Title: To amend the Internal Revenue Code of 1986 to extend certain tax benefits related to empowerment zones.
Policy area: Taxation

Summary:
This bill extends the period for the designation of empowerment zones and reinstates the tax credit for holders of qualified zone academy bonds. An empowerment zone is an economically distressed community eligible for various tax incentives and grants from the federal government to promote investment in the community.
The bill reinstates and expands the tax credit for holders of qualified zone academy bonds. A qualified zone academy bond is a tax-exempt bond that may be issued to rehabilitate or repair a public school facility, to provide equipment and develop course material, and train teachers and other school personnel.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2238 Introduced in House (IH)]

<DOC>






116th CONGRESS
  1st Session
                                H. R. 2238

   To amend the Internal Revenue Code of 1986 to extend certain tax 
                 benefits related to empowerment zones.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 10, 2019

 Mr. Espaillat (for himself and Mr. Rogers of Kentucky) 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 extend certain tax 
                 benefits related to empowerment zones.

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

SECTION 1. EXTENSION OF EMPOWERMENT ZONES.

    (a) In General.--Section 1391(d)(1)(A)(i) of the Internal Revenue 
Code of 1986 is amended by striking ``December 31, 2017'' and inserting 
``December 31, 2029''.
    (b) Effective Date.--The amendment made by this section shall take 
effect on January 1, 2018.
    (c) Treatment of Certain Termination Dates Specified in 
Nominations.--In the case of a designation of an empowerment zone the 
nomination for which included a termination date which is 
contemporaneous with the date specified in subparagraph (A)(i) of 
section 1391(d)(1) of the Internal Revenue Code of 1986 (as in effect 
before the enactment of this Act), subparagraph (B) of such section 
shall not apply with respect to such designation if, after the date of 
the enactment of this section, the entity which made such nomination 
amends the nomination to provide for a new termination date in such 
manner as the Secretary of the Treasury (or the Secretary's designee) 
may provide.

SEC. 2. REINSTATEMENT OF QUALIFIED ZONE ACADEMY BONDS.

    (a) In General.--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 subpart:

     ``Subpart H--Credit to Holders of Qualified Zone Academy Bonds

``Sec. 54. Credit to holders.
``Sec. 54A. Qualified zone academy bonds.

``SEC. 54. CREDIT TO HOLDERS.

