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[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1512 Introduced in House (IH)]

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.

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

SECTION 1. TAX EXEMPT TREATMENT OF CERTAIN BONDS ISSUED IN CONNECTION 
              WITH DELINQUENT REAL PROPERTY TAXES.

    (a) In General.--Section 148 of the Internal Revenue Code of 1986 
is amended by redesignating subsection (i) as subsection (j) and by 
inserting after subsection (h) the following new subsection:
    ``(i) Special Rule for Delinquent Tax Bonds.--
            ``(1) In general.--For purposes of this section, a bond 
        which meets the requirements of paragraph (2) shall not be 
        treated as an arbitrage bond.
            ``(2) Delinquent tax bond requirements.--A bond meets the 
        requirements of this paragraph if--
                    ``(A) the bond is issued primarily to facilitate 
                the collection or receipt of delinquent real property 
                taxes levied by the issuer for itself, or for 
                governmental units within the jurisdiction of the 
                issuer, within the 24-month period prior to the date of 
                issue of the bond,
                    ``(B)(i) the amount of the net proceeds of the 
                issue of which the bond is a part does not exceed the 
                sum of the amount of the delinquent real property taxes 
                referenced in subparagraph (A) and certified by the 
                issuer of the bond on its books and records as 
                uncollected, plus issuance costs, and
                    ``(ii) such certification is made as of a specific 
                date which occurs during the 5-month period preceding 
                the date of issue of the bond,
                    ``(C) the maturity date of the bond is not later 
                than 24 months after the date of issue of the bond, and
                    ``(D) all delinquent real property taxes (and 
                interest, collection fees, and penalties attributable 
                to such taxes) received by the issuer for itself, or 
                for governmental units within the jurisdiction of the 
                issuer, after the specific date referenced in 
                subparagraph (B)(ii) and before the last maturity date 
                of the issue of which the bond is a part are used for 
                the payment of principal, interest, or redemption price 
                of the issue of which the bond is a part to the extent 
                required for such purpose.
        For purposes of this paragraph, net proceeds of the issue of 
        which the bond is a part shall be treated as spent on the date 
        of issuance of the issue.
            ``(3) Refunding bonds.--A bond (or series of bonds) issued 
        to refund a bond meeting the requirements of paragraph (2) 
        shall be treated as meeting such requirements only if--
                    ``(A) the maturity date of the refunding bond is 
                not later than 24 months after the date of issue of the 
                original bond,
                    ``(B) the amount of the refunding bond does not 
                exceed the outstanding amount of the refunded bond, and
                    ``(C) the bond is issued not more than 90 days 
                before the redemption of the refunded bond.''.
    (b) Coordination With Hedge Bond Rules.--Section 149(g)(3) of such 
Code is amended by adding at the end the following new subparagraph:
                    ``(D) Exception for delinquent tax bond.--For 
                purposes of this subsection, the term `hedge bond' 
                shall not include any bond that meets the requirements 
                of section 148(i)(2).''.
    (c) Coordination With Pooled Financial Bond Rules.--Section 
149(f)(4)(B) of such Code is amended by striking ``or'' at the end of 
clause (i), by striking the period at the end of clause (ii) and 
inserting ``, or'', and by adding at the end the following new clause:
                            ``(iii) section 148(i) applies to such 
                        bond.''.
    (d) Coordination With Private Activity Bond Rules.--Paragraph (2) 
of section 141(c) of such Code (relating to private activity bond; 
qualified bond) is amended by striking ``or'' at the end of 
subparagraph (A), by striking the period at the end of subparagraph (B) 
and inserting ``, or'', and by adding at the end the following new 
subparagraph:
                    ``(C) is with respect to a bond which meets the 
                requirements of section 148(i)(2) (relating to 
                delinquent tax bonds).''.
    (e) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
                                 <all>
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