), the
applicable percentage with respect to any bond shall be
determined under the following table:
``In the case of a bond issued The applicable
during calendar year: percentage is:
2020 through 2024.................................. 42%
2025............................................... 38%
2026............................................... 34%
2027 and thereafter................................ 30%.
``(3) Limitation.--
``(A) In general.--The amount of any interest
payment taken into account under paragraph (1) with
respect to a bond for any payment date shall not exceed
the amount of interest which would have been payable
under such bond on such date if such interest were
determined at the rate which the Secretary estimates
will permit the issuance of American infrastructure
bonds with a specified maturity or redemption date
without discount and without additional interest cost.
``(B) Date of rate determination with respect to
bond.--Such rate with respect to any American
infrastructure bond shall be determined as of the first
day on which there is a binding, written contract for
the sale or exchange of the bond.
``(c) American Infrastructure Bond.--
``(1) In general.--For purposes of this section, the term
`American infrastructure bond' means any bond (other than a
private activity bond) issued as part of an issue if--
``(A) 100 percent of the available project proceeds
of such issue are to be used for capital expenditures
or operations and maintenance expenditures in
connection with property the acquisition, construction,
or improvement of which would be a capital expenditure,
``(B) the interest on such bond would (but for this
section) be excludable from gross income under section
103,
``(C) the issue price has not more than a de
minimis amount (determined under rules similar to the
rules of section 1273(a)(3)) of premium over the stated
principal amount of the bond, and
``(D) prior to the issuance of such bond, the
issuer makes an irrevocable election to have this
section apply.
``(2) Applicable rules.--For purposes of applying paragraph
(1)--
``(A) Not treated as federally guaranteed.--For
purposes of section 149(b), an American infrastructure
bond shall not be treated as federally guaranteed by
reason of the credit allowed under this section.
``(B) Application of arbitrage rules.--For purposes
of section 148, the yield on an American infrastructure
bond shall be reduced by the credit allowed under this
section.
``(d) Definition and Special Rules.--For purposes of this section--
``(1) Interest includible in gross income.--For purposes of
this title, interest on any American infrastructure bond shall
be includible in gross income.
``(2) Available project proceeds.--The term `available
project proceeds' means--
``(A) the excess of--
``(i) the proceeds from the sale of an
issue, over
``(ii) the sum of--
``(I) issuance costs financed by
the issue (the extent that such costs
do not exceed 2 percent of such
proceeds), and
``(II) amounts in a reasonably
required reserve (within the meaning of
section 150(a)(3)) with respect to such
issue), and
``(B) the proceeds from any investment of the
excess described in clause (i).
``(3) Current refundings allowed.--
``(A) In general.--In the case of a bond issued to
refund an American infrastructure bond, such refunding
bond shall be treated as an American infrastructure
bond for purposes of this section if--
``(i) the average maturity date of the
issue of which the refunding bond is a part is
not later than the average maturity date of the
bonds to be refunded by such issue,
``(ii) the amount of the refunding bond
does not exceed the outstanding amount of the
refunded bond,
``(iii) the refunded bond is redeemed not
later than 90 days after the date of the
issuance of the refunding bond, and
``(iv) the refunded bond was issued more
than 30 days after the date of the enactment of
this section.
``(B) Applicable percentage limitation.--The
applicable percentage with respect to any bond to which
subparagraph (A) applies shall be 30 percent.
``(C) Determination of average maturity.--For
purposes of subparagraph (A)(i), average maturity shall
be determined in accordance with section 147(b)(2)(A).
``(D) Application of davis-bacon act requirements
with respect to american infrastructure bonds.--
Subchapter IV of chapter 31 of the title 40, United
States Code, shall apply to projects financed with the
proceeds of American infrastructure bonds.
``(e) Regulations.--The Secretary may prescribe such regulations
and other guidance as may be necessary or appropriate to carry out this
section.''.
(b) Conforming Amendments.--
(1) Section 1324(b)(2) of title 31, United States Code, is
amended by striking ``or 6431'' and inserting ``6431, or
6431A''.
(2) The table of sections for subchapter B of chapter 65 is
amended by adding at the end the following new item:
``Sec. 6431A. Credit allowed to issuer for American infrastructure
bonds.''.
(c) Effective Date.--The amendments made by this section shall
apply to bonds issued more than 30 days after the date of the enactment
of this Act.
SEC. 3. ADVANCE REFUNDING BONDS.
(a) In General.--Section 149(d) is amended--
(1) by striking ``to advance refund another bond.'' in
paragraph (1) and inserting ``as part of an issue described in
paragraph (2), (3), or (4).'',
(2) by redesignating paragraphs (2) and (3) as paragraphs
(5) and (7), respectively,
(3) by inserting after paragraph (1) the following new
paragraphs:
``(2) Certain private activity bonds.--An issue is
described in this paragraph if any bond (issued as part of such
issue) is issued to advance refund a private activity bond
(other than a qualified 501(c)(3) bond).
