LIFT Act

I 117TH CONGRESS 1ST SESSION H. R. 2634 To amend the Internal Revenue Code of 1986 to provide a credit for American infrastructure bonds, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 16, 2021 Ms. SEWELL 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 provide a credit for American infrastructure bonds, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Local Infrastructure 4 Financing Tools Act’’, or the ‘‘LIFT Act’’. 5 SEC. 2. CREDIT TO ISSUER FOR CERTAIN INFRASTRUC- 6 TURE BONDS. 7 (a) IN GENERAL.—Subchapter B of chapter 65 is 8 amended by adding at the end the following new section: 9 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 2634 IH ‘‘SEC. 6431A. CREDIT ALLOWED TO ISSUER FOR AMERICAN 1 INFRASTRUCTURE BONDS. 2 ‘‘(a) IN GENERAL.—In the case of an American in- 3 frastructure bond, the issuer of such bond shall be allowed 4 a credit with respect to each interest payment under such 5 bond which shall be payable by the Secretary as provided 6 in subsection (b). 7 ‘‘(b) PAYMENT OF CREDIT.— 8 ‘‘(1) IN GENERAL.—The Secretary shall pay 9 (contemporaneously with each date on which interest 10 is so payable) to the issuer of such bond (or to any 11 person who makes such interest payments on behalf 12 of such issuer) an amount equal to the applicable 13 percentage of such interest so payable. 14 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 15 of this subsection, except as provided in subsection 16 (d), the applicable percentage with respect to any 17 bond shall be determined under the following table: 18 ‘‘In the case of a bond issued The applicable during calendar year: percentage is: 2020 through 2024 ...................................................................... 42% 2025 ............................................................................................. 38% 2026 ............................................................................................. 34% 2027 and thereafter ..................................................................... 30%. ‘‘(3) LIMITATION.— 19 ‘‘(A) IN GENERAL.—The amount of any 20 interest payment taken into account under 21 paragraph (1) with respect to a bond for any 22 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 2634 IH payment date shall not exceed the amount of 1 interest which would have been payable under 2 such bond on such date if such interest were 3 determined at the rate which the Secretary esti- 4 mates will permit the issuance of American in- 5 frastructure bonds with a specified maturity or 6 redemption date without discount and without 7 additional interest cost. 8 ‘‘(B) DATE OF RATE DETERMINATION 9 WITH RESPECT TO BOND.—Such rate with re- 10 spect to any American infrastructure bond shall 11 be determined as of the first day on which there 12 is a binding, written contract for the sale or ex- 13 change of the bond. 14 ‘‘(c) AMERICAN INFRASTRUCTURE BOND.— 15 ‘‘(1) IN GENERAL.—For purposes of this sec- 16 tion, the term ‘American infrastructure bond’ means 17 any bond (other than a private activity bond) issued 18 as part of an issue if— 19 ‘‘(A) 100 percent of the available project 20 proceeds of such issue are to be used for capital 21 expenditures or operations and maintenance ex- 22 penditures in connection with property the ac- 23 quisition, construction, or improvement of 24 which would be a capital expenditure, 25 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 2634 IH ‘‘(B) the interest on such bond would (but 1 for this section) be excludable from gross in- 2 come under section 103, 3 ‘‘(C) the issue price has not more than a 4 de minimis amount (determined under rules 5 similar to the rules of section 1273(a)(3)) of 6 premium over the stated principal amount of 7 the bond, and 8 ‘‘(D) prior to the issuance of such bond, 9 the issuer makes an irrevocable election to have 10 this section apply. 11 ‘‘(2) APPLICABLE RULES.—For purposes of ap- 12 plying paragraph (1)— 13 ‘‘(A) NOT TREATED AS FEDERALLY GUAR- 14 ANTEED.—For purposes of section 149(b), an 15 American infrastructure bond shall not be 16 treated as federally guaranteed by reason of the 17 credit allowed under this section. 18 ‘‘(B) APPLICATION OF ARBITRAGE 19 RULES.—For purposes of section 148, the yield 20 on an American infrastructure bond shall be re- 21 duced by the credit allowed under this section. 22 ‘‘(d) DEFINITION AND SPECIAL RULES.