I 

116TH CONGRESS 

1ST SESSION H. R. 2238 

To amend the Internal Revenue Code of 1986 to extend certain tax benefits 

related to empowerment zones. 

IN THE HOUSE OF REPRESENTATIVES 

APRIL 10, 2019 

Mr. ESPAILLAT (for himself and Mr. ROGERS of Kentucky) 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 extend 

certain tax benefits related to empowerment zones. 

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

3 SECTION 1. EXTENSION OF EMPOWERMENT ZONES. 

4 (a) IN GENERAL.—Section 1391(d)(1)(A)(i) of the 

5 Internal Revenue Code of 1986 is amended by striking 

6 ‘‘December 31, 2017’’ and inserting ‘‘December 31, 

7 2029’’. 

8 (b) EFFECTIVE DATE.—The amendment made by 

9 this section shall take effect on January 1, 2018. 


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1 (c) TREATMENT OF CERTAIN TERMINATION DATES

2 SPECIFIED IN NOMINATIONS.—In the case of a designa3 tion of an empowerment zone the nomination for which 

4 included a termination date which is contemporaneous 

5 with the date specified in subparagraph (A)(i) of section 

6 1391(d)(1) of the Internal Revenue Code of 1986 (as in 

7 effect before the enactment of this Act), subparagraph (B) 

8 of such section shall not apply with respect to such des9 ignation if, after the date of the enactment of this section, 

10 the entity which made such nomination amends the nomi11 nation to provide for a new termination date in such man12 ner as the Secretary of the Treasury (or the Secretary’s 

13 designee) may provide. 

14 SEC. 2. REINSTATEMENT OF QUALIFIED ZONE ACADEMY 

15 BONDS. 

16 (a) IN GENERAL.—Part IV of subchapter A of chap17 ter 1 of the Internal Revenue Code of 1986 is amended 

18 by adding at the end the following new subpart: 

19 ‘‘Subpart H—Credit to Holders of Qualified Zone 

20 Academy Bonds 

‘‘Sec. 54. Credit to holders. 

‘‘Sec. 54A. Qualified zone academy bonds. 

21 ‘‘SEC. 54. CREDIT TO HOLDERS. 

22 ‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 

23 a qualified zone academy bond on one or more credit al24 lowance dates of the bond during any taxable year, there 


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1 shall be allowed as a credit against the tax imposed by 

2 this chapter for the taxable year an amount equal to the 

3 sum of the credits determined under subsection (b) with 

4 respect to such dates. 

5 ‘‘(b) AMOUNT OF CREDIT.— 

6 ‘‘(1) IN GENERAL.—The amount of the credit 

7 determined under this subsection with respect to any 

8 credit allowance date for a qualified zone academy 

9 bond is 25 percent of the annual credit determined 

10 with respect to such bond. 

11 ‘‘(2) ANNUAL CREDIT.—The annual credit de12 termined with respect to any qualified zone academy 

13 bond is the product of— 

14 ‘‘(A) the applicable credit rate, multiplied 

15 by 

16 ‘‘(B) the outstanding face amount of the 

17 bond. 

18 ‘‘(3) APPLICABLE CREDIT RATE.—For purposes 

19 of paragraph (2), the applicable credit rate is the 

20 rate which the Secretary estimates will permit the 

21 issuance of qualified zone academy bonds with a 

22 specified maturity or redemption date without dis23 count and without interest cost to the qualified 

24 issuer. The applicable credit rate with respect to any 

25 qualified zone academy bond shall be determined as 


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1 of the first day on which there is a binding, written 

2 contract for the sale or exchange of the bond. 

3 ‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE4 DEMPTION.—In the case of a bond which is issued 

5 during the 3-month period ending on a credit allow6 ance date, the amount of the credit determined 

7 under this subsection with respect to such credit al8 lowance date shall be a ratable portion of the credit 

9 otherwise determined based on the portion of the 3- 

10 month period during which the bond is outstanding. 

11 A similar rule shall apply when the bond is redeemed 

12 or matures. 

13 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 

14 ‘‘(1) IN GENERAL.—The credit allowed under 

15 subsection (a) for any taxable year shall not exceed 

16 the excess of— 

17 ‘‘(A) the sum of the regular tax liability 

18 (as defined in section 26(b)) plus the tax im19 posed by section 55, over 

20 ‘‘(B) the sum of the credits allowable 

21 under this part (other than subparts C and J 

22 and this subpart). 

23 ‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 

24 credit allowable under subsection (a) exceeds the 

25 limitation imposed by paragraph (1) for such taxable 


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1 year, such excess shall be carried to the succeeding 

2 taxable year and added to the credit allowable under 

3 subsection (a) for such taxable year (determined be4 fore the application of paragraph (1) for such suc5 ceeding taxable year). 

