To amend the Internal Revenue Code of 1986 to provide an income tax credit to holders of bonds financing new communications technologies, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tech Bond Initiative of 2001''.

SEC. FINDINGS.

    Congress finds the following:
            (1) Access to high-speed Internet is as important to 21st 
        Century businesses as access to the railroads meant to 
        businesses of the last century.
            (2) In States across the Nation, up to one-third of the 
        population lacks access to high-speed Internet.
            (3) Companies without access to high-speed Internet are at 
        a competitive disadvantage.
            (4) Tech bonds would give State and local governments 
        incentives to expand broadband deployment in their communities.

SEC. 2. CREDIT TO HOLDERS OF QUALIFIED TECHNOLOGY BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to credits against tax) is 
amended by adding at the end the following new subpart:

 ``Subpart H--Nonrefundable Credit for Holders of Qualified Technology 
                                 Bonds

                              ``Sec. 54. Credit to holders of qualified 
                                        technology bonds.

``SEC. 54. CREDIT TO HOLDERS OF QUALIFIED TECHNOLOGY BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
qualified technology bond on a credit allowance 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 the 
amount determined under subsection (b).
    ``(b) Amount of Credit.--
            ``(1) In general.--The amount of the credit determined 
        under this subsection with respect to any qualified technology 
        bond is the amount equal to the product of--
                    ``(A) the credit rate determined by the Secretary 
                under paragraph (2) for the month in which such bond 
                was issued, multiplied by
                    ``(B) the face amount of the bond held by the 
                taxpayer on the credit allowance date.
            ``(2) Determination.--During each calendar month, the 
        Secretary shall determine a credit rate which shall apply to 
        bonds issued during the following calendar month. The credit 
        rate for any month is the percentage which the Secretary 
        estimates will permit the issuance of qualified technology 
        bonds without discount and without interest cost to the issuer.
    ``(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 defined in 
        section 26(b)) plus the tax imposed by section 55, over
            ``(2) the sum of the credits allowable under this part 
        (other than this subpart and subpart C).
    ``(d) Qualified Technology Bond.--For purposes of this part--
            ``(1) In general.--The term `qualified technology 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 project,
                    ``(B) the bond is issued by a State or local 
                government within the jurisdiction of which such 
                project is located,
                    ``(C) the issuer designates such bond for purposes 
                of this section,
                    ``(D) certifies that it has obtained the written 
                approval of the Secretary of Commerce for such project, 
                and
                    ``(E) the term of each bond which is part of such 
                issue does not exceed 15 years.
            ``(2) Qualified project.--
                    ``(A) In general.--The term `qualified project' 
                means a project--
                            ``(i) to expand broadband 
                        telecommunications services in an area within 
                        the jurisdiction of a State or local 
                        government,
                            ``(ii) which is nominated by such State or 
                        local government for designation as a qualified 
                        project, and
                            ``(iii) which the Secretary of Commerce, 
                        after consultation with the Secretary of 
                        Housing and Urban Development designates as a 
                        qualified project.
                    ``(B) Designation preferences.--With respect to 
                designations under this section, preferences shall be 
                given to--
                            ``(i) nominations of projects involving 
                        underserved or rural areas lacking access to 
                        high-speed Internet connections, and
                            ``(ii) nominations reflecting partnerships 
                        and comprehensive planning between State and 
                        local governments and the private sector.
    ``(e) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national technology 
        bond limitation for each calendar year. Such limitation is 
        $100,000,000 for 2002, 2003, 2004, 2005, and 2006, and, except 
        as provided in paragraph (4), zero thereafter.
            ``(2) Allocation of limitation.--The national technology 
        bond limitation for a calendar year shall be allocated by the 
        Secretary among the qualified projects designated for such 
        year.
            ``(3) Designation subject to limitation amount.--The 
        maximum aggregate face amount of bonds issued during any 
        calendar year which may be designated under subsection (d)(1) 
        with respect to any qualified project shall not exceed the 
        limitation amount allocated to such project under paragraph (2) 
        for such calendar year.
            ``(4) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the national technology limitation amount, 
                exceeds
                    ``(B) the amount of bonds issued during such year 
                which are designated under subsection (d)(1) with 
                respect to qualified projects,
        the national technology limitation amount for the following 
        calendar year shall be increased by the amount of such excess.
    ``(f) Other Definitions.--For purposes of this subpart--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Credit allowance date.--The term `credit allowance 
        date' means, with respect to any issue, the last day of the 1-
        year period beginning on the date of issuance of such issue and 
        the last day of each successive 1-year period thereafter.
            ``(3) State.--The term `State' means the several States and 
        the District of Columbia.
    ``(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 (c)) and the amount so 
included shall be treated as interest income.
    ``(h) Other Special Rules.--
            ``(1) Partnership; s corporation; and other pass-thru 
        entities.--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 allowable under subsection 
        (a).
            ``(2) Bonds held by regulated investment companies.--If any 
        qualified technology bond is held by a regulated investment 
        company, the credit determined under subsection (a) shall be 
        allowed to shareholders of such company under procedures 
        prescribed by the Secretary.
            ``(3) Treatment for estimated tax purposes.--Solely for 
        purposes of sections 6654 and 6655, the credit allowed by this 
        section to a taxpayer by reason of holding a qualified 
        technology bond on a credit allowance date shall be treated as 
        if it were a payment of estimated tax made by the taxpayer on 
        such date.
            ``(4) Reporting.--Issuers of qualified technology bonds 
        shall submit reports similar to the reports required under 
        section 149(e).''.
    (b) Reporting.--Subsection (d) of section 6049 of the Internal 
Revenue Code of 1986 (relating to returns regarding payments of 
interest) is amended by adding at the end the following new paragraph:
            ``(8) Reporting of credit on qualified technology bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(g) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(f)(2)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, 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 Secretary may 
                prescribe such regulations as are necessary or 
                appropriate to carry out the purposes of this 
                paragraph, including regulations which require more 
                frequent or more detailed reporting.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        adding at the end the following new item:

                              ``Subpart H. Nonrefundable Credit for 
                                        Holders of Qualified Technology 
                                        Bonds.''.
            (2) Section 6401(b)(1) of such Code is amended by striking 
        ``and G'' and inserting ``G, and H''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2001.

Summary: Tech Bond Initiative of 2001 - Amends the Internal Revenue Code to create a limited credit for the holder of a "qualified technology bond" (as defined).