I 

108TH CONGRESS 

1ST SESSION H. R. 1512

To amend the Internal Revenue Code of 1986 to provide that certain bonds 

issued by local governments in connection with delinquent real property 

taxes may be treated as tax exempt. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 31, 2003

Mr. CAMP (for himself and Mr. LEVIN) 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 

that certain bonds issued by local governments in connection with delinquent real property taxes may be treated 

as tax exempt.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. TAX EXEMPT TREATMENT OF CERTAIN BONDS 

4 ISSUED IN CONNECTION WITH DELINQUENT 

5 REAL PROPERTY TAXES. 

6 (a) IN GENERAL.—Section 148 of the Internal Rev7 enue Code of 1986 is amended by redesignating subsection 
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1 (i) as subsection (j) and by inserting after subsection (h) 

2 the following new subsection: 

3 ‘‘(i) SPECIAL RULE FOR DELINQUENT TAX

4 BONDS.—

5 ‘‘(1) IN GENERAL.—For purposes of this sec6 tion, a bond which meets the requirements of para7 graph (2) shall not be treated as an arbitrage bond. 

8 ‘‘(2) DELINQUENT TAX BOND REQUIRE9 MENTS.—A bond meets the requirements of this 

10 paragraph if—

11 ‘‘(A) the bond is issued primarily to facili12 tate the collection or receipt of delinquent real 

13 property taxes levied by the issuer for itself, or 

14 for governmental units within the jurisdiction of 

15 the issuer, within the 24-month period prior to 

16 the date of issue of the bond, 

17 ‘‘(B)(i) the amount of the net proceeds of 

18 the issue of which the bond is a part does not 

19 exceed the sum of the amount of the delinquent 

20 real property taxes referenced in subparagraph 

21 (A) and certified by the issuer of the bond on 

22 its books and records as uncollected, plus 

23 issuance costs, and 
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1 ‘‘(ii) such certification is made as of a spe2 cific date which occurs during the 5-month pe3 riod preceding the date of issue of the bond, 

4 ‘‘(C) the maturity date of the bond is not 

5 later than 24 months after the date of issue of 

6 the bond, and 

7 ‘‘(D) all delinquent real property taxes 

8 (and interest, collection fees, and penalties at9 tributable to such taxes) received by the issuer 

10 for itself, or for governmental units within the 

11 jurisdiction of the issuer, after the specific date 

12 referenced in subparagraph (B)(ii) and before 

13 the last maturity date of the issue of which the 

14 bond is a part are used for the payment of 

15 principal, interest, or redemption price of the 

16 issue of which the bond is a part to the extent 

17 required for such purpose. 

18 For purposes of this paragraph, net proceeds of the 

19 issue of which the bond is a part shall be treated as 

20 spent on the date of issuance of the issue. 

21 ‘‘(3) REFUNDING BONDS.—A bond (or series of 

22 bonds) issued to refund a bond meeting the require23 ments of paragraph (2) shall be treated as meeting 

24 such requirements only if—
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1 ‘‘(A) the maturity date of the refunding 

2 bond is not later than 24 months after the date 

3 of issue of the original bond, 

4 ‘‘(B) the amount of the refunding bond 

5 does not exceed the outstanding amount of the 

6 refunded bond, and 

7 ‘‘(C) the bond is issued not more than 90 

8 days before the redemption of the refunded 

9 bond.’’. 

10 (b) COORDINATION WITH HEDGE BOND RULES.—

11 Section 149(g)(3) of such Code is amended by adding at 

12 the end the following new subparagraph: 

13 ‘‘(D) EXCEPTION FOR DELINQUENT TAX

14 BOND.—For purposes of this subsection, the 

15 term ‘hedge bond’ shall not include any bond 

16 that meets the requirements of section 

17 148(i)(2).’’. 

18 (c) COORDINATION WITH POOLED FINANCIAL BOND

19 RULES.—Section 149(f)(4)(B) of such Code is amended 

20 by striking ‘‘or’’ at the end of clause (i), by striking the 

21 period at the end of clause (ii) and inserting ‘‘, or’’, and 

22 by adding at the end the following new clause: 

23 ‘‘(iii) section 148(i) applies to such 

24 bond.’’. 
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1 (d) COORDINATION WITH PRIVATE ACTIVITY BOND

2 RULES.—Paragraph (2) of section 141(c) of such Code 

3 (relating to private activity bond; qualified bond) is 

4 amended by striking ‘‘or’’ at the end of subparagraph (A), 

5 by striking the period at the end of subparagraph (B) and 

6 inserting ‘‘, or’’, and by adding at the end the following 

7 new subparagraph: 

8 ‘‘(C) is with respect to a bond which meets 

9 the requirements of section 148(i)(2) (relating 

10 to delinquent tax bonds).’’. 

11 (e) EFFECTIVE DATE.—The amendments made by 

12 this section shall apply to obligations issued after the date 

13 of the enactment of this Act.

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