Municipal Bond Market Support Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3967 To amend the Internal Revenue Code of 1986 to permanently modify the limitations on the deduction of interest by financial institutions which hold tax-exempt bonds, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 25, 2019 Ms. SEWELL of Alabama (for herself and Mr. REED) 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 permanently modify the limitations on the deduction of interest by financial institutions which hold tax-exempt 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 ‘‘Municipal Bond Mar- 4 ket Support Act of 2019’’. 5 VerDate Sep 11 2014 02:07 Aug 06, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3967.IH H3967 kjohnson on DSK79L0C42 with BILLS 2 •HR 3967 IH SEC. 2. PERMANENT MODIFICATION OF SMALL ISSUER EX- 1 CEPTION TO TAX-EXEMPT INTEREST EX- 2 PENSE ALLOCATION RULES FOR FINANCIAL 3 INSTITUTIONS. 4 (a) PERMANENT INCREASE IN LIMITATION.—Sub- 5 paragraphs (C)(i), (D)(i), and (D)(iii)(II) of section 6 265(b)(3) of the Internal Revenue Code of 1986 are each 7 amended by striking ‘‘$10,000,000’’ and inserting 8 ‘‘$30,000,000’’. 9 (b) PERMANENT MODIFICATION OF OTHER SPECIAL 10 RULES.—Section 265(b)(3) of such Code is amended— 11 (1) by redesignating clauses (iv), (v), and (vi) 12 of subparagraph (G) as clauses (ii), (iii), and (iv), 13 respectively, and moving such clauses to the end of 14 subparagraph (H) (as added by paragraph (2)), and 15 (2) by striking so much of subparagraph (G) as 16 precedes such clauses and inserting the following: 17 ‘‘(G) QUALIFIED 501(c)(3) BONDS TREATED 18 AS ISSUED BY EXEMPT ORGANIZATION.—In the 19 case of a qualified 501(c)(3) bond (as defined 20 in section 145), this paragraph shall be applied 21 by treating the 501(c)(3) organization for 22 whose benefit such bond was issued as the 23 issuer. 24 ‘‘(H) SPECIAL RULE FOR QUALIFIED 25 FINANCINGS.— 26 VerDate Sep 11 2014 02:07 Aug 06, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3967.IH H3967 kjohnson on DSK79L0C42 with BILLS 3 •HR 3967 IH ‘‘(i) IN GENERAL.—In the case of a 1 qualified financing issue— 2 ‘‘(I) subparagraph (F) shall not 3 apply, and 4 ‘‘(II) any obligation issued as a 5 part of such issue shall be treated as 6 a qualified tax-exempt obligation if 7 the requirements of this paragraph 8 are met with respect to each qualified 9 portion of the issue (determined by 10 treating each qualified portion as a 11 separate issue which is issued by the 12 qualified borrower with respect to 13 which such portion relates).’’. 14 (c) INFLATION ADJUSTMENT.—Section 265(b)(3) of 15 such Code, as amended by subsection (b), is amended by 16 adding at the end the following new subparagraph: 17 ‘‘(I) INFLATION ADJUSTMENT.—In the 18 case of any calendar year after 2019, the 19 $30,000,000 amounts contained in subpara- 20 graphs (C)(i), (D)(i), and (D)(iii)(II) shall each 21 be increased by an amount equal to— 22 ‘‘(i) such dollar amount, multiplied by 23 ‘‘(ii) the cost-of-living adjustment de- 24 termined under section 1(f)(3) for such 25 VerDate Sep 11 2014 02:07 Aug 06, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3967.IH H3967 kjohnson on DSK79L0C42 with BILLS 4 •HR 3967 IH calendar year, determined by substituting 1 ‘calendar year 2018’ for ‘calendar year 2 2016’ in subparagraph (A)(ii) thereof. 3 Any increase determined under the preceding 4 sentence shall be rounded to the nearest mul- 5 tiple of $100,000.’’. 6 (d) EFFECTIVE DATE.—The amendments made by 7 this section shall apply to obligations issued after the date 8 of the enactment of this Act. 9 Æ VerDate Sep 11 2014 02:07 Aug 06, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H3967.IH H3967 kjohnson on DSK79L0C42 with BILLS