II 

108TH CONGRESS 

2D SESSION S. 2580 

To amend the Internal Revenue Code of 1986 to provide an income tax 

credit to holders of bonds financing new communications technologies, 

and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 24, 2004 

Mrs. CLINTON introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

an income tax credit to holders of bonds financing new 

communications technologies, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Technology Bond Ini5 tiative of 2004’’. 

6 SEC. 2. FINDINGS 

7 Congress finds the following: 

8 (1) Access to high-speed Internet is as impor9 tant to 21st Century businesses as access to the rail-
2 

•S 2580 IS 

1 roads and interstate highways was to businesses of 

2 the last century. 

3 (2) Up to one-third of the United States popu4 lation lacks access to high-speed Internet. 

5 (3) Companies without access to high-speed 

6 Internet are unable to meet their market potential, 

7 just as a community cannot prosper if it doesn’t 

8 have high quality roads and bridges. 

9 (4) Technology bonds would provide incentives 

10 to State and local governments to partner with the 

11 private sector to expand broadband deployment in 

12 their communities, especially underserved urban and 

13 rural areas. 

14 SEC. 3. CREDIT TO HOLDERS OF QUALIFIED TECHNOLOGY 

15 BONDS. 

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

18 credits against tax) is amended by adding at the end the 

19 following new subpart: 

20 ‘‘Subpart H—Nonrefundable Credit for Holders of 

21 Qualified Technology Bonds 

‘‘Sec. 54. Credit to holders of qualified technology bonds. 
3 

•S 2580 IS 

1 ‘‘SEC. 54. CREDIT TO HOLDERS OF QUALIFIED TECH2 NOLOGY BONDS. 

3 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax4 payer who holds a qualified technology bond on a credit 

5 allowance date of such bond which occurs during the tax6 able year, there shall be allowed as a credit against the 

7 tax imposed by this chapter for such taxable year the 

8 amount determined under subsection (b). 

9 ‘‘(b) AMOUNT OF CREDIT.— 

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

11 determined under this subsection with respect to any 

12 qualified technology bond is the amount equal to the 

13 product of— 

14 ‘‘(A) the credit rate determined by the Sec15 retary under paragraph (2) for the month in 

16 which such bond was issued, multiplied by 

17 ‘‘(B) the face amount of the bond held by 

18 the taxpayer on the credit allowance date. 

19 ‘‘(2) DETERMINATION.—During each calendar 

20 month, the Secretary shall determine a credit rate 

21 which shall apply to bonds issued during the fol22 lowing calendar month. The credit rate for any 

23 month is the percentage which the Secretary esti24 mates will permit the issuance of qualified tech25 nology bonds without discount and without interest 

26 cost to the issuer. 
4 

•S 2580 IS 

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

2 credit allowed under subsection (a) for any taxable year 

3 shall not exceed the excess of— 

4 ‘‘(1) the sum of the regular tax liability (as de5 fined in section 26(b)) plus the tax imposed by sec6 tion 55, over 

7 ‘‘(2) the sum of the credits allowable under this 

8 part (other than this subpart and subpart C). 

9 ‘‘(d) QUALIFIED TECHNOLOGY BOND.—For pur10 poses of this part— 

11 ‘‘(1) IN GENERAL.—The term ‘qualified tech12 nology bond’ means any bond issued as part of an 

13 issue if— 

14 ‘‘(A) 95 percent of more of the proceeds of 

15 such issue are to be used for any or a series of 

16 qualified projects, 

17 ‘‘(B) the bond is issued by a State or local 

18 government within the jurisdiction of which 

19 such project is located, 

20 ‘‘(C) the issuer designates such bond for 

21 purposes of this section, 

22 ‘‘(D) certifies that it has obtained the writ23 ten approval of the Secretary of Commerce for 

24 such project, and 
5 

•S 2580 IS 

1 ‘‘(E) the term of each bond which is part 

2 of such issue does not exceed 15 years. 

3 ‘‘(2) QUALIFIED PROJECT.— 

4 ‘‘(A) IN GENERAL.—The term ‘qualified 

5 project’ means a project— 

6 ‘‘(i) to expand broadband tele7 communications services in an area within 

8 the jurisdiction of a State or local govern9 ment, 

10 ‘‘(ii) which is nominated by such State 

11 or local government for a designation as a 

12 qualified project, and 

13 ‘‘(iii) which the Secretary of Com14 merce, after consultation with the Sec15 retary of Housing and Urban Development 

16 designates as a qualified project or a series 

17 of qualified projects. 

18 ‘‘(B) DESIGNATION PREFERENCES.—With 

19 respect to designations under this section, pref20 erences shall be given to— 

21 ‘‘(i) nominations of projects involving 

22 underserved urban or rural areas lacking 

23 access to high-speed Internet connections, 

24 and 
6 

•S 2580 IS 

1 ‘‘(ii) nominations reflecting partner2 ships and comprehensive planning between 

3 State and local governments and the pri4 vate sector. 

5 ‘‘(e) LIMITATION ON AMOUNT OF BONDS DES6 IGNATED.— 

7 ‘‘(1) NATIONAL LIMITATION.—There is a na8 tional technology bond limitation for each calendar 

9 year. Such limitation is $100,000,000 for 2005, 

10 2006, 2007, 2008, and 2009, and, except as pro11 vided in paragraph (4), zero thereafter. 

