109TH CONGRESS 
1ST SESSION H. R. 4337
AN ACT 
To amend the Internal Revenue Code of 1986 to provide 
for Gulf tax credit bonds and advance refundings of 
certain tax-exempt bonds, and to provide a Federal guar-
antee of certain State 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 ‘‘Gulf Opportunity Zone 
Public Finance Relief Act of 2005’’. 
SEC. 2. GULF TAX CREDIT BONDS. 
(a) IN GENERAL.—Subpart H 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. 54A. CREDIT TO HOLDERS OF GULF TAX CREDIT 
BONDS. 
‘‘(a) ALLOWANCE OF CREDIT.—If a taxpayer holds 
a Gulf tax credit bond on one or more credit allowance 
dates of the bond occurring during any taxable year, there 
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 Gulf tax credit 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 Gulf tax credit bond is 
the product of—
‘‘(A) the credit rate determined by the Sec-
retary under paragraph (3) for the day on 
which such bond was sold, multiplied by 
‘‘(B) the outstanding face amount of the 
bond. 
‘‘(3) DETERMINATION.—For purposes of para-
graph (2), with respect to any Gulf tax credit bond, 
the Secretary shall determine daily or cause to be 
determined daily a credit rate which shall apply to 
the first day on which there is a binding, written 
contract for the sale or exchange of the bond. The 
credit rate for any day is the credit rate which the 
Secretary or the Secretary’s designee estimates will 
permit the issuance of Gulf tax credit bonds with a 
specified maturity or redemption date without dis-
count and without interest cost to the issuer. 
‘‘(4) CREDIT ALLOWANCE DATE.—For purposes 
of this section, the term ‘credit allowance date’ 
means March 15, June 15, September 15, and De-
cember 15. Such term also includes the last day on 
which the bond is outstanding. 
‘‘(5) 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.—The 
credit allowed under subsection (a) for any taxable year 
shall not exceed the excess of—
‘‘(1) the sum of the regular tax liability (as de-
fined in section 26(b)) plus the tax imposed by sec-
tion 55, over 
‘‘(2) the sum of the credits allowable under this 
part (other than subpart C and this section). 
‘‘(d) GULF TAX CREDIT BOND.—For purposes of 
this section—
‘‘(1) IN GENERAL.—The term ‘Gulf tax credit 
bond’ means any bond issued as part of an issue 
if—
‘‘(A) the bond is issued by the State of 
Alabama, Louisiana, or Mississippi, 
‘‘(B) 95 percent or more of the proceeds of 
such issue are to be used to—
‘‘(i) pay principal, interest, or pre-
miums on qualified bonds issued by such
State or any political subdivision of such 
State, or 
‘‘(ii) make a loan to any political sub-
division of such State to pay principal, in-
terest, or premiums on qualified bonds 
issued by such political subdivision, 
‘‘(C) the Governor of such State designates 
such bond for purposes of this section, 
‘‘(D) the bond is a general obligation of 
such State and is in registered form (within the 
meaning of section 149(a)), 
‘‘(E) the maturity of such bond does not 
exceed 2 years, and 
‘‘(F) the bond is issued after December 31, 
2005, and before January 1, 2007. 
‘‘(2) 
STATE
MATCHING
REQUIREMENT.—A 
bond shall not be treated as a Gulf tax credit bond 
unless—
‘‘(A) the issuer of such bond pledges as of 
the date of the issuance of the issue an amount 
equal to the face amount of such bond to be 
used for payments described in clause (i) of 
paragraph (1)(B), or loans described in clause 
(ii) of such paragraph, as the case may be, with
respect to the issue of which such bond is a 
part, and 
‘‘(B) any such payment or loan is made in 
equal amounts from the proceeds of such issue 
and from the amount pledged under subpara-
graph (A). 
The requirement of subparagraph (B) shall be treat-
ed as met with respect to any such payment or loan 
made during the 1-year period beginning on the date 
of the issuance (or any successor 1-year period) if 
such requirement is met when applied with respect 
to the aggregate amount of such payments and loans 
made during such period. 
‘‘(3) AGGREGATE
LIMIT
ON
BOND
DESIGNA-
TIONS.—The maximum aggregate face amount of 
bonds which may be designated under this section by 
the Governor of a State shall not exceed—
‘‘(A) $200,000,000 in the case of the State 
of Louisiana, 
‘‘(B) $100,000,000 in the case of the State 
of Mississippi, and 
‘‘(C) $50,000,000 in the case of the State 
of Alabama. 
‘‘(4) SPECIAL
RULES
RELATING
TO
ARBI-
TRAGE.—A bond which is part of an issue shall not
be treated as a Gulf tax credit bond unless, with re-
spect to the issue of which the bond is a part, the 
issuer satisfies the arbitrage requirements of section 
148 with respect to proceeds of the issue and any 
loans made with such proceeds. 
‘‘(e) QUALIFIED BOND.—For purposes of this sec-
tion—
‘‘(1) IN GENERAL.—The term ‘qualified bond’ 
means any obligation of a State or political subdivi-
sion thereof which was outstanding on August 28, 
2005. 
