I
106TH CONGRESS
1ST SESSION
H. R. 2446
To amend the Internal Revenue Code of 1986 to allow a credit against
income tax to holders of Better America Bonds.
IN THE HOUSE OF REPRESENTATIVES
JULY 1, 1999
Mr. MATSUI (for himself, Mr. DOGGETT, Mr. BLUMENAUER, Mr. GEPHARDT,
Mr. BONIOR, Mr. RANGEL, Mr. COYNE, Mr. LEVIN, Mr. CARDIN, Mr.
LEWIS of Georgia, Mr. NEAL of Massachusetts, Mr. JEFFERSON, Mrs.
THURMAN, Mr. BECERRA, Mr. ALLEN, Ms. BALDWIN, Mr. BARRETT of
Wisconsin, Mr. BERMAN, Ms. BROWN of Florida, Mr. BROWN of Cali-
fornia, Mr. BROWN
of Ohio, Mrs. CAPPS, Ms. CARSON, Mrs.
CHRISTENSEN, Mr. CUMMINGS, Ms. DEGETTE, Ms. DELAURO, Mr.
DIXON, Mr. DOOLEY of California, Mr. DOYLE, Mr. FARR of California,
Mr. FATTAH, Mr. FROST, Mr. HINCHEY, Mr. HOEFFEL, Mr. HOLT, Mr.
LARSON, Mr. MALONEY of Connecticut, Mr. MEEHAN, Mr. MENENDEZ,
Ms. MILLENDER-MCDONALD, Mr. GEORGE MILLER of California, Mrs.
NAPOLITANO, 
Ms. 
NORTON, 
Ms. 
PELOSI, 
Mr. 
SERRANO, 
Ms.
SCHAKOWSKY, Mr. THOMPSON of Mississippi, Mr. TIERNEY, Mrs. JONES
of Ohio, Mr. UDALL of Colorado, Mr. UDALL of New Mexico, Mr. WAX-
MAN, Mr. WEYGAND, and Ms. WOOLSEY) 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 allow a
credit against income tax to holders of Better America
Bonds.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘Better America Bonds
Act of 1999’’.
SEC. 2. CREDIT TO HOLDERS OF BETTER AMERICA BONDS.
(a) IN GENERAL.—Subpart B of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end the following new
section:
‘‘SEC. 30B. CREDIT TO HOLDERS OF BETTER AMERICA
BONDS.
‘‘(a) ALLOWANCE OF CREDIT.—In the case of a tax-
payer who holds a Better America Bond on a credit allow-
ance date of such bond which occurs during the taxable
year, there shall be allowed as a credit against the tax
imposed by this chapter for such taxable year an amount
equal to the sum of the credits determined under sub-
section (b) with respect to credit allowance dates during
such year on which the taxpayer holds such bond.
‘‘(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 Better America Bond is
25 percent of the annual credit determined with re-
spect to such bond.
‘‘(2) ANNUAL CREDIT.—The annual credit de-
termined with respect to any Better America 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 (1), the applicable credit rate with re-
spect to an issue is the rate equal to an average
market yield (as of the day before the date of
issuance of the issue) on outstanding long-term cor-
porate debt obligations (determined under regula-
tions prescribed by the Secretary).
‘‘(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 re-
deemed.
‘‘(c) BETTER AMERICA BOND.—For purposes of this
section—
‘‘(1) IN GENERAL.—The term ‘Better America
Bond’ means any bond issued as part of an issue
if—
‘‘(A) 95 percent or more of the proceeds of
such issue are to be used for any qualified pur-
pose,
‘‘(B) the bond is issued by a State or local
government within the jurisdiction of which the
qualified purpose of the issue is to be carried
out,
‘‘(C) the issuer designates such bond for
purposes of this section,
‘‘(D) the term of each bond which is part
of such issue does not exceed 15 years,
‘‘(E) the requirements of section 147(f)
are met with respect to such issue, and
‘‘(F) except in the case of the proceeds of
such issue which are to be used for the qualified
purpose described in paragraph (2)(A)(iv), the
payment of the principal of such issue is se-
cured by taxes of general applicability imposed
by a general purpose governmental unit.
‘‘(2) QUALIFIED PURPOSE.—
‘‘(A) IN
GENERAL.—The term ‘qualified
purpose’ means any of the following:
‘‘(i) The acquisition of land for use as
open space, wetlands, public parks, or
greenways, and the provision of visitor fa-
cilities (such as campgrounds and hiking
or biking trails) for land so used, but only
if—
‘‘(I) such land and facilities are
to be owned by the issuer or a quali-
fied owner, and
‘‘(II) the initial owner of such
land and facilities records pursuant to
State law a qualified restrictive cov-
enant with respect to such land and
facilities.