12 ‘‘(2) ALLOCATION OF LIMITATION.—The na13 tional technology bond limitation for a calendar year 

14 shall be allocated by the Secretary among the quali15 fied projects designated for such year. 

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 (d)(1) with respect to 

20 any qualified project shall not exceed the limitation 

21 amount allocated to such project under paragraph 

22 (2) for such calendar year. 

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

24 for any calendar year— 
7 

•S 2580 IS 

1 ‘‘(A) the national technology limitation 

2 amount, exceeds 

3 ‘‘(B) the amount of bonds issued during 

4 such year which are designated under sub5 section (d)(1) with respect to qualified projects, 

6 the national technology limitation amount for the 

7 following calendar year shall be increased by the 

8 amount of such excess. 

9 ‘‘(f) OTHER DEFINITIONS.—For purposes of this 

10 subpart— 

11 ‘‘(1) BOND.—The term ‘bond’ includes any ob12 ligation. 

13 ‘‘(2) CREDIT ALLOWANCE DATE.—The term 

14 ‘credit allowance date’ means, with respect to any 

15 issue, the last day of the 1-year period beginning on 

16 the date of issuance of such issue and the last day 

17 of each successive 1-year period thereafter. 

18 ‘‘(3) STATE.—The term ‘State’ means the sev19 eral States and the District of Columbia. 

20 ‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross 

21 income includes the amount of the credit allowed to the 

22 taxpayer under this section (determined without regard to 

23 subsection (c)) and the amount so included shall be treat24 ed as interest income. 

25 ‘‘(h) OTHER SPECIAL RULES.— 
8 

•S 2580 IS 

1 ‘‘(1) PARTNERSHIP; S CORPORATION; AND

2 OTHER PASS-THRU ENTITIES.—Under regulations 

3 prescribed by the Secretary, in the case of a partner4 ship, trust, S corporation, or other pass-thru entity, 

5 rules similar to the rules of section 41(g) shall apply 

6 with respect to the credit allowable under subsection 

7 (a). 

8 ‘‘(2) BONDS HELD BY REGULATED INVEST9 MENT COMPANIES.—If any qualified technology bond 

10 is held by a regulated investment company, the cred11 it determined under subsection (a) shall be allowed 

12 to shareholders of such company under procedures 

13 prescribed by the Secretary. 

14 ‘‘(3) TREATMENT FOR ESTIMATED TAX PUR15 POSES.—Solely for purposes of sections 6654 and 

16 6655, the credit allowed by this section to a tax17 payer by reason of holding a qualified technology 

18 bond on a credit allowance date shall be treated as 

19 if it were a payment of estimated tax made by the 

20 taxpayer on such date. 

21 ‘‘(4) REPORTING.—Issuers of qualified tech22 nology bonds shall submit reports similar to the re23 ports required under section 149(e).’’. 

24 (b) REPORTING.—Subsection (d) of section 6049 of 

25 the Internal Revenue Code of 1986 (relating to returns 
9 

•S 2580 IS 

1 regarding payments of interest) is amended by adding at 

2 the end the following new paragraph: 

3 ‘‘(8) REPORTING OF CREDIT ON QUALIFIED

4 TECHNOLOGY BONDS.— 

5 ‘‘(A) IN GENERAL.—For purposes of sub6 section (a), the term ‘interest’ includes amounts 

7 includible in gross income under section 54(g) 

8 and such amounts shall be treated as paid on 

9 the credit allowance date (as defined in section 

10 54(f)(2)). 

11 ‘‘(B) REPORTING TO CORPORATIONS, 

12 ETC.—Except as otherwise provided in regula13 tions, in the case of any interest described in 

14 subparagraph (A) of this paragraph, subsection 

15 (b)(4) of this section shall be applied without 

16 regard to subparagraphs (A), (H), (I), (J), (K), 

17 and (L)(i). 

18 ‘‘(C) REGULATORY AUTHORITY.—The Sec19 retary may prescribe such regulations as are 

20 necessary or appropriate to carry out the pur21 poses of this paragraph, including regulations 

22 which require more frequent or more detailed 

23 reporting.’’. 

24 (c) CLERICAL AMENDMENTS.— 
10 

•S 2580 IS 

1 (1) The table of subparts for part IV of sub2 chapter A of chapter 1 of the Internal Revenue Code 

3 of 1986 is amended by adding at the end the fol4 lowing new item: 

‘‘Subpart H. Nonrefundable Credit for Holders of Qualified Technology 

Bonds.’’. 

5 (2) Section 6401(b)(1) of such Code is amend6 ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 

7 (d) EFFECTIVE DATE.—The amendments made by 

8 this section shall apply to obligations issued after Decem9 ber 31, 2004. 

Æ