Modernizing Agricultural and Manufacturing Bonds Act

I 118TH CONGRESS 1ST SESSION H. R. 3787 To amend the Internal Revenue Code of 1986 to modify certain rules applica- ble to qualified small issue manufacturing bonds, to expand certain exceptions to the private activity bond rules for first-time farmers, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JUNE 1, 2023 Mr. LAHOOD (for himself, Mr. KILDEE, Mr. FEENSTRA, and Mr. EVANS) in- troduced the following bill; which was referred to the Committee on Ways and Means A BILL To amend the Internal Revenue Code of 1986 to modify certain rules applicable to qualified small issue manufac- turing bonds, to expand certain exceptions to the private activity bond rules for first-time farmers, 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 ‘‘Modernizing Agricul- 4 tural and Manufacturing Bonds Act’’. 5 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 3787 IH SEC. 2. MODIFICATIONS TO QUALIFIED SMALL ISSUE 1 BONDS. 2 (a) MANUFACTURING FACILITIES TO INCLUDE PRO- 3 DUCTION OF INTANGIBLE PROPERTY AND FUNCTIONALLY 4 RELATED FACILITIES.—Subparagraph (C) of section 5 144(a)(12) of the Internal Revenue Code of 1986 is 6 amended to read as follows: 7 ‘‘(C) MANUFACTURING FACILITY.—For 8 purposes of this paragraph— 9 ‘‘(i) IN GENERAL.—The term ‘manu- 10 facturing facility’ means any facility 11 which— 12 ‘‘(I) is used in the manufacturing 13 or production of tangible personal 14 property (including the processing re- 15 sulting in a change in the condition of 16 such property), 17 ‘‘(II) is used in the creation or 18 production of intangible property 19 which is described in section 20 197(d)(1)(C)(iii), or 21 ‘‘(III) is functionally related and 22 subordinate to a facility described in 23 subclause (I) or (II) if such facility is 24 located on the same site as the facility 25 described in subclause (I) or (II). 26 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 3787 IH ‘‘(ii) CERTAIN FACILITIES IN- 1 CLUDED.—The term ‘manufacturing facil- 2 ity’ includes facilities that are directly re- 3 lated and ancillary to a manufacturing fa- 4 cility (determined without regard to this 5 clause) if— 6 ‘‘(I) those facilities are located on 7 the same site as the manufacturing 8 facility, and 9 ‘‘(II) not more than 25 percent 10 of the net proceeds of the issue are 11 used to provide those facilities. 12 ‘‘(iii) LIMITATION ON OFFICE 13 SPACE.—A rule similar to the rule of sec- 14 tion 142(b)(2) shall apply for purposes of 15 clause (i). 16 ‘‘(iv) LIMITATION ON REFUNDINGS 17 FOR CERTAIN PROPERTY.—Subclauses (II) 18 and (III) of clause (i) shall not apply to 19 any bond issued on or before the date of 20 the enactment of the Modernizing Agricul- 21 tural and Manufacturing Bonds Act, or to 22 any bond issued to refund a bond issued 23 on or before such date (other than a bond 24 to which clause (iii) of this subparagraph 25 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 3787 IH (as in effect before the date of the enact- 1 ment of the Modernizing Agricultural and 2 Manufacturing Bonds Act applies)), either 3 directly or in a series of refundings.’’. 4 (b) INCREASE IