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. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. EXTENSION OF EMPOWERMENT ZONES. 
(a) IN GENERAL.—Section 1391(d)(1)(A)(i) of the 
Internal Revenue Code of 1986 is amended by striking 
‘‘December 31, 2017’’ and inserting ‘‘December 31, 
2029’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall take effect on January 1, 2018. 
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(c) TREATMENT OF CERTAIN TERMINATION DATES 
SPECIFIED IN NOMINATIONS.—In the case of a designa-
tion of an empowerment zone the nomination for which 
included a termination date which is contemporaneous 
with the date specified in subparagraph (A)(i) of section 
1391(d)(1) of the Internal Revenue Code of 1986 (as in 
effect before the enactment of this Act), subparagraph (B) 
of such section shall not apply with respect to such des-
ignation if, after the date of the enactment of this section, 
the entity which made such nomination amends the nomi-
nation to provide for a new termination date in such man-
ner as the Secretary of the Treasury (or the Secretary’s 
designee) may provide. 
SEC. 2. REINSTATEMENT OF QUALIFIED ZONE ACADEMY 
BONDS. 
(a) IN GENERAL.—Part IV of subchapter A of chap-
ter 1 of the Internal Revenue Code of 1986 is amended 
by adding at the end the following new subpart: 
‘‘Subpart H—Credit to Holders of Qualified Zone 
Academy Bonds 
‘‘Sec. 54. Credit to holders. 
‘‘Sec. 54A. Qualified zone academy bonds. 
‘‘SEC. 54. CREDIT TO HOLDERS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a qualified zone academy bond on one or more credit al-
lowance dates of the bond during any taxable year, there 
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shall be allowed as a credit against the tax imposed by 
this chapter for the taxable year an amount equal to the 
sum of the credits determined under subsection (b) with 
respect to such dates. 
‘‘(b) AMOUNT OF CREDIT.— 
‘‘(1) IN GENERAL.—The amount of the credit 
determined under this subsection with respect to any 
credit allowance date for a qualified zone academy 
bond is 25 percent of the annual credit determined 
with respect to such bond. 
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any qualified zone academy 
bond is the product of— 
‘‘(A) the applicable credit rate, multiplied 
by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) APPLICABLE CREDIT RATE.—For purposes 
of paragraph (2), the applicable credit rate is the 
rate which the Secretary estimates will permit the 
issuance of qualified zone academy bonds with a 
specified maturity or redemption date without dis-
count and without interest cost to the qualified 
issuer. The applicable credit rate with respect to any 
qualified zone academy bond shall be determined as 
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of the first day on which there is a binding, written 
contract for the sale or exchange of the bond. 
‘‘(4) SPECIAL RULE FOR ISSUANCE AND RE-
DEMPTION.—In the case of a bond which is issued 
during the 3-month period ending on a credit allow-
ance date, the amount of the credit determined 
under this subsection with respect to such credit al-
lowance date shall be a ratable portion of the credit 
otherwise determined based on the portion of the 3- 
month period during which the bond is outstanding. 
A similar rule shall apply when the bond is redeemed 
or matures. 
‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.— 
‘‘(1) IN GENERAL.—The credit allowed under 
subsection (a) for any taxable year shall not exceed 
the excess of— 
‘‘(A) the sum of the regular tax liability 
(as defined in section 26(b)) plus the tax im-
posed by section 55, over 
‘‘(B) the sum of the credits allowable 
under this part (other than subparts C and J 
and this subpart). 
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the 
credit allowable under subsection (a) exceeds the 
limitation imposed by paragraph (1) for such taxable 
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year, such excess shall be carried to the succeeding 
taxable year and added to the credit allowable under 
subsection (a) for such taxable year (determined be-
fore the application of paragraph (1) for such suc-
ceeding taxable year). 
‘‘(d) DEFINITIONS.—For purposes of this sub-
chapter— 
‘‘(1) CREDIT
ALLOWANCE
DATE.—The term 
‘credit allowance date’ means— 
‘‘(A) March 15, 
‘‘(B) June 15, 
‘‘(C) September 15, and 
‘‘(D) December 15. 
Such term includes the last day on which the bond 
is outstanding. 
