I
#
105TH CONGRESS
2D SESSION
H. R. 4069
To amend the Internal Revenue Code of 1986 to provide that certain bonds
issued by local governments in connection with delinquent real property
taxes may be treated as tax exempt.
IN THE HOUSE OF REPRESENTATIVES
JUNE 17, 1998
Mr. CAMP (for himself, Mr. LEVIN, Mr. EHLERS, Mr. BONIOR, Mr. UPTON,
Mr. DINGELL, Mr. KNOLLENBERG, Ms. STABENOW, Mr. KILDEE, Mr.
HOEKSTRA, Mr. STUPAK, Mr. BARCIA, Ms. RIVERS, Ms. KILPATRICK,
and Mr. CONYERS) 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 provide
that certain bonds issued by local governments in connec-
tion with delinquent real property taxes may be treated
as tax exempt.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. TAX EXEMPT TREATMENT OF CERTAIN BONDS
ISSUED IN CONNECTION WITH DELINQUENT
REAL PROPERTY TAXES.
(a) IN GENERAL.—Section 148 of the Internal Reve-
nue Code of 1986 is amended by redesignating subsection
HR 4069 IH1S
(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,
‘‘(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
HR 4069 IH1S
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,
‘‘(E) the last maturity date of the issue of
which the bond is a part (including the last ma-
turity date of any bonds issued to refund that
issue or to refund other bonds issued to refund
that issue) is not later than 26 months after
the date of issuance of the original bond, and
‘‘(F) 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,
HR 4069 IH1S
interest, and redemption price, in the aggre-
gate).’’
(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
HR 4069 IH1S
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 December
31, 1996. For purposes of the preceding sentence, a bond
(or series of bonds) issued to refund a bond shall be treat-
ed 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 section 144(a)(12)(A)(ii)
of the Internal Revenue Code of 1986.
Æ