6 ‘‘(d) DEFINITIONS.—For purposes of this sub7 chapter— 

8 ‘‘(1) CREDIT ALLOWANCE DATE.—The term 

9 ‘credit allowance date’ means— 

10 ‘‘(A) March 15, 

11 ‘‘(B) June 15, 

12 ‘‘(C) September 15, and 

13 ‘‘(D) December 15. 

14 Such term includes the last day on which the bond 

15 is outstanding. 

16 ‘‘(2) BOND.—The term ‘bond’ includes any ob17 ligation. 

18 ‘‘(3) STATE.—The term ‘State’ includes the 

19 District of Columbia and any possession of the 

20 United States. 

21 ‘‘(4) AVAILABLE PROJECT PROCEEDS.—The 

22 term ‘available project proceeds’ means— 

23 ‘‘(A) the excess of— 

24 ‘‘(i) the proceeds from the sale of an 

25 issue, over 


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1 ‘‘(ii) the issuance costs financed by 

2 the issue (to the extent that such costs do 

3 not exceed 2 percent of such proceeds), 

4 and 

5 ‘‘(B) the proceeds from any investment of 

6 the excess described in subparagraph (A). 

7 ‘‘(e) CREDIT TREATED AS INTEREST.—For purposes 

8 of this subtitle, the credit determined under subsection (a) 

9 shall be treated as interest which is includible in gross in10 come. 

11 ‘‘(f) S CORPORATIONS AND PARTNERSHIPS.—In the 

12 case of a qualified zone academy bond held by an S cor13 poration or partnership, the allocation of the credit al14 lowed by this section to the shareholders of such corpora15 tion or partners of such partnership shall be treated as 

16 a distribution. 

17 ‘‘(g) BONDS HELD BY REAL ESTATE INVESTMENT

18 TRUSTS.—If any qualified zone academy bond is held by 

19 a real estate investment trust, the credit determined under 

20 subsection (a) shall be allowed to beneficiaries of such 

21 trust (and any gross income included under subsection (e) 

22 with respect to such credit shall be distributed to such 

23 beneficiaries) under procedures prescribed by the Sec24 retary. 


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1 ‘‘(h) CREDITS MAY BE STRIPPED.—Under regula2 tions prescribed by the Secretary— 

3 ‘‘(1) IN GENERAL.—There may be a separation 

4 (including at issuance) of the ownership of a quali5 fied zone academy bond and the entitlement to the 

6 credit under this section with respect to such bond. 

7 In case of any such separation, the credit under this 

8 section shall be allowed to the person who on the 

9 credit allowance date holds the instrument evidenc10 ing the entitlement to the credit and not to the hold11 er of the bond. 

12 ‘‘(2) CERTAIN RULES TO APPLY.—In the case 

13 of a separation described in paragraph (1), the rules 

14 of section 1286 shall apply to the qualified zone 

15 academy bond as if it were a stripped bond and to 

16 the credit under this section as if it were a stripped 

17 coupon. 

18 ‘‘SEC. 54A. QUALIFIED ZONE ACADEMY BONDS. 

19 ‘‘(a) IN GENERAL.—For purposes of this subchapter, 

20 the term ‘qualified zone academy bond’ means any bond 

21 issued as part of an issue if— 

22 ‘‘(1) 100 percent of the available project pro23 ceeds of such issue are to be used for a qualified 

24 purpose with respect to a qualified zone academy es25 tablished by an eligible local education agency, 


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1 ‘‘(2) the bond is issued by a State or local gov2 ernment within the jurisdiction of which such acad3 emy is located, and 

4 ‘‘(3) the issuer— 

5 ‘‘(A) designates such bond for purposes of 

6 this section, 

7 ‘‘(B) certifies that it has written assur8 ances that the private business contribution re9 quirement of subsection (b) will be met with re10 spect to such academy, and 

11 ‘‘(C) certifies that it has the written ap12 proval of the eligible local education agency for 

13 such bond issuance. 

14 ‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIRE15 MENT.—For purposes of subsection (a), the private busi16 ness contribution requirement of this subsection is met 

17 with respect to any issue if the eligible local education 

18 agency that established the qualified zone academy has 

19 written commitments from private entities to make quali20 fied contributions having a present value (as of the date 

21 of issuance of the issue) of not less than 10 percent of 

22 the proceeds of the issue. 

23 ‘‘(c) LIMITATION ON AMOUNT OF BONDS DES24 IGNATED.— 


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1 ‘‘(1) NATIONAL LIMITATION.—There is a na2 tional zone academy bond limitation for each cal3 endar year. Such limitation is $400,000,000 for each 

4 of calendar years 2020 through 2029 and, except as 

5 provided in paragraph (4), zero thereafter. 

