American Infrastructure Bonds Act of 2020

II 116TH CONGRESS 2D SESSION S. 4203 To amend the Internal Revenue Code of 1986 to provide a credit to issuers of American infrastructure bonds. IN THE SENATE OF THE UNITED STATES JULY 2, 2020 Mr. WICKER (for himself and Mr. BENNET) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to provide a credit to issuers of American infrastructure bonds. 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 ‘‘American Infrastruc- 4 ture Bonds Act of 2020’’. 5 SEC. 2. CREDIT FOR AMERICAN INFRASTRUCTURE BONDS 6 ALLOWED TO ISSUERS. 7 (a) IN GENERAL.—Subchapter B of chapter 65 of the 8 Internal Revenue Code of 1986 is amended by inserting 9 after section 6430 the following new section: 10 VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4203 IS ‘‘SEC. 6431. CREDIT TO ISSUER OF AMERICAN INFRASTRUC- 1 TURE BONDS. 2 ‘‘(a) IN GENERAL.—The issuer of an American infra- 3 structure bond shall be allowed a credit with respect to 4 each interest payment under such bond which shall be pay- 5 able by the Secretary as provided in subsection (b). 6 ‘‘(b) PAYMENT OF CREDIT.— 7 ‘‘(1) IN GENERAL.—The Secretary shall pay 8 (contemporaneously with each interest payment date 9 under such bond) to the issuer of such bond (or to 10 any person who makes such interest payments on 11 behalf of the issuer) the applicable percentage of the 12 interest payable under such bond on such date. 13 ‘‘(2) APPLICABLE PERCENTAGE.—For purposes 14 of paragraph (1), the applicable percentage shall be 15 equal to— 16 ‘‘(A) in the case of any American infra- 17 structure bond issued before January 1, 2026, 18 35 percent, and 19 ‘‘(B) in the case of any American infra- 20 structure bond issued after December 31, 2025, 21 28 percent. 22 ‘‘(3) INTEREST PAYMENT DATE.—For purposes 23 of this subsection, the term ‘interest payment date’ 24 means each date on which the holder of record of 25 VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4203 IS the American infrastructure bond is entitled to a 1 payment of interest under such bond. 2 ‘‘(c) AMERICAN INFRASTRUCTURE BOND.— 3 ‘‘(1) IN GENERAL.—For purposes of this sec- 4 tion, the term ‘American infrastructure bond’ means 5 any obligation if— 6 ‘‘(A) the interest on such obligation would 7 (but for this section) be excludable from gross 8 income under section 103, 9 ‘‘(B) either— 10 ‘‘(i) the obligation is not a private ac- 11 tivity bond, or 12 ‘‘(ii) the obligation is a private activ- 13 ity bond, but it is issued as part of an 14 issue 95 percent or more of the net pro- 15 ceeds of which are to be used to finance or 16 refinance property that meets the owner- 17 ship test in section 145(a)(1), as applied 18 by substituting ‘95 percent of the property’ 19 for ‘all property’, and 20 ‘‘(C) the issuer makes an irrevocable elec- 21 tion to have this section apply. 22 ‘‘(2) APPLICABLE RULES.—For purposes of ap- 23 plying paragraph (1)— 24 VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4203 IS ‘‘(A) for purposes of section 149(b), a 1 bond shall not be treated as federally guaran- 2 teed by reason of the credit allowed under this 3 section, and 4 ‘‘(B) a bond shall not be treated as an 5 American infrastructure bond if the issue price 6 has more than a de minimis amount (deter- 7 mined under rules similar to the rules of section 8 1273(a)(3)) of premium over the stated prin- 9 cipal amount of the bond. 10 ‘‘(d) SPECIAL RULES.— 11 ‘‘(1) INTEREST ON AMERICAN INFRASTRUC- 12 TURE BONDS INCLUDIBLE IN GROSS INCOME FOR 13 FEDERAL INCOME TAX PURPOSES.—For purposes of 14 this title, interest on any American infrastructure 15 bond shall be includible in gross income. 16 ‘‘(2) APPLICATION OF ARBITRAGE RULES.—For 17 purposes of section 148, the yield on an issue of 18 American infrastructure bonds shall be reduced by 19 the credit allowed under this section, except that no 20 such reduction shall apply with respect to deter- 21 mining the amount of gross proceeds of an issue 22 that qualifies as a reasonably required reserve or re- 23 placement fund. 24 VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4203 IS ‘‘(e) REGULATIONS.—The Secretary may prescribe 1 such regulations and other guidance as may be necessary 2 or appropriate to carry out this section.’’. 3 (b) CONFORMING AMENDMENTS.— 4 (1) The table of sections for subchapter B of 5 chapter 65 of subtitle F of the Internal Revenue 6 Code of 1986 is amended by adding at the end the 7 following new item: 8 ‘‘Sec. 6431. Credit to issuer of American infrastructure bonds.’’. (2) Subparagraph (A) of section 6211(b)(4) of 9 such Code is amended by inserting ‘‘6431,’’after 10 ‘‘36B,’’. 11 (c) TRANSITIONAL COORDINATION WITH STATE 12 LAW.—Except as otherwise provided by a State after the 13 date of the enactment of this Act, the interest on any 14 American infrastructure bond (as defined in section 6431 15 of the Internal Revenue Code of 1986 (as added by this 16 Act)) and the amount of any credit determined under such 17 section with respect to such bond shall be treated for pur- 18 poses of the income tax laws of such State as being exempt 19 from Federal income tax. 20 (d) ADJUSTMENT TO PAYMENT TO ISSUERS IN CASE 21 OF SEQUESTRATION.— 22 (1) IN GENERAL.—In the case of any payment 23 under subsection (b) of section 6431 of the Internal 24 Revenue Code of 1986 (as added by this Act) made 25 VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4203 IS after the date of enactment of this Act to which se- 1 questration applies, the amount of such payment 2 shall be increased to an amount equal to— 3 (A) such payment (determined before such 4 sequestration), multiplied by 5 (B) the quotient obtained by dividing the 6 number 1 by the amount by which the number 7 1 exceeds the percentage reduction in such pay- 8 ment pursuant to such sequestration. 9 (2) SEQUESTRATION.—For purposes of this 10 subsection, the term ‘‘sequestration’’ means any re- 11 duction in direct spending ordered in accordance 12 with a sequestration report prepared by the Director 13 of the Office and Management and Budget pursuant 14 to the Balanced Budget and Emergency Deficit Con- 15 trol Act of 1985 or the Statutory Pay-As-You-Go 16 Act of 2010 or future legislation having similar ef- 17 fect. 18 (e) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to obligations issued after the date 20 of enactment of this Act. 21 Æ VerDate Sep 11 2014 03:41 Jul 13, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6301 E:\BILLS\S4203.IS S4203 pbinns on DSKJLVW7X2PROD with BILLS