I 
116TH CONGRESS 
1ST SESSION H. R. 3967 
To amend the Internal Revenue Code of 1986 to permanently modify the 
limitations on the deduction of interest by financial institutions which 
hold tax-exempt bonds, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 25, 2019 
Ms. SEWELL of Alabama (for herself and Mr. REED) 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 permanently 
modify the limitations on the deduction of interest by 
financial institutions which hold tax-exempt bonds, and 
for other purposes. 
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 ‘‘Municipal Bond Mar-
ket Support Act of 2019’’. 
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SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EX-
CEPTION 
TO 
TAX-EXEMPT 
INTEREST 
EX-
PENSE ALLOCATION RULES FOR FINANCIAL 
INSTITUTIONS. 
(a) PERMANENT INCREASE IN LIMITATION.—Sub-
paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section 
265(b)(3) of the Internal Revenue Code of 1986 are each 
amended by striking ‘‘$10,000,000’’ and inserting 
‘‘$30,000,000’’. 
(b) PERMANENT MODIFICATION OF OTHER SPECIAL 
RULES.—Section 265(b)(3) of such Code is amended— 
(1) by redesignating clauses (iv), (v), and (vi) 
of subparagraph (G) as clauses (ii), (iii), and (iv), 
respectively, and moving such clauses to the end of 
subparagraph (H) (as added by paragraph (2)), and 
(2) by striking so much of subparagraph (G) as 
precedes such clauses and inserting the following: 
‘‘(G) QUALIFIED 501(c)(3) BONDS TREATED 
AS ISSUED BY EXEMPT ORGANIZATION.—In the 
case of a qualified 501(c)(3) bond (as defined 
in section 145), this paragraph shall be applied 
by treating the 501(c)(3) organization for 
whose benefit such bond was issued as the 
issuer. 
‘‘(H) SPECIAL
RULE
FOR
QUALIFIED 
FINANCINGS.— 
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‘‘(i) IN GENERAL.—In the case of a 
qualified financing issue— 
‘‘(I) subparagraph (F) shall not 
apply, and 
‘‘(II) any obligation issued as a 
part of such issue shall be treated as 
a qualified tax-exempt obligation if 
the requirements of this paragraph 
are met with respect to each qualified 
portion of the issue (determined by 
treating each qualified portion as a 
separate issue which is issued by the 
qualified borrower with respect to 
which such portion relates).’’. 
(c) INFLATION ADJUSTMENT.—Section 265(b)(3) of 
such Code, as amended by subsection (b), is amended by 
adding at the end the following new subparagraph: 
‘‘(I) INFLATION
ADJUSTMENT.—In the 
case of any calendar year after 2019, the 
$30,000,000 amounts contained in subpara-
graphs (C)(i), (D)(i), and (D)(iii)(II) shall each 
be increased by an amount equal to— 
‘‘(i) such dollar amount, multiplied by 
‘‘(ii) the cost-of-living adjustment de-
termined under section 1(f)(3) for such 
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calendar year, determined by substituting 
‘calendar year 2018’ for ‘calendar year 
2016’ in subparagraph (A)(ii) thereof. 
Any increase determined under the preceding 
sentence shall be rounded to the nearest mul-
tiple of $100,000.’’. 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to obligations issued after the date 
of the enactment of this Act. 
Æ 
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