(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 sec-
tion, a bond which meets the requirements of para-
graph (2) shall not be treated as an arbitrage bond.
‘‘(2) 
DELINQUENT
TAX
BOND
REQUIRE-
MENTS.—A bond meets the requirements of this
paragraph if—
‘‘(A) the bond is issued primarily to facili-
tate the collection or receipt of delinquent real
property taxes levied for school districts that
provide education primarily below the post-sec-
ondary level,
‘‘(B) all sale proceeds of the issue of which
the bond is a part (other than sale proceeds, if
any, to be used for costs of issuance and the es-
tablishment of a reasonably required reserve or
replacement fund) are transferred, within 30
days after the date of issue of the bond, to gov-
ernmental units that levy, collect, or receive real
property taxes,
‘‘(C)(i) the amount of the sale proceeds so
transferred does not exceed the amount of de-
linquent real property taxes for the year (or the
preceding year) certified by such units to the
issuer of the bond as uncollected, and
‘‘(ii) such certification is made as of a spe-
cific date which occurs during the 5-month pe-
riod preceding the date of the issuance of the
bond,
‘‘(D) the maturity date of the bond is not
later than 3 months after the date of the issue,
and
‘‘(E) all delinquent real property taxes
(and interest, fees, and penalties attributable to
such taxes) received by such governmental units
after the specific date referred to in subpara-
graph (C) and before any maturity date of such
issue are used, within 3 months of receipt, for
the payment of principal, interest, or redemp-
tion price of the issue of which the bond is a
part (to the extent that such taxes, interest,
fees, and penalties do not exceed such principal,
interest, and redemption price, in the aggre-
gate).
For purposes of this part, proceeds of the issue
which are transferred in accordance with subpara-
graph (B) shall be treated as spent on the date so
transferred.
‘‘(3) REFUNDING BONDS.—A bond (or series of
bonds) issued to refund a bond meeting the require-
ments of paragraph (2) shall be treated as meeting
such requirements only if, in addition to meeting
such requirements—
‘‘(A) the maturity date of the refunding
bond is not later than 26 months after the date
of issuance of the original bond, and
‘‘(B) the requirements of subclauses (II)
and (III) of section 144(a)(12)(A)(ii) are met.’’
(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—
(1) by striking ‘‘or’’ at the end of clause (i),
(2) by striking the period at the end of clause
(ii) and inserting ‘‘, or’’, and
(3) 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 bonds issued after the date of
the enactment of this Act. For purposes of the preceding
sentence, a bond (or series of bonds) issued to refund a
bond shall be treated as being issued on the date of
issuance of the refunded bond, if the refunding bond meets
the requirements of subclauses (I), (II), and (III) of sec-
tion 144(a)(12)(A)(ii) of the Internal Revenue Code of
1986.
Æ