—For pur- 23 poses of this section— 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 2634 IH ‘‘(1) INTEREST INCLUDIBLE IN GROSS IN- 1 COME.—For purposes of this title, interest on any 2 American infrastructure bond shall be includible in 3 gross income. 4 ‘‘(2) AVAILABLE PROJECT PROCEEDS.—The 5 term ‘available project proceeds’ means— 6 ‘‘(A) the excess of— 7 ‘‘(i) the proceeds from the sale of an 8 issue, over 9 ‘‘(ii) the sum of— 10 ‘‘(I) issuance costs financed by 11 the issue (the extent that such costs 12 do not exceed 2 percent of such pro- 13 ceeds), and 14 ‘‘(II) amounts in a reasonably re- 15 quired reserve (within the meaning of 16 section 150(a)(3)) with respect to 17 such issue), and 18 ‘‘(B) the proceeds from any investment of 19 the excess described in clause (i). 20 ‘‘(3) CURRENT REFUNDINGS ALLOWED.— 21 ‘‘(A) IN GENERAL.—In the case of a bond 22 issued to refund an American infrastructure 23 bond, such refunding bond shall be treated as 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 2634 IH an American infrastructure bond for purposes 1 of this section if— 2 ‘‘(i) the average maturity date of the 3 issue of which the refunding bond is a part 4 is not later than the average maturity date 5 of the bonds to be refunded by such issue, 6 ‘‘(ii) the amount of the refunding 7 bond does not exceed the outstanding 8 amount of the refunded bond, 9 ‘‘(iii) the refunded bond is redeemed 10 not later than 90 days after the date of the 11 issuance of the refunding bond, and 12 ‘‘(iv) the refunded bond was issued 13 more than 30 days after the date of the 14 enactment of this section. 15 ‘‘(B) APPLICABLE PERCENTAGE LIMITA- 16 TION.—The applicable percentage with respect 17 to any bond to which subparagraph (A) applies 18 shall be 30 percent. 19 ‘‘(C) DETERMINATION OF AVERAGE MATU- 20 RITY.—For purposes of subparagraph (A)(i), 21 average maturity shall be determined in accord- 22 ance with section 147(b)(2)(A). 23 ‘‘(D) APPLICATION OF DAVIS-BACON ACT 24 REQUIREMENTS WITH RESPECT TO AMERICAN 25 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 2634 IH INFRASTRUCTURE BONDS.—Subchapter IV of 1 chapter 31 of the title 40, United States Code, 2 shall apply to projects financed with the pro- 3 ceeds of American infrastructure bonds. 4 ‘‘(e) REGULATIONS.—The Secretary may prescribe 5 such regulations and other guidance as may be necessary 6 or appropriate to carry out this section.’’. 7 (b) CONFORMING AMENDMENTS.— 8 (1) Section 1324(b)(2) of title 31, United 9 States Code, is amended by striking ‘‘or 6431’’ and 10 inserting ‘‘6431, or 6431A’’. 11 (2) The table of sections for subchapter B of 12 chapter 65 is amended by adding at the end the fol- 13 lowing new item: 14 ‘‘Sec. 6431A. Credit allowed to issuer for American infrastructure bonds.’’. (c) EFFECTIVE DATE.—The amendments made by 15 this section shall apply to bonds issued more than 30 days 16 after the date of the enactment of this Act. 17 SEC. 3. ADVANCE REFUNDING BONDS. 18 (a) IN GENERAL.—Section 149(d) is amended— 19 (1) by striking ‘‘to advance refund another 20 bond.’’ in paragraph (1) and inserting ‘‘as part of 21 an issue described in paragraph (2), (3), or (4).’’, 22 (2) by redesignating paragraphs (2) and (3) as 23 paragraphs (5) and (7), respectively, 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 2634 IH (3) by inserting after paragraph (1) the fol- 1 lowing new paragraphs: 2 ‘‘(2) CERTAIN PRIVATE ACTIVITY BONDS.—An 3 issue is described in this paragraph if any bond 4 (issued as part of such issue) is issued to advance 5 refund a private activity bond (other than a qualified 6 501(c)(3) bond). 7 ‘‘(3) OTHER BONDS.— 8 ‘‘(A) IN GENERAL.—An issue is described 9 in this paragraph if any bond (issued as part of 10 such issue), hereinafter in this paragraph re- 11 ferred to as the ‘refunding bond’, is issued to 12 advance refund a bond unless— 13 ‘‘(i) the refunding bond is only— 14 ‘‘(I) the first advance refunding 15 of the original bond if the original 16 bond is issued after 1985, or 17 ‘‘(II) the first or second advance 18 refunding of the original bond if the 19 original bond was issued before 1986, 20 ‘‘(ii) in the case of refunded bonds 21 issued before 1986, the refunded bond is 22 redeemed not later than the earliest date 23 on which such bond may be redeemed at 24 par or at a premium of 3 percent or less, 25 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 2634 IH ‘‘(iii) in the case of refunded bonds 1 issued after 1985, the refunded bond is re- 2 deemed not later than the