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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.
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).