‘‘(2) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(3) STATE.—The term ‘State’ includes the 
District of Columbia and any possession of the 
United States. 
‘‘(4) AVAILABLE
PROJECT
PROCEEDS.—The 
term ‘available project proceeds’ means— 
‘‘(A) the excess of— 
‘‘(i) the proceeds from the sale of an 
issue, over 
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‘‘(ii) the issuance costs financed by 
the issue (to the extent that such costs do 
not exceed 2 percent of such proceeds), 
and 
‘‘(B) the proceeds from any investment of 
the excess described in subparagraph (A). 
‘‘(e) CREDIT TREATED AS INTEREST.—For purposes 
of this subtitle, the credit determined under subsection (a) 
shall be treated as interest which is includible in gross in-
come. 
‘‘(f) S CORPORATIONS AND PARTNERSHIPS.—In the 
case of a qualified zone academy bond held by an S cor-
poration or partnership, the allocation of the credit al-
lowed by this section to the shareholders of such corpora-
tion or partners of such partnership shall be treated as 
a distribution. 
‘‘(g) BONDS HELD BY REAL ESTATE INVESTMENT 
TRUSTS.—If any qualified zone academy bond is held by 
a real estate investment trust, the credit determined under 
subsection (a) shall be allowed to beneficiaries of such 
trust (and any gross income included under subsection (e) 
with respect to such credit shall be distributed to such 
beneficiaries) under procedures prescribed by the Sec-
retary. 
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‘‘(h) CREDITS MAY BE STRIPPED.—Under regula-
tions prescribed by the Secretary— 
‘‘(1) IN GENERAL.—There may be a separation 
(including at issuance) of the ownership of a quali-
fied zone academy bond and the entitlement to the 
credit under this section with respect to such bond. 
In case of any such separation, the credit under this 
section shall be allowed to the person who on the 
credit allowance date holds the instrument evidenc-
ing the entitlement to the credit and not to the hold-
er of the bond. 
‘‘(2) CERTAIN RULES TO APPLY.—In the case 
of a separation described in paragraph (1), the rules 
of section 1286 shall apply to the qualified zone 
academy bond as if it were a stripped bond and to 
the credit under this section as if it were a stripped 
coupon. 
‘‘SEC. 54A. QUALIFIED ZONE ACADEMY BONDS. 
‘‘(a) IN GENERAL.—For purposes of this subchapter, 
the term ‘qualified zone academy bond’ means any bond 
issued as part of an issue if— 
‘‘(1) 100 percent of the available project pro-
ceeds of such issue are to be used for a qualified 
purpose with respect to a qualified zone academy es-
tablished by an eligible local education agency, 
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‘‘(2) the bond is issued by a State or local gov-
ernment within the jurisdiction of which such acad-
emy is located, and 
‘‘(3) the issuer— 
‘‘(A) designates such bond for purposes of 
this section, 
‘‘(B) certifies that it has written assur-
ances that the private business contribution re-
quirement of subsection (b) will be met with re-
spect to such academy, and 
‘‘(C) certifies that it has the written ap-
proval of the eligible local education agency for 
such bond issuance. 
‘‘(b) PRIVATE BUSINESS CONTRIBUTION REQUIRE-
MENT.—For purposes of subsection (a), the private busi-
ness contribution requirement of this subsection is met 
with respect to any issue if the eligible local education 
agency that established the qualified zone academy has 
written commitments from private entities to make quali-
fied contributions having a present value (as of the date 
of issuance of the issue) of not less than 10 percent of 
the proceeds of the issue. 
‘‘(c) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.— 
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‘‘(1) NATIONAL LIMITATION.—There is a na-
tional zone academy bond limitation for each cal-
endar year. Such limitation is $400,000,000 for each 
of calendar years 2020 through 2029 and, except as 
provided in paragraph (4), zero thereafter. 
‘‘(2) ALLOCATION
OF
LIMITATION.—The na-
tional zone academy bond limitation for a calendar 
year shall be allocated by the Secretary among the 
States on the basis of their respective populations of 
individuals below the poverty line (as defined by the 
Office of Management and Budget). The limitation 
amount allocated to a State under the preceding 
sentence shall be allocated by the State education 
agency to qualified zone academies within such 
State. 