    ``(a) Allowance of Credit.--If a taxpayer holds a qualified zone 
academy bond on one or more credit allowance dates of the bond 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 qualified zone academy bond is 25 percent of the annual 
        credit determined with respect to such bond.
            ``(2) Annual credit.--The annual credit determined with 
        respect to any qualified zone academy bond is the product of--
                    ``(A) the applicable credit rate, multiplied by
                    ``(B) the outstanding face amount of the bond.
            ``(3) Applicable credit rate.--For purposes of paragraph 
        (2), the applicable credit rate is the rate which the Secretary 
        estimates will permit the issuance of qualified zone academy 
        bonds with a specified maturity or redemption date without 
        discount and without interest cost to the qualified issuer. The 
        applicable credit rate with respect to any qualified zone 
        academy bond shall be determined as of the first day on which 
        there is a binding, written contract for the sale or exchange 
        of the bond.
            ``(4) Special rule for issuance and redemption.--In the 
        case of a bond which is issued during the 3-month period ending 
        on a credit allowance date, the amount of the credit determined 
        under this subsection with respect to such credit allowance 
        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.--
            ``(1) In general.--The credit allowed under subsection (a) 
        for any taxable year shall not exceed the excess of--
                    ``(A) the sum of the regular tax liability (as 
                defined in section 26(b)) plus the tax imposed by 
                section 55, over
                    ``(B) the sum of the credits allowable under this 
                part (other than subparts C and J and this subpart).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year 
        (determined before the application of paragraph (1) for such 
        succeeding taxable year).
    ``(d) Definitions.--For purposes of this subchapter--
            ``(1) Credit allowance date.--The term `credit allowance 
        date' means--
                    ``(A) March 15,
                    ``(B) June 15,
                    ``(C) September 15, and
                    ``(D) December 15.
        Such term includes the last day on which the bond is 
        outstanding.
            ``(2) Bond.--The term `bond' includes any obligation.
            ``(3) State.--The term `State' includes the District of 
        Columbia and any possession of the United States.
            ``(4) Available project proceeds.--The term `available 
        project proceeds' means--
                    ``(A) the excess of--
                            ``(i) the proceeds from the sale of an 
                        issue, over
                            ``(ii) the issuance costs financed by the 
                        issue (to the extent that such costs do not 
                        exceed 2 percent of such proceeds), and
                    ``(B) the proceeds from any investment of the 
                excess described in subparagraph (A).
    ``(e) Credit Treated as Interest.--For purposes of this subtitle, 
the credit determined under subsection (a) shall be treated as interest 
which is includible in gross income.
    ``(f) S Corporations and Partnerships.--In the case of a qualified 
zone academy bond held by an S corporation or partnership, the 
allocation of the credit allowed by this section to the shareholders of 
such corporation or partners of such partnership shall be treated as a 
distribution.
    ``(g) Bonds Held by Real Estate Investment Trusts.--If any 
qualified zone academy bond is held by a real estate investment trust, 
the credit determined under subsection (a) shall be allowed to 
beneficiaries of such trust (and any gross income included under 
subsection (e) with respect to such credit shall be distributed to such 
beneficiaries) under procedures prescribed by the Secretary.
    ``(h) Credits May Be Stripped.--Under regulations prescribed by the 
Secretary--
            ``(1) In general.--There may be a separation (including at 
        issuance) of the ownership of a qualified zone academy bond and 
        the entitlement to the credit under this section with respect 
        to such bond. In case of any such separation, the credit under 
        this section shall be allowed to the person who on the credit 
        allowance date holds the instrument evidencing the entitlement 
        to the credit and not to the holder of the bond.
            ``(2) Certain rules to apply.--In the case of a separation 
        described in paragraph (1), the rules of section 1286 shall 
        apply to the qualified zone academy bond as if it were a 
        stripped bond and to the credit under this section as if it 
        were a stripped coupon.

``SEC. 54A. QUALIFIED ZONE ACADEMY BONDS.

