Tribal Economic Development Act of 2021
Bill: S.2523 | Sponsor: Sen. Murkowski, Lisa (R-AK)
Policy area: Taxation

Summary:
Tribal Economic Development Act of 2021
This bill amends provisions relating to tribal economic development (TED) bonds issued to promote community development projects in Alaskan Indian tribal areas.
Specifically, the bill increases the national tribal economic development bond limitation to $4 billion. It also eliminates the requirement that TED bond proceeds be used solely on Indian reservations and permits bond proceeds to be used for economic development by any qualified Native user which includes any tribal entity, Alaska Native Corporation, and entity that is majority-owned and controlled by an Indian tribe or Alaska Native Corporation. The bill also allows third parties to guarantee the repayment of TED bonds.

To amend the Internal Revenue Code of 1986 to modify the rules for 
                   tribal economic development bonds.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tribal Economic Development Act of 
2021''.

SEC. 2. MODIFICATIONS RELATED TO TRIBAL ECONOMIC DEVELOPMENT BONDS.

    (a) Increase in National Limitation.--Subparagraph (B) of section 
7871(f)(1) of the Internal Revenue Code of 1986 is amended by striking 
``$2,000,000,000'' and inserting ``$4,000,000,000''.
    (b) Other Modifications.--
            (1) In general.--Paragraph (2) of section 7871(f) of the 
        Internal Revenue Code of 1986 is amended to read as follows:
            ``(2) Bonds treated as exempt from tax.--Notwithstanding 
        any other provision of this title, gross income shall not 
        include interest on any tribal economic development bond.''.
            (2) Modification of definition of tribal economic 
        development bond.--Section 7871(f)(3) of the Internal Revenue 
        Code of 1986 is amended to read as follows:
            ``(3) Tribal economic development bond.--
                    ``(A) In general.--For purposes of this section, 
                the term `tribal economic development bond' means any 
                bond issued by an Indian tribal government (or a 
                subdivision thereof)--
                            ``(i) which is part of an issue 95 percent 
                        or more of the proceeds of which are to be 
                        used--
                                    ``(I) by a qualified Native user, 
                                and
                                    ``(II) to promote the economic 
                                development of any Indian tribe or 
                                Native Corporation (including through 
                                loans by any Indian tribal government 
                                or a subdivision thereof to a qualified 
                                Native user),
                            ``(ii) except as provided in subparagraph 
                        (D), which is not an arbitrage bond (within the 
                        meaning of section 148),
                            ``(iii) which meets the applicable 
                        requirements of section 149 (other than 
                        subsections (b), (d), and (g) thereof), and
                            ``(iv) which is designated by the Indian 
                        tribal government as a tribal economic 
                        development bond for purposes of this 
                        subsection.
                    ``(B) Exception.--Such term shall not include any 
                bond issued as part of an issue if any portion of the 
                proceeds of such issue are used to finance any portion 
                of a building in which class II or class III gaming (as 
                defined in section 4 of the Indian Gaming Regulatory 
                Act) is conducted or housed or any other property 
                actually used in the conduct of such gaming.
                    ``(C) Limitation on amount of bonds designated.--
                The maximum aggregate face amount of bonds which may be 
                designated by any Indian tribal government under 
                subparagraph (A) shall not exceed the amount of 
                national tribal economic development bond limitation 
                allocated to such government under paragraph (1).
                    ``(D) Loans to qualified native users permitted.--
                            ``(i) In general.--For purposes of applying 
                        section 148 to this paragraph, the term 
                        `arbitrage bond' shall not include a bond 
                        issued as part of an issue the proceeds of 
                        which are used to provide a loan described in 
                        clause (ii) to a qualified Native user 
                        notwithstanding whether the interest rate on 
                        such loan produces a yield which is higher than 
                        the yield on such issue.
                            ``(ii) Loan described.--A loan is described 
                        in this clause if the terms of the loan prevent 
                        the borrower of such loan from making further 
                        loans with the proceeds of such loan.
                    ``(E) Qualified native user.--For purposes of this 
                paragraph, the term `qualified Native user' means--
                            ``(i) an Indian tribal government (or a 
                        subdivision thereof),
                            ``(ii) a Native Corporation, or
                            ``(iii) any other entity if--
                                    ``(I) in the case of a corporation, 
                                not less than two-thirds of the 
                                outstanding stock are owned by one or 
                                more entities described in clauses (i) 
                                or (ii), and
                                    ``(II) in the case of any entity 
                                other than a corporation, not less than 
                                two-thirds of the capital and profits 
                                interests are owned by one or more 
                                entities described in clauses (i) or 
                                (ii).
                    ``(F) Other definitions.--For purposes of this 
                paragraph--
                            ``(i) Native corporation.--The term `Native 
                        Corporation' has the meaning given such term 
                        under section 646(h)(2).
                            ``(ii) Indian tribe.--The term `Indian 
                        tribe' has the meaning given such term under 
                        subsection (c)(3)(E)(ii).
                    ``(G) Coordination with third-party repayment, 
                etc.--A bond shall not fail to be treated as a tribal 
                economic development bond solely because a person other 
                than the Indian tribal government (or subdivision 
                thereof) issuing the bond has guaranteed the repayment 
                of, is otherwise obligated to repay, or in fact repays, 
                any portion of the principal or interest of such 
                bond.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of the enactment of this 
Act.
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