‘‘(ii) The remediation of land acquired
under clause (i) (or other publicly owned
land) to enhance water quality by—
‘‘(I) restoring hydrology or plant-
ing trees or other vegetation,
‘‘(II) 
undertaking 
reasonable
measures to control erosion,
‘‘(III) restoring wetlands, or
‘‘(IV) 
remediating 
conditions
caused by the prior disposal of toxic
or other waste.
‘‘(iii) The acquisition by the issuer or
any qualified owner of any restriction on
privately owned open land which prevents
commercial development and any substan-
tial change in the use or character of the
land if such restriction would, if contrib-
uted by the owner of the open land to a
qualified organization (as defined in sec-
tion 170(h)(3)), be a qualified conservation
contribution (as defined in section 170(h)).
‘‘(iv) The environmental assessment
and remediation of real property owned by
any State or local government if—
‘‘(I) such property was acquired
by such government as a result of
being abandoned by the prior owner,
and
‘‘(II) such property is located in
an area at or on which there has been
a release (or threat of release) or dis-
posal of any hazardous substance (as
defined in section 198).
‘‘(B) REMEDIATION OF NATIONAL PRIOR-
ITIES
LISTED
SITES
NOT
QUALIFIED
PUR-
POSE.—Subparagraph (A)(ii) shall not apply to
remediation of any site which is on, or proposed
for, the national priorities list under section
105(a)(8)(B) of the Comprehensive Environ-
mental Response, Compensation, and Liability
Act of 1980.
‘‘(C) QUALIFIED OWNER.—For purposes of
this paragraph, the term ‘qualified owner’
means any organization described in section
501(c)(3) whose exempt purpose includes envi-
ronmental protection.
‘‘(D) 
QUALIFIED
RESTRICTIVE
COV-
ENANT.—For 
purposes 
of 
subparagraph
(A)(i)(II), the term ‘qualified restrictive cov-
enant’ means, with respect to land or facilities,
any covenant which prohibits the person who
owns such land or facilities at the end of the
term of the bond from selling or otherwise per-
mitting a use of such land or facilities which is
not described in subparagraph (A) unless—
‘‘(i) a reasonable period is allowed for
a qualified owner to purchase such land or
facilities,
‘‘(ii) the purchase price is not greater
than the price originally paid in conjunc-
tion with the expenditure of bond proceeds,
and
‘‘(iii) the purchaser records pursuant
to State law a covenant with respect to the
purchased land and facilities which pro-
tects in perpetuity the use of such land
and facilities for a use described in sub-
paragraph (A).
‘‘(3) PUBLIC
AVAILABILITY
REQUIREMENT,
ETC.—
‘‘(A) IN
GENERAL.—The term ‘Better
America Bond’ shall not include any bond
which is part of an issue if—
‘‘(i) any portion of the proceeds of the
issue are to be used for any private busi-
ness use (as defined in section 141(b)(6)),
or
‘‘(ii) the payment of the principal of,
or the interest on, any portion of such pro-
ceeds is (under the terms of such issue or
any underlying arrangement) directly or
indirectly secured or to be derived as de-
scribed in subparagraph (A) or (B) of sec-
tion 141(b)(2).
‘‘(B) 
EXCEPTION.—Subparagraph 
(A)
shall not apply to proceeds used for a qualified
purpose described in paragraph (2)(A)(iv).
‘‘(d) LIMITATION
ON AMOUNT
OF BONDS DES-
IGNATED.—
‘‘(1) IN
GENERAL.—The maximum aggregate
face amount of bonds issued during any calendar
year which may be designated under subsection
(c)(1) by any issuer shall not exceed the limitation
amount allocated under paragraph (3) for such cal-
endar year to such issuer.
‘‘(2) NATIONAL
LIMITATION
ON
AMOUNT
OF
BONDS
DESIGNATED.—There is a national Better
America Bond limitation for each calendar year.
Such limitation is—
‘‘(A) $1,900,000,000 for each of calendar
years 2000, 2001, 2002, 2003, and 2004, and
‘‘(B) except as provided in paragraph (4),
zero after 2004.