``(3) Other bonds.--
``(A) In general.--An issue is described in this
paragraph if any bond (issued as part of such issue),
hereinafter in this paragraph referred to as the
`refunding bond', is issued to advance refund a bond
unless--
``(i) the refunding bond is only--
``(I) the first advance refunding
of the original bond if the original
bond is issued after 1985, or
``(II) the first or second advance
refunding of the original bond if the
original bond was issued before 1986,
``(ii) in the case of refunded bonds issued
before 1986, the refunded bond is redeemed not
later than the earliest date on which such bond
may be redeemed at par or at a premium of 3
percent or less,
``(iii) in the case of refunded bonds
issued after 1985, the refunded bond is
redeemed not later than the earliest date on
which such bond may be redeemed,
``(iv) the initial temporary period under
section 148(c) ends--
``(I) with respect to the proceeds
of the refunding bond not later than 30
days after the date of issue of such
bond, and
``(II) with respect to the proceeds
of the refunded bond on the date of
issue of the refunding bond, and
``(v) in the case of refunded bonds to
which section 148(e) did not apply, on and
after the date of issue of the refunding bond,
the amount of proceeds of the refunded bond
invested in higher yielding investments (as
defined in section 148(b)) which are nonpurpose
investments (as defined in section
148(f)(6)(A)) does not exceed--
``(I) the amount so invested as
part of a reasonably required reserve
or replacement fund or during an
allowable temporary period, and
``(II) the amount which is equal to
the lesser of 5 percent of the proceeds
of the issue of which the refunded bond
is a part or $100,000 (to the extent
such amount is allocable to the
refunded bond).
``(B) Special rules for redemptions.--
``(i) Issuer must redeem only if debt
service savings.--Clause (ii) and (iii) of
subparagraph (A) shall apply only if the issuer
may realize present value debt service savings
(determined without regard to administrative
expenses) in connection with the issue of which
the refunding bond is a part.
``(ii) Redemptions not required before 90th
day.--For purposes of clauses (ii) and (iii) of
subparagraph (A), the earliest date referred to
in such clauses shall not be earlier than the
90th day after the date of issuance of the
refunding bond.
``(4) Abusive transactions prohibited.--An issue is
described in this paragraph if any bond (issued as part of such
issue) is issued to advance refund another bond and a device is
employed in connection with the issuance of such issue to
obtain a material financial advantage (based on arbitrage)
apart from savings attributable to lower interest rates.'', and
(4) by inserting after paragraph (5) (as so redesignated)
the following new paragraph:
``(6) Special rules for purposes of paragraph (3).--For
purposes of paragraph (3), bonds issued before October 22,
1986, shall be taken into account under subparagraph (A)(i)
thereof except--
``(A) a refunding which occurred before 1986 shall
be treated as an advance refunding only if the
refunding bond was issued more than 180 days before the
redemption of the refunded bond, and
``(B) a bond issued before 1986, shall be treated
as advance refunded no more than once before March 15,
1986.''.
(b) Conforming Amendment.--Section 148(f)(4)(C) is amended by
redesignating clauses (xiv) through (xvi) as clauses (xv) to (xvii),
respectively, and by inserting after clause (xiii) the following new
clause:
``(xiv) Determination of initial temporary
period.--For purposes of this subparagraph, the
end of the initial section temporary period
shall be determined without regard to section
149(d)(3)(A)(iv).''.
(c) Effective Date.--The amendments made by this section shall
apply to advance refunding bonds issued more than 30 days after the
date of the enactment of this Act.
SEC. 4. PERMANENT MODIFICATION OF SMALL ISSUER EXCEPTION TO TAX-EXEMPT
INTEREST EXPENSE ALLOCATION RULES FOR FINANCIAL
INSTITUTIONS.
(a) Permanent Increase in Limitation.--Subparagraphs (C)(i),
(D)(i), and (D)(iii)(II) of section 265(b)(3) are each amended by
striking ``$10,000,000'' and inserting ``$30,000,000''.
(b) Permanent Modification of Other Special Rules.--Section
265(b)(3) is amended--
(1) by redesignating clauses (iv), (v), and (vi) of
subparagraph (G) as clauses (ii), (iii), and (iv),
respectively, and moving such clauses to the end of
subparagraph (H) (as added by paragraph (2)), and
(2) by striking so much of subparagraph (G) as precedes
such clauses and inserting the following:
``(G) Qualified 501(c)(3) bonds treated as issued
by exempt organization.--In the case of a qualified
501(c)(3) bond (as defined in section 145), this
paragraph shall be applied by treating the 501(c)(3)
organization for whose benefit such bond was issued as
the issuer.
``(H) Special rule for qualified financings.--
``(i) In general.--In the case of a
qualified financing issue--
``(I) subparagraph (F) shall not
apply, and
``(II) any obligation issued as a
part of such issue shall be treated as
a qualified tax-exempt obligation if
the requirements of this paragraph are
met with respect to each qualified
portion of the issue (determined by
treating each qualified portion as a
separate issue which is issued by the
qualified borrower with respect to
which such portion relates).''.
(c) Inflation Adjustment.--Section 265(b)(3), as amended by
subsection (b), is amended by adding at the end the following new
subparagraph:
``(I) Inflation adjustment.--In the case of any
calendar year after 2020, the $30,000,000 amounts
contained in subparagraphs (C)(i), (D)(i), and
(D)(iii)(II) shall each be increased by an amount equal
to--
``(i) such dollar amount, multiplied by
``(ii) the cost-of-living adjustment
determined under section 1(f)(3) for such
calendar year, determined by substituting
`calendar year 2019' for `calendar year 2016'
in subparagraph (A)(ii) thereof.
Any increase determined under the preceding sentence
shall be rounded to the nearest multiple of
$100,000.''.
(d) Effective Date.--The amendments made by this section shall
apply to obligations issued after the date of the enactment of this
Act.
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