II 

108TH CONGRESS 

2D SESSION S. 2689

To amend the Internal Revenue Code of 1986 to replace the recapture 

bond provisions of the low income housing tax credit program. 

IN THE SENATE OF THE UNITED STATES 

JULY 20, 2004

Mrs. LINCOLN 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 replace 

the recapture bond provisions of the low income housing 

tax credit program.

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

3 SECTION 1. REPEAL OF RECAPTURE BOND RULE. 

4 (a) IN GENERAL.—Paragraph (6) of section 42(j) of 

5 the Internal Revenue Code of 1986 (relating to recapture 

6 of credit) is amended to read as follows: 

7 ‘‘(6) NO RECAPTURE ON DISPOSITION OF

8 BUILDING (OR INTEREST THEREIN) REASONABLY

9 EXPECTED TO CONTINUE AS A QUALIFIED LOW-IN10 COME BUILDING.—
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•S 2689 IS 

1 ‘‘(A) IN GENERAL.—In the case of a dis2 position of a building or an interest therein, the 

3 taxpayer shall be discharged from liability for 

4 any additional tax under this subsection by rea5 son of such disposition if it is reasonably ex6 pected that such building will continue to be op7 erated as a qualified low-income building for 

8 the remaining compliance period with respect to 

9 such building. 

10 ‘‘(B) STATUTE OF LIMITATIONS.—

11 ‘‘(i) EXTENSION OF PERIOD.—The pe12 riod for assessing a deficiency attributable 

13 to the application of subparagraph (A) 

14 with respect to a building (or interest 

15 therein) during the compliance period with 

16 respect to such building shall not expire 

17 before the expiration of 3 years after the 

18 end of such compliance period. 

19 ‘‘(ii) ASSESSMENT.—Such deficiency 

20 may be assessed before the expiration of 

21 the 3-year period referred to in clause (i) 

22 notwithstanding the provisions of any 

23 other law or rule of law which would other24 wise prevent such assessment.’’. 

25 (b) INFORMATION REPORTING.—
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•S 2689 IS 

1 (1) IN GENERAL.—Subpart B of part III of 

2 subchapter A of chapter 61 of such Code (relating 

3 to information concerning transactions with other 

4 persons) is amended by inserting after section 

5 6050T the following new section: 

6 ‘‘SEC. 6050U. RETURNS RELATING TO PAYMENT OF LOW-IN7 COME HOUSING CREDIT REPAYMENT 

8 AMOUNT. 

9 ‘‘(a) REQUIREMENT OF REPORTING.—Every person 

10 who, at any time during the taxable year, is an owner of 

11 a building (or an interest therein)—

12 ‘‘(1) which is in the compliance period at any 

13 time during such year, and 

14 ‘‘(2) with respect to which recapture is required 

15 by section 42(j), 

16 shall, at such time as the Secretary may prescribe, make 

17 the return described in subsection (b). 

18 ‘‘(b) FORM AND MANNER OF RETURNS.—A return 

19 is described in this subsection if such return—

20 ‘‘(1) is in such form as the Secretary may pre21 scribe, and 

22 ‘‘(2) contains—

23 ‘‘(A) the name, address, and TIN of each 

24 person who, with respect to such building or in-
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•S 2689 IS 

1 terest, was formerly an investor in such owner 

2 at any time during the compliance period, 

3 ‘‘(B) the amount (if any) of any credit re4 capture amount required under section 42(j), 

5 and 

6 ‘‘(C) such other information as the Sec7 retary may prescribe. 

8 ‘‘(c) STATEMENTS TO BE FURNISHED TO PERSONS

9 WITH RESPECT TO WHOM INFORMATION IS REQUIRED.—

10 Every person required to make a return under subsection 

11 (a) shall furnish to each person whose name is required 

12 to be set forth in such return a written statement show13 ing—

14 ‘‘(1) the name and address of the person re15 quired to make such return and the phone number 

16 of the information contact for such person, and 

17 ‘‘(2) the information required to be shown on 

18 the return with respect to such person. 

19 The written statement required under the preceding sen20 tence shall be furnished on or before March 31 of the year 

21 following the calendar year for which the return under 

22 subsection (a) is required to be made. 

23 ‘‘(d) COMPLIANCE PERIOD.—For purposes of this 

24 section, the term ‘compliance period’ has the meaning 

25 given such term by section 42(i).’’. 
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•S 2689 IS 

1 (2) ASSESSABLE PENALTIES.—

2 (A) Subparagraph (B) of section 

3 6724(d)(1) of such Code (relating to defini4 tions) is amended by redesignating clauses (xii) 

5 through (xviii) as clauses (xiii) through (xix), 

6 respectively, and by inserting after clause (xi) 

7 the following new clause: 

8 ‘‘(xii) section 6050U (relating to re9 turns relating to payment of low-income 

10 housing credit repayment amount),’’. 

11 (B) Paragraph (2) of section 6724(d) of 

12 such Code is amended by striking ‘‘or’’ at the 

13 end of subparagraph (AA), by striking the pe14 riod at the end of subparagraph (BB) and in15 serting ‘‘, or’’, and by adding after subpara16 graph (BB) the following new subparagraph: 

17 ‘‘(CC) section 6050U (relating to returns 

18 relating to payment of low-income housing cred19 it repayment amount).’’. 

20 (C) CLERICAL AMENDMENT.—The table of 

21 sections for subpart B of part III of subchapter 

22 A of chapter 61 of such Code is amended by in23 serting after the item relating to section 6050S 

24 the following new item:

‘‘Sec. 6050U. Returns relating to payment of low-income housing credit repayment amount.’’.
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•S 2689 IS 

1 (c) EFFECTIVE DATE.—

2 (1) IN GENERAL.—The amendments made by 

3 this section shall apply with respect to any liability 

4 for the credit recapture amount under section 42(j) 

5 of the Internal Revenue Code of 1986 that arises 

6 after the date of the enactment of this Act. 

7 (2) SPECIAL RULE FOR LOW-INCOME HOUSING

8 BUILDINGS SOLD BEFORE DATE OF ENACTMENT OF

9 THIS ACT.—In the case of a building disposed of be10 fore the date of the enactment of this Act with re11 spect to which the taxpayer posted a bond (or alter12 native form of security) under section 42(j) of the 

13 Internal Revenue Code of 1986 (as in effect before 

14 the enactment of this Act), the taxpayer may elect 

15 (by notifying the Secretary of the Treasury in writ16 ing)—

17 (A) to cease to be subject to the bond re18 quirements under section 42(j)(6) of such Code 

19 (as in effect before the enactment of this Act), 

20 and 

21 (B) to be subject to the requirements of 

22 section 42(j) of such Code (as amended by this 

23 Act).

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