‘‘(3) DESIGNATION
SUBJECT
TO
LIMITATION 
AMOUNT.—The maximum aggregate face amount of 
bonds issued during any calendar year which may be 
designated under subsection (a) with respect to any 
qualified zone academy shall not exceed the limita-
tion amount allocated to such academy under para-
graph (2) for such calendar year. 
‘‘(4) CARRYOVER OF UNUSED LIMITATION.— 
‘‘(A) IN
GENERAL.—If for any calendar 
year— 
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‘‘(i) the limitation amount for any 
State, exceeds 
‘‘(ii) the amount of bonds issued dur-
ing such year which are designated under 
subsection (a) with respect to qualified 
zone academies within such State, 
the limitation amount for such State for the fol-
lowing calendar year shall be increased by the 
amount of such excess. 
‘‘(B) LIMITATION
ON
CARRYOVER.—Any 
carryforward of a limitation amount may be 
carried only to the first 2 years following the 
unused limitation year. For purposes of the pre-
ceding sentence, a limitation amount shall be 
treated as used on a first-in first-out basis. 
‘‘(d) DEFINITIONS.—For purposes of this section— 
‘‘(1) QUALIFIED
ZONE
ACADEMY.—The term 
‘qualified zone academy’ means any public school (or 
academic program within a public school) which is 
established by and operated under the supervision of 
an eligible local education agency to provide edu-
cation or training below the postsecondary level if— 
‘‘(A) such public school or program (as the 
case may be) is designed in cooperation with 
business to enhance the academic curriculum, 
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increase graduation and employment rates, and 
better prepare students for the rigors of college 
and the increasingly complex workforce, 
‘‘(B) students in such public school or pro-
gram (as the case may be) will be subject to the 
same academic standards and assessments as 
other students educated by the eligible local 
education agency, 
‘‘(C) the comprehensive education plan of 
such public school or program is approved by 
the eligible local education agency, and 
‘‘(D)(i) such public school is located in an 
empowerment zone or enterprise community 
(including any such zone or community des-
ignated after the date of the enactment of this 
section), or 
‘‘(ii) there is a reasonable expectation 
(as of the date of issuance of the bonds) 
that at least 35 percent of the students at-
tending such school or participating in 
such program (as the case may be) will be 
eligible for free or reduced-cost lunches 
under the school lunch program established 
under the National School Lunch Act. 
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‘‘(2) ELIGIBLE LOCAL EDUCATION AGENCY.— 
For purposes of this section, the term ‘eligible local 
education agency’ means any local educational agen-
cy as defined in section 8101 of the Elementary and 
Secondary Education Act of 1965. 
‘‘(3) QUALIFIED PURPOSE.—The term ‘quali-
fied purpose’ means, with respect to any qualified 
zone academy— 
‘‘(A) rehabilitating or repairing the public 
school facility in which the academy is estab-
lished, 
‘‘(B) providing equipment for use at such 
academy, 
‘‘(C) developing course materials for edu-
cation to be provided at such academy, and 
‘‘(D) training teachers and other school 
personnel in such academy. 
‘‘(4) QUALIFIED
CONTRIBUTIONS.—The term 
‘qualified contribution’ means any contribution (of a 
type and quality acceptable to the eligible local edu-
cation agency) of— 
‘‘(A) equipment for use in the qualified 
zone academy (including state-of-the-art tech-
nology and vocational equipment), 
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‘‘(B) technical assistance in developing 
curriculum or in training teachers in order to 
promote appropriate market driven technology 
in the classroom, 
‘‘(C) services of employees as volunteer 
mentors, 
‘‘(D) internships, field trips, or other edu-
cational opportunities outside the academy for 
students, or 
‘‘(E) any other property or service speci-
fied by the eligible local education agency.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) Section 6401(b)(1) of such Code is amend-
ed by striking ‘‘and G’’ and inserting ‘‘G, and H’’. 
(2) The table of subparts for part IV of sub-
chapter A of chapter 1 of such Code is amended by 
at the end the following new item: 
‘‘SUBPART H—CREDIT TO HOLDERS OF QUALIFIED ZONE ACADEMY BONDS’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2019. 
Æ 
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