earliest date on 3 which such bond may be redeemed, 4 ‘‘(iv) the initial temporary period 5 under section 148(c) ends— 6 ‘‘(I) with respect to the proceeds 7 of the refunding bond not later than 8 30 days after the date of issue of such 9 bond, and 10 ‘‘(II) with respect to the proceeds 11 of the refunded bond on the date of 12 issue of the refunding bond, and 13 ‘‘(v) in the case of refunded bonds to 14 which section 148(e) did not apply, on and 15 after the date of issue of the refunding 16 bond, the amount of proceeds of the re- 17 funded bond invested in higher yielding in- 18 vestments (as defined in section 148(b)) 19 which are nonpurpose investments (as de- 20 fined in section 148(f)(6)(A)) does not ex- 21 ceed— 22 ‘‘(I) the amount so invested as 23 part of a reasonably required reserve 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 2634 IH or replacement fund or during an al- 1 lowable temporary period, and 2 ‘‘(II) the amount which is equal 3 to the lesser of 5 percent of the pro- 4 ceeds of the issue of which the re- 5 funded bond is a part or $100,000 (to 6 the extent such amount is allocable to 7 the refunded bond). 8 ‘‘(B) SPECIAL RULES FOR REDEMP- 9 TIONS.— 10 ‘‘(i) ISSUER MUST REDEEM ONLY IF 11 DEBT SERVICE SAVINGS.—Clause (ii) and 12 (iii) of subparagraph (A) shall apply only 13 if the issuer may realize present value debt 14 service savings (determined without regard 15 to administrative expenses) in connection 16 with the issue of which the refunding bond 17 is a part. 18 ‘‘(ii) REDEMPTIONS NOT REQUIRED 19 BEFORE 90TH DAY.—For purposes of 20 clauses (ii) and (iii) of subparagraph (A), 21 the earliest date referred to in such clauses 22 shall not be earlier than the 90th day after 23 the date of issuance of the refunding bond. 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 2634 IH ‘‘(4) ABUSIVE TRANSACTIONS PROHIBITED.— 1 An issue is described in this paragraph if any bond 2 (issued as part of such issue) is issued to advance 3 refund another bond and a device is employed in 4 connection with the issuance of such issue to obtain 5 a material financial advantage (based on arbitrage) 6 apart from savings attributable to lower interest 7 rates.’’, and 8 (4) by inserting after paragraph (5) (as so re- 9 designated) the following new paragraph: 10 ‘‘(6) SPECIAL RULES FOR PURPOSES OF PARA- 11 GRAPH (3).—For purposes of paragraph (3), bonds 12 issued before October 22, 1986, shall be taken into 13 account under subparagraph (A)(i) thereof except— 14 ‘‘(A) a refunding which occurred before 15 1986 shall be treated as an advance refunding 16 only if the refunding bond was issued more 17 than 180 days before the redemption of the re- 18 funded bond, and 19 ‘‘(B) a bond issued before 1986, shall be 20 treated as advance refunded no more than once 21 before March 15, 1986.’’. 22 (b) CONFORMING AMENDMENT.—Section 23 148(f)(4)(C) is amended by redesignating clauses (xiv) 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 2634 IH through (xvi) as clauses (xv) to (xvii), respectively, and 1 by inserting after clause (xiii) the following new clause: 2 ‘‘(xiv) DETERMINATION OF INITIAL 3 TEMPORARY PERIOD.—For purposes of 4 this subparagraph, the end of the initial 5 section temporary period shall be deter- 6 mined without regard to section 7 149(d)(3)(A)(iv).’’. 8 (c) EFFECTIVE DATE.—The amendments made by 9 this section shall apply to advance refunding bonds issued 10 more than 30 days after the date of the enactment of this 11 Act. 12 SEC. 4. PERMANENT MODIFICATION OF SMALL ISSUER EX- 13 CEPTION TO TAX-EXEMPT INTEREST EX- 14 PENSE ALLOCATION RULES FOR FINANCIAL 15 INSTITUTIONS. 16 (a) PERMANENT INCREASE IN LIMITATION.—Sub- 17 paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section 18 265(b)(3) are each amended by striking ‘‘$10,000,000’’ 19 and inserting ‘‘$30,000,000’’. 20 (b) PERMANENT MODIFICATION OF OTHER SPECIAL 21 RULES.—Section 265(b)(3) is amended— 22 (1) by redesignating clauses (iv), (v), and (vi) 23 of subparagraph (G) as clauses (ii), (iii), and (iv), 24 VerDate Sep 11 2014 02:30 Jun 09, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H2634.IH H2634 pbinns on DSKJLVW7X2PROD with BILLS 13 •HR 2634 IH respectively, and moving such clauses to the end of 1 subparagraph (H) (as added by paragraph (2)), and 2 (2) by striking so much of subparagraph (G) as 3 precedes such clauses and inserting th [Text truncated for display. Full text available on Congress.gov.]