6 ‘‘(2) ALLOCATION OF LIMITATION.—The na7 tional zone academy bond limitation for a calendar 

8 year shall be allocated by the Secretary among the 

9 States on the basis of their respective populations of 

10 individuals below the poverty line (as defined by the 

11 Office of Management and Budget). The limitation 

12 amount allocated to a State under the preceding 

13 sentence shall be allocated by the State education 

14 agency to qualified zone academies within such 

15 State. 

16 ‘‘(3) DESIGNATION SUBJECT TO LIMITATION

17 AMOUNT.—The maximum aggregate face amount of 

18 bonds issued during any calendar year which may be 

19 designated under subsection (a) with respect to any 

20 qualified zone academy shall not exceed the limita21 tion amount allocated to such academy under para22 graph (2) for such calendar year. 

23 ‘‘(4) CARRYOVER OF UNUSED LIMITATION.— 

24 ‘‘(A) IN GENERAL.—If for any calendar 

25 year— 


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1 ‘‘(i) the limitation amount for any 

2 State, exceeds 

3 ‘‘(ii) the amount of bonds issued dur4 ing such year which are designated under 

5 subsection (a) with respect to qualified 

6 zone academies within such State, 

7 the limitation amount for such State for the fol8 lowing calendar year shall be increased by the 

9 amount of such excess. 

10 ‘‘(B) LIMITATION ON CARRYOVER.—Any 

11 carryforward of a limitation amount may be 

12 carried only to the first 2 years following the 

13 unused limitation year. For purposes of the pre14 ceding sentence, a limitation amount shall be 

15 treated as used on a first-in first-out basis. 

16 ‘‘(d) DEFINITIONS.—For purposes of this section— 

17 ‘‘(1) QUALIFIED ZONE ACADEMY.—The term 

18 ‘qualified zone academy’ means any public school (or 

19 academic program within a public school) which is 

20 established by and operated under the supervision of 

21 an eligible local education agency to provide edu22 cation or training below the postsecondary level if— 

23 ‘‘(A) such public school or program (as the 

24 case may be) is designed in cooperation with 

25 business to enhance the academic curriculum, 


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1 increase graduation and employment rates, and 

2 better prepare students for the rigors of college 

3 and the increasingly complex workforce, 

4 ‘‘(B) students in such public school or pro5 gram (as the case may be) will be subject to the 

6 same academic standards and assessments as 

7 other students educated by the eligible local 

8 education agency, 

9 ‘‘(C) the comprehensive education plan of 

10 such public school or program is approved by 

11 the eligible local education agency, and 

12 ‘‘(D)(i) such public school is located in an 

13 empowerment zone or enterprise community 

14 (including any such zone or community des15 ignated after the date of the enactment of this 

16 section), or 

17 ‘‘(ii) there is a reasonable expectation 

18 (as of the date of issuance of the bonds) 

19 that at least 35 percent of the students at20 tending such school or participating in 

21 such program (as the case may be) will be 

22 eligible for free or reduced-cost lunches 

23 under the school lunch program established 

24 under the National School Lunch Act. 


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1 ‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.— 

2 For purposes of this section, the term ‘eligible local 

3 education agency’ means any local educational agen4 cy as defined in section 8101 of the Elementary and 

5 Secondary Education Act of 1965. 

6 ‘‘(3) QUALIFIED PURPOSE.—The term ‘quali7 fied purpose’ means, with respect to any qualified 

8 zone academy— 

9 ‘‘(A) rehabilitating or repairing the public 

10 school facility in which the academy is estab11 lished, 

12 ‘‘(B) providing equipment for use at such 

13 academy, 

14 ‘‘(C) developing course materials for edu15 cation to be provided at such academy, and 

16 ‘‘(D) training teachers and other school 

17 personnel in such academy. 

18 ‘‘(4) QUALIFIED CONTRIBUTIONS.—The term 

19 ‘qualified contribution’ means any contribution (of a 

20 type and quality acceptable to the eligible local edu21 cation agency) of— 

22 ‘‘(A) equipment for use in the qualified 

23 zone academy (including state-of-the-art tech24 nology and vocational equipment), 


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1 ‘‘(B) technical assistance in developing 

2 curriculum or in training teachers in order to 

3 promote appropriate market driven technology 

4 in the classroom, 

5 ‘‘(C) services of employees as volunteer 

6 mentors, 

7 ‘‘(D) internships, field trips, or other edu8 cational opportunities outside the academy for 

9 students, or 

10 ‘‘(E) any other property or service speci11 fied by the eligible local education agency.’’. 

12 (b) CONFORMING AMENDMENTS.— 

13 (1) Section 6401(b)(1) of such Code is amend14 ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 

15 (2) The table of subparts for part IV of sub16 chapter A of chapter 1 of such Code is amended by 

17 at the end the following new item: 

‘‘SUBPART H—CREDIT TO HOLDERS OF QUALIFIED ZONE ACADEMY BONDS’’. 

18 (c) EFFECTIVE DATE.—The amendments made by 

19 this section shall apply to taxable years ending after De20 cember 31, 2019. 

Æ 


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