    ``(a) In General.--For purposes of this subchapter, the term 
`qualified zone academy bond' means any bond issued as part of an issue 
if--
            ``(1) 100 percent of the available project proceeds of such 
        issue are to be used for a qualified purpose with respect to a 
        qualified zone academy established by an eligible local 
        education agency,
            ``(2) the bond is issued by a State or local government 
        within the jurisdiction of which such academy is located, and
            ``(3) the issuer--
                    ``(A) designates such bond for purposes of this 
                section,
                    ``(B) certifies that it has written assurances that 
                the private business contribution requirement of 
                subsection (b) will be met with respect to such 
                academy, and
                    ``(C) certifies that it has the written approval of 
                the eligible local education agency for such bond 
                issuance.
    ``(b) Private Business Contribution Requirement.--For purposes of 
subsection (a), the private business contribution requirement of this 
subsection is met with respect to any issue if the eligible local 
education agency that established the qualified zone academy has 
written commitments from private entities to make qualified 
contributions having a present value (as of the date of issuance of the 
issue) of not less than 10 percent of the proceeds of the issue.
    ``(c) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a national zone 
        academy bond limitation for each calendar year. Such limitation 
        is $400,000,000 for each of calendar years 2020 through 2029 
        and, except as provided in paragraph (4), zero thereafter.
            ``(2) Allocation of limitation.--The national zone academy 
        bond limitation for a calendar year shall be allocated by the 
        Secretary among the States on the basis of their respective 
        populations of individuals below the poverty line (as defined 
        by the Office of Management and Budget). The limitation amount 
        allocated to a State under the preceding sentence shall be 
        allocated by the State education agency to qualified zone 
        academies within such State.
            ``(3) Designation subject to limitation amount.--The 
        maximum aggregate face amount of bonds issued during any 
        calendar year which may be designated under subsection (a) with 
        respect to any qualified zone academy shall not exceed the 
        limitation amount allocated to such academy under paragraph (2) 
        for such calendar year.
            ``(4) Carryover of unused limitation.--
                    ``(A) In general.--If for any calendar year--
                            ``(i) the limitation amount for any State, 
                        exceeds
                            ``(ii) the amount of bonds issued during 
                        such year which are designated under subsection 
                        (a) with respect to qualified zone academies 
                        within such State,
                the limitation amount for such State for the following 
                calendar year shall be increased by the amount of such 
                excess.
                    ``(B) Limitation on carryover.--Any carryforward of 
                a limitation amount may be carried only to the first 2 
                years following the unused limitation year. For 
                purposes of the preceding sentence, a limitation amount 
                shall be treated as used on a first-in first-out basis.
    ``(d) Definitions.--For purposes of this section--
            ``(1) Qualified zone academy.--The term `qualified zone 
        academy' means any public school (or academic program within a 
        public school) which is established by and operated under the 
        supervision of an eligible local education agency to provide 
        education or training below the postsecondary level if--
                    ``(A) such public school or program (as the case 
                may be) is designed in cooperation with business to 
                enhance the academic curriculum, increase graduation 
                and employment rates, and better prepare students for 
                the rigors of college and the increasingly complex 
                workforce,
                    ``(B) students in such public school or program (as 
                the case may be) will be subject to the same academic 
                standards and assessments as other students educated by 
                the eligible local education agency,
                    ``(C) the comprehensive education plan of such 
                public school or program is approved by the eligible 
                local education agency, and
                    ``(D)(i) such public school is located in an 
                empowerment zone or enterprise community (including any 
                such zone or community designated after the date of the 
                enactment of this section), or
                            ``(ii) there is a reasonable expectation 
                        (as of the date of issuance of the bonds) that 
                        at least 35 percent of the students attending 
                        such school or participating in such program 
                        (as the case may be) will be eligible for free 
                        or reduced-cost lunches under the school lunch 
                        program established under the National School 
                        Lunch Act.
            ``(2) Eligible local education agency.--For purposes of 
        this section, the term `eligible local education agency' means 
        any local educational agency as defined in section 8101 of the 
        Elementary and Secondary Education Act of 1965.
            ``(3) Qualified purpose.--The term `qualified purpose' 
        means, with respect to any qualified zone academy--
                    ``(A) rehabilitating or repairing the public school 
                facility in which the academy is established,
                    ``(B) providing equipment for use at such academy,
                    ``(C) developing course materials for education to 
                be provided at such academy, and
                    ``(D) training teachers and other school personnel 
                in such academy.
            ``(4) Qualified contributions.--The term `qualified 
        contribution' means any contribution (of a type and quality 
        acceptable to the eligible local education agency) of--
                    ``(A) equipment for use in the qualified zone 
                academy (including state-of-the-art technology and 
                vocational equipment),
                    ``(B) technical assistance in developing curriculum 
                or in training teachers in order to promote appropriate 
                market driven technology in the classroom,
                    ``(C) services of employees as volunteer mentors,
                    ``(D) internships, field trips, or other 
                educational opportunities outside the academy for 
                students, or
                    ``(E) any other property or service specified by 
                the eligible local education agency.''.
    (b) Conforming Amendments.--
            (1) Section 6401(b)(1) of such Code is amended by striking 
        ``and G'' and inserting ``G, and H''.
            (2) The table of subparts for part IV of subchapter A of 
        chapter 1 of such Code is amended by at the end the following 
        new item:

   ``subpart h--credit to holders of qualified zone academy bonds''.

    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after December 31, 2019.
                                 <all>