‘‘(3) ALLOCATION
OF
LIMITATION
AMONG
STATES AND LOCAL GOVERNMENTS.—
‘‘(A) IN GENERAL.—The national Better
America Bond limitation for any calendar year
shall be allocated by the EPA Administrator to
States and local governments having approved
applications. As part of the competitive applica-
tion process, the Environmental Protection
Agency should, when possible, allocate such lim-
itation on a per capita basis.
‘‘(B) APPROVED APPLICATION.—For pur-
poses of subparagraph (A), the term ‘approved
application’ means an application which is ap-
proved by the EPA Administrator and includes
such information as the EPA Administrator
shall specify.
‘‘(4) CARRYOVER OF UNUSED LIMITATION.—If
for any calendar year—
‘‘(A) the amount allocated under para-
graph (4) to any State or local government, ex-
ceeds
‘‘(B) the amount of bonds issued during
such year which are designated under sub-
section (c)(1) pursuant to such allocation,
the limitation amount under paragraph (3) for such
State or local government for the following calendar
year shall be increased by the amount of such ex-
cess.
‘‘(e) 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 part IV of subchapter A (other than sub-
part C thereof, relating to refundable credits).
‘‘(2) CARRYOVER OF UNUSED CREDIT.—If the
credit allowable under subsection (a) exceeds the
limitation imposed by paragraph (1) for such taxable
year, such excess shall be carried to the succeeding
taxable year and added to the credit allowable under
subsection (a) for such taxable year.
‘‘(f) OTHER DEFINITIONS.—For purposes of this
section—
‘‘(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, any possession of the United
States, and any Indian tribal government (within the
meaning of section 7871).
‘‘(4) LOCAL
GOVERNMENT.—The term ‘local
government’ means—
‘‘(A) any county, city, town, township, par-
ish, village, or other general purpose political
subdivision of a State, and
‘‘(B) any combination of political subdivi-
sions described in subparagraph (A) recognized
by the EPA Administrator.
‘‘(5) EPA ADMINISTRATOR.—The term ‘EPA
Administrator’ means the Administrator of the Envi-
ronmental Protection Agency.
‘‘(g) CREDIT INCLUDED IN GROSS INCOME.—Gross
income includes the amount of the credit allowed to the
taxpayer under this section (determined without regard to
subsection (e)) and the amount so included shall be treat-
ed as interest income.
‘‘(h) SPECIAL RULES RELATING TO ARBITRAGE.—
‘‘(1) IN GENERAL.—A bond shall not be treated
as failing to meet the requirements of subsection
(c)(1) solely by reason of the fact that the proceeds
of the issue of which such bond is a part are in-
vested for a temporary period (but not more than 36
months) until such proceeds are needed for the pur-
pose for which such issue was issued.
‘‘(2) REASONABLE EXPECTATION AND BINDING
COMMITMENT REQUIREMENTS.—Paragraph (1) shall
apply to an issue only if, as of the date of
issuance—
‘‘(A) the issuer reasonably expects that—
‘‘(i) at least 95 percent of the pro-
ceeds of the issue will be spent for a quali-
fied purpose within the 3-year period be-
ginning on such date, and
‘‘(ii) property financed with such pro-
ceeds will be used for qualified purposes
for at least 15 years after being so fi-
nanced,
‘‘(B) there is a binding commitment with
a third party to spend at least 10 percent of the
proceeds of the issue for qualified purposes
within the 6-month period beginning on such
date, and
‘‘(C) the issuer reasonably expects that the
remaining proceeds of the issue will be spent
with due diligence for qualified purposes.
‘‘(3) EARNINGS ON PROCEEDS.—Any earnings
on proceeds during the temporary period shall be
treated as proceeds of the issue for purposes of ap-
plying subsection (c)(1) and paragraph (1) of this
subsection.
‘‘(i) DENIAL OF DEDUCTION FOR ENVIRONMENTAL
REMEDIATION EXPENDITURES.—Expenditures financed
by any Better America Bond shall not be allowed as a
deduction under section 198.
‘‘(j) OTHER SPECIAL RULES.—
‘‘(1) BONDS
HELD
BY
REGULATED
INVEST-
MENT COMPANIES.—If any Better America Bond is
held by a regulated investment company, the credit
determined under subsection (a) shall be allowed to
shareholders of such company under procedures pre-
scribed by the Secretary.
‘‘(2) CREDITS MAY BE STRIPPED.—Under regu-
lations prescribed by the Secretary—
‘‘(A) IN GENERAL.—There may be a sepa-
ration (including at issuance) of the ownership
of a Better America 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 evidencing the entitlement to
the credit and not to the holder of the bond.