‘‘(2) 
EXCEPTION
FOR
PRIVATE
ACTIVITY 
BONDS.—Such term shall not include any private ac-
tivity bond. 
‘‘(3) 
EXCEPTION
FOR
ADVANCE 
REFUNDINGS.—Such term shall not include any 
bond—
‘‘(A) which is designated as an advance re-
funding bond under section 149(d)(7), or 
‘‘(B) with respect to which there is any 
outstanding bond to refund such bond. 
‘‘(f) 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 (c)) and the amount so included shall be treat-
ed as interest income. 
‘‘(g) OTHER DEFINITIONS AND SPECIAL RULES.—
For purposes of this section—
‘‘(1) BOND.—The term ‘bond’ includes any ob-
ligation. 
‘‘(2) 
PARTNERSHIP; 
S
CORPORATION; 
AND 
OTHER PASS-THRU ENTITIES.—
‘‘(A) IN
GENERAL.—Under regulations 
prescribed by the Secretary, in the case of a 
partnership, trust, S corporation, or other pass-
thru entity, rules similar to the rules of section 
41(g) shall apply with respect to the credit al-
lowable under subsection (a). 
‘‘(B) NO BASIS ADJUSTMENT.—In the case 
of a bond held by a partnership or an S cor-
poration, rules similar to the rules under sec-
tion 1397E(i) shall apply. 
‘‘(3) BONDS
HELD
BY
REGULATED
INVEST-
MENT COMPANIES.—If any Gulf tax credit 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.
‘‘(4) REPORTING.—Issuers of Gulf tax credit 
bonds shall submit reports similar to the reports re-
quired under section 149(e).’’. 
(b) CONFORMING AMENDMENTS.—
(1) Paragraph (2) of section 54(c) of such Code 
is amended by inserting ‘‘, section 54A,’’ after ‘‘sub-
part C’’. 
(2) Subparagraph (A) of section 6049(d)(8) of 
such Code is amended—
(A) by inserting ‘‘or 54A(f)’’ after ‘‘section 
54(g)’’, and 
(B) by inserting ‘‘or 54A(b)(4), as the case 
may be’’ after ‘‘section 54(b)(4)’’. 
(3) The table of sections for subpart H of part 
IV of subchapter A of chapter 1 of such Code is 
amended by adding at the end the following new 
item:
‘‘Sec. 54A. Credit to holders of Gulf tax credit bonds.’’.
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years ending after De-
cember 31, 2005. 
SEC. 3. ADVANCE REFUNDINGS OF CERTAIN TAX-EXEMPT 
BONDS. 
(a) IN GENERAL.—Subsection (d) of section 149 of 
the Internal Revenue Code of 1986 (relating to advance 
refundings) is amended by redesignating paragraph (7) as
paragraph (8) and by inserting after paragraph (6) the 
following new paragraph: 
‘‘(7) ADVANCE REFUNDINGS OF CERTAIN GULF 
COAST BONDS.—
‘‘(A) IN
GENERAL.—With respect to a 
bond described in subparagraph (C) which is 
not a qualified 501(c)(3) bond, one additional 
advance refunding after the date of the enact-
ment of this paragraph and before January 1, 
2011, shall be allowed under the applicable 
rules of this subsection if—
‘‘(i) the Governor of the State des-
ignates the advance refunding bond for 
purposes of this paragraph, and 
‘‘(ii) the requirements of subpara-
graph (E) are met. 
‘‘(B) 
CERTAIN
PRIVATE
ACTIVITY 
BONDS.—With respect to a bond described in 
subparagraph (C) which is an exempt facility 
bond described in paragraph (1) or (2) of sec-
tion 142(a), one advance refunding after the 
date of the enactment of this paragraph and be-
fore January 1, 2011, shall be allowed under 
the applicable rules of this subsection (notwith-
standing paragraph (2)) if the requirements of
clauses (i) and (ii) of subparagraph (A) are 
met. 
‘‘(C) BONDS DESCRIBED.—A bond is de-
scribed in this subparagraph if such bond was 
outstanding on August 28, 2005, and is issued 
by the State of Alabama, Louisiana, or Mis-
sissippi, or a political subdivision thereof. 
‘‘(D) AGGREGATE LIMIT.—The maximum 
aggregate face amount of bonds which may be 
designated under this paragraph by the Gov-
ernor of a State shall not exceed—
‘‘(i) $4,500,000,000 in the case of the 
State of Louisiana, 
‘‘(ii) $2,250,000,000 in the case of 
the State of Mississippi, and 
‘‘(iii) $1,125,000,000 in the case of 
the State of Alabama. 
‘‘(E) ADDITIONAL
REQUIREMENTS.—The 
requirements of this subparagraph are met with 
respect to any advance refunding of a bond de-
scribed in subparagraph (C) if—
‘‘(i) no advance refundings of such 
bond would be allowed under this title on 
or after August 28, 2005,