19–006

108TH CONGRESS REPT. 108–102 " HOUSE OF REPRESENTATIVES ! 1st Session Part 1

TO CLARIFY THE TAX TREATMENT OF BONDS AND OTHER 

OBLIGATIONS ISSUED BY THE GOVERNMENT OF AMERICAN SAMOA

MAY 15, 2003.—Ordered to be printed 

Mr. SENSENBRENNER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany H.R. 982] 

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 982) to clarify the tax treatment of bonds and other obligations issued by the Government of American Samoa, having considered the same, reports favorably thereon without amendment and 

recommends that the bill do pass.

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 1

Background and Need for the Legislation ............................................................. 2

Hearings ................................................................................................................... 3

Committee Consideration ........................................................................................ 3

Vote of the Committee ............................................................................................. 3

Committee Oversight Findings ............................................................................... 3

Performance Goals and Objectives ......................................................................... 3

New Budget Authority and Tax Expenditures ...................................................... 3

Congressional Budget Office Cost Estimate .......................................................... 3

Constitutional Authority Statement ...................................................................... 4

Section-by-Section Analysis and Discussion .......................................................... 5

Changes in Existing Law Made by the Bill, as Reported ..................................... 5

Markup Transcript .................................................................................................. 6

PURPOSE AND SUMMARY

H.R. 982, a bill to clarify the tax treatment of bonds and other 

obligations issued by the Government of American Samoa, amends 

current law to exempt bonds issued by the government of American 

Samoa from local and State, income taxes. Currently, Federal law 

2

1 CIA: The World Factbook, American Samoa. http://www.cia.gov/cia/publications/factbook/geos/

aq.html. [Visited February 26, 2002]. 2 48 U.S.C. § 1661–1670 (2001). 3Samoa Seeks Further Debt Authorization, BOND BUYER, vol. 336, no. 31122, Friday, April 20, 

2001. 4 American Samoan Governor Negotiates Refinancing of Loan, PAC. ISLANDS BROAD. ASS’N

NEWS SERV., Monday, December 27, 1999. 5 48 U.S.C. § 103(c)(2) (2001). 6 48 U.S.C. § 1423(a) (2000). 7 Id. § 1801. 8 Id. § 1403. 

exempts government bonds issued by States, territories and possessions from these taxes. 

BACKGROUND AND NEED FOR THE LEGISLATION

FEDERAL LAWS GOVERNING AMERICAN SAMOA

American Samoa was defined by a treaty signed by the United 

States, Britain, and Germany in 1899. 1 Unlike other U.S. territories such as Guam, the Virgin Islands, and Puerto Rico, Congress 

has not provided American Samoa with an organic act establishing 

its governmental institutions. Rather, American Samoa is an ‘‘unincorporated’’ territory the administration of which was transferred 

from the Department of the Navy to the Department of the Interior 

in 1951. The Interior Secretary subsequently delegated authority to 

American Samoa to organize its own governmental institutions. 

While the territory ratified its own Constitution in 1966, 2 the Department of the Interior retains ultimate oversight over the territory. 

SAMOAN GOVERNMENT BONDS

Like most States and localities, American Samoa issues government bonds to fund a variety of public projects. However, its bond 

issuing activities are very limited. American Samoa’s last major bonding project was in 1988, when it raised $22 million for a governmental office building. 3 Currently, the government of American Samoa owes about $18 million in outstanding bonds. 4 Relevant 

sections of the Internal Revenue Code exclude interest from State 

and local bonds from Federal taxation. This exemption specifically 

applies to the ‘‘District of Columbia and any possession of the 

United States.’’ 5 This definition, however, does not explicitly encompass United States territories. 

LEGISLATION PERTAINING TO THE TAX TREATMENT OF BONDS ISSUED

BY U.S. TERRITORIES OTHER THAN AMERICAN SAMOA

Bonds issued by almost all U.S. territories are exempt from Federal, State, and local taxes. For example, Federal statute provides 

that ‘‘all bonds issued by the government of Guam or by its authority shall be exempt . . . from taxation by the Government of the 

United States or by the government of Guam, or by any State or 

territory of any political subdivision thereof, or by the District of 

Columbia.’’ 6 Bonds issued by the government of the Northern Mariana Islands are also ‘‘exempt, as to principal and interest, from 

taxation by the United States, or by any State [or locality] . . . or 

the District of Columbia.’’ 7 In addition, Federal law provides that 

bonds issued by the government of the Virgin Islands or any of its 

municipalities are exempt from State and local taxes. 8 Finally, inVerDate Jan 31 2003 01:36 May 16, 2003 Jkt 019006 PO 00000 Frm 00002 Fmt 6659 Sfmt 6601 E:\HR\OC\HR102P1.XXX HR102P1
3

9 Id. § 745. 

terest on bonds issued by the government of Puerto Rico are immune from State and Federal taxation. 9 H.R. 982 was introduced 

by Representative Eni Faleomovaega on February 27, 2003 to harmonize the taxing status of American Samoan government bonds 

with other States, territories, and possessions. 

HEARINGS

There were no Committee hearings on H.R. 982 in the 108th 

Congress. In the 107th Congress, the Subcommittee on Commercial 

and Administrative Law held a hearing on identical legislation 

(H.R. 1448) on March 6, 2002. Rep. Eni Faleomovaega was the sole 

witness. 

COMMITTEE CONSIDERATION

On May 7, 2003, the Committee met in open session and ordered 

favorably reported the bill H.R. 982, without amendment by voice 

vote, a quorum being present. 

VOTE OF THE COMMITTEE

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee notes that there were no 

recorded votes during the Committee’s consideration of H.R. 982. 

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee reports that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

PERFORMANCE GOALS AND OBJECTIVES

H.R. 982 does not authorize funding. Therefore, clause 3(c)(4) of 

rule XIII of the Rules of the House of Representatives is inapplicable. 

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 3(c)(2) of House rule XIII is inapplicable because this legislation does not provide new budgetary authority or increased tax 

expenditures. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 3(c)(3) of rule XIII of the Rules of the 

House of Representatives, the Committee sets forth, with respect to 

the H.R. 3180, the following estimate and comparison prepared by 

the Director of the Congressional Budget Office under section 402 

of the Congressional Budget Act of 1974:

4

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, May 9, 2003. 

Hon. F. JAMES SENSENBRENNER, Jr., Chairman, 

Committee on the Judiciary, 

House of Representatives, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 982, a bill to clarify the 

tax treatment of bonds and other obligations issued by the government of American Samoa. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contacts are Matthew Pickford (for 

Federal costs), who can be reached at 226–2860, and Marjorie Miller (for the State and local impact), who can be reached at 225–

3220. 

Sincerely, 

DOUGLAS HOLTZ-EAKIN.

Enclosure

cc: Honorable John Conyers, Jr. 

Ranking Member 

H.R. 982—A bill to clarify the tax treatment of bonds and other obligations issued by the government of American Samoa. 

H.R. 982 would amend current law to make bonds issued by the 

government of American Samoa exempt from state, local, and territorial income tax. The bill would not affect Federal taxes, and CBO 

estimates that implementing H.R. 982 would have no impact on the 

Federal budget. 

H.R. 982 contains an intergovernmental mandate as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

that the cost of the mandate would be well below the threshold established in that act ($59 million in 2003, adjusted annually for inflation). This mandate is a preemption of state and local taxing authority. The bill would exempt the interest on any bond issued by 

the government of American Samoa from State, local, and territorial taxes. Because American Samoa generally has only a few 

million dollars in bonds outstanding at any time, this preemption 

would not have a significant cost for State, local, or territorial governments. Enacting this bill would benefit the government of 

American Samoa by reducing its borrowing costs. The bill contains 

no private-sector mandates as defined in UMRA. 

The CBO staff contacts for this estimate are Matthew Pickford 

(for Federal costs), who can be reached at 226–2860, and Marjorie 

Miller (for the State and local impact), who can be reached at 225–

3220. This estimate was approved by Peter H. Fontaine, Deputy 

Assistant Director for Budget Analysis. 

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to clause 3(d)(1) of rule XIII of the Rules of the House 

of Representatives, the Committee finds the authority for this legislation in article I, section 8 of the Constitution. 

5

SECTION-BY-SECTION ANALYSIS AND DISCUSSION

Section 1. Clarification of Tax Treatment of Bonds and Other Obligations Issued by Government of American Samoa. Section 1 

amends § 202(b) of Pub. L. No. 98–4545 (48 U.S.C. 1670) so that 

it exempts bonds issued by the government of American Samoa 

from State and local taxes. This exemption does not apply to gift, 

estate, inheritance, legacy, succession, or other wealth transfer 

taxes. 

Section 2. Effective Date. Section 2 makes the legislation effective upon its enactment into law. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

existing law in which no change is proposed is shown in roman):

SECTION 202 OF THE ACT OF OCTOBER 5, 1984

(Public Law 98–454) 

An Act to enhance the economic development of Guam, the Virgin Islands, American 

Samoa, the Northern Mariana Islands, and for other purposes.

SEC. 202. (a)***

ø(b)(1) Except as provided in paragraph (2), any obligation 

shall be exempt from all State and local taxation in effect on 

or after October 1, 1984. 

ø(2) Any obligation issued under subsection (a) shall not be 

exempt from State or local gift, estate, inheritance, legacy, succession, or other wealth transfer taxes. 

ø(3) For purposes of this subsection—

ø(A) The term ‘‘State’’ included the District of Columbia. 

ø(B) The taxes imposed by counties, municipalities, or 

any territory, dependency, or possession of the United 

States shall be treated as local taxes.¿

(b) EXEMPTION OF ALL BONDS FROM INCOME TAXATION BY

STATE AND LOCAL GOVERNMENTS.—

(1) IN GENERAL.—The interest on any bond or other obligation issued by or on behalf of the Government of American 

Samoa shall be exempt from taxation by the Government of 

American Samoa and the governments of any of the several 

States, the District of Columbia, any territory or possession of 

the United States, and any subdivision thereof. 

(2) EXEMPTION APPLICABLE ONLY TO INCOME TAXES.—The 

exemption provided by paragraph (1) shall not apply to gift, estate, inheritance, legacy, succession, or other wealth transfer 

taxes.

* * * * * * *

6

MARKUP TRANSCRIPT

BUSINESS MEETING 

WEDNESDAY, MAY 7, 2003

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:00 a.m., in Room 

2141, Rayburn House Office Building, Hon. F. James Sensenbrenner, Jr. [Chairman of the Committee] presiding. 

[Intervening business.] 

Chairman SENSENBRENNER. The next item on the agenda, pursuant to notice, I now call up the bill H.R. 982, to clarify the tax 

treatment of bonds and other obligations issued by the Government 

of American Samoa for purposes of markup and move its favorable 

recommendation to the full House. 

Without objection, the bill will be considered as read and open 

for amendment at any point. 

[The bill, H.R. 982, follows:]

7


I982A.eps
8


I982B.eps
9

Chairman SENSENBRENNER. The Chair recognizes the gentleman 

from Utah, Mr. Cannon, to explain the bill. 

Mr. CANNON. Thank you, Mr. Chairman. 

H.R. 982 amends Federal law to exempt bonds issued by the 

Government of American Samoa from State and local taxation. The 

legislation was introduced by Delegate Eni Faleomavaega of American Samoa. Government bonds issued by States and U.S. territories such as Guam, Puerto Rico, and the U.S. Virgin Islands currently enjoy this exemption. Thus the purpose of H.R. 982 is not 

to craft a special exception to a general rule but to harmonize the 

tax treatment of American Samoan and the bonds to enable the Samoan Government to better attend to its public—the public needs 

of its residents. 

Identical legislation was reported by this Committee and approved by the House under suspension of the rules in the last Congress after receiving a hearing before the Subcommittee on Commercial and Administrative Law. I urge support of this noncontroversial but necessary measure. 

Thank you, Mr. Chairman. I yield back. 

Chairman SENSENBRENNER. The gentleman from Virginia. 

Mr. SCOTT. I have no comment, Mr. Chairman. 

Chairman SENSENBRENNER. Without objection, all Members may 

include opening statements in the record at this point. 

Are there amendments? Are there amendments? There are no 

amendments. A reporting quorum is still not present, and, without 

objection, the previous question will be ordered on reporting the 

bill favorably. 

[Intervening business.] 

The unfinished business now is the motion to report favorably 

the bill H.R. 982, to clarify the tax treatment of bonds and other 

obligations issued by the Government of American Samoa. A reporting quorum is present. 

Those in favor of reporting the bill favorably will as your names 

are—will say aye. 

Opposed, no. 

The ayes appear to have it. The ayes have it. The motion to report favorably is agreed to. 

Without objection, the Chair is authorized to move to go to conference pursuant to House rules. Without objection, the staff is directed to make any technical and conforming changes, and all 

Members will be given 2 days, under House rules, in which to submit additional dissenting, supplemental, or minority views.

Æ