‘‘(B) CERTAIN RULES TO APPLY.—In the
case of a separation described in subparagraph
(A), the rules of section 1286 shall apply to the
Better America Bond as if it were a stripped
bond and to the credit under this section as if
it were a stripped coupon.
‘‘(3) TREATMENT
FOR
ESTIMATED
TAX
PUR-
POSES.—Solely for purposes of sections 6654 and
6655, the credit allowed by this section to a tax-
payer by reason of holding a Better America Bond
on a credit allowance date shall be treated as if it
were a payment of estimated tax made by the tax-
payer on such date.
‘‘(4) CREDIT MAY BE TRANSFERRED.—Nothing
in any law or rule of law shall be construed to limit
the transferability of the credit allowed by this sec-
tion through sale and repurchase agreements.
‘‘(5) REPORTING.—Issuers of Better America
Bonds shall submit reports similar to the reports re-
quired under section 149(e).
‘‘(k) RECAPTURE OF PORTION OF CREDIT WHERE
CESSATION OF QUALIFIED USE.—
‘‘(1) IN GENERAL.—If any bond which when
issued purported to be a Better America Bond
ceases to meet the requirements of subsection (c),
the issuer shall pay to the United States (at the
time required by the Secretary) an amount equal to
the aggregate of the credits allowable under this sec-
tion (determined without regard to subsection (e))
for taxable years ending during the calendar year
in which such cessation occurs and the 2 preceding
calendar years.
‘‘(2) FAILURE TO PAY.—If the issuer fails to
timely pay the amount required by paragraph (1)
with respect to any issue, the tax imposed by this
chapter on each holder of any bond which is part of
such issue shall be increased (for the taxable year of
the holder in which such cessation occurs) by the ag-
gregate decrease in the credits allowed under this
section to such holder for taxable years beginning in
such 3 calendar years which would have resulted
solely from denying any credit under this section
with respect to such issue for such taxable years.
‘‘(3) SPECIAL RULES.—
‘‘(A) TAX
BENEFIT
RULE.—The tax for
the taxable year shall be increased under para-
graph (2) only with respect to credits allowed
by reason of this section which were used to re-
duce tax liability. In the case of credits not so
used to reduce tax liability, the carryforwards
and carrybacks under section 39 shall be appro-
priately adjusted.
‘‘(B) NO CREDITS AGAINST TAX.—Any in-
crease in tax under paragraph (2) shall not be
treated as a tax imposed by this chapter for
purposes of determining—
‘‘(i) the amount of any credit allow-
able under this part, or
‘‘(ii) the amount of the tax imposed
by section 55.
‘‘(l) TERMINATION.—This section shall not apply to
any bond issued after December 31, 2004.’’
(b) REPORTING.—Subsection (d) of section 6049 of
such Code (relating to returns regarding payments of in-
terest) is amended by adding at the end the following new
paragraph:
‘‘(8) REPORTING OF CREDIT ON BETTER AMER-
ICA BONDS.—
‘‘(A) IN GENERAL.—For purposes of sub-
section (a), the term ‘interest’ includes amounts
includible in gross income under section 30B(g)
and such amounts shall be treated as paid on
the credit allowance date (as defined in section
30B(f)(1)).
‘‘(B) 
REPORTING
TO
CORPORATIONS,
ETC.—Except as otherwise provided in regula-
tions, in the case of any interest described in
subparagraph (A) of this paragraph, subsection
(b)(4) of this section shall be applied without
regard to subparagraphs (A), (H), (I), (J), (K),
and (L)(i).
‘‘(C) REGULATORY AUTHORITY.—The Sec-
retary may prescribe such regulations as are
necessary or appropriate to carry out the pur-
poses of this paragraph, including regulations
which require more frequent or more detailed
reporting.’’
(c) CONFORMING AMENDMENT.—The table of sec-
tions for subpart B of part IV of subchapter A of chapter
1 of such Code is amended by adding at the end the fol-
lowing new item:
‘‘Sec. 30B. Credit to holders of Better America Bonds.’’
(d) EFFECTIVE DATE.—The amendments made by
this section shall apply to obligations issued after Decem-
ber 31, 1999.
(e) GUIDELINES FOR APPLICATIONS.—Not later than
January 1, 2000, guidelines specifying the criteria to be
used in approving applications under section 30B(d)(3) of
the Internal Revenue Code of 1986 (as added by this Act)
shall be developed and published by the Administrator of
the Environmental Protection Agency in the Federal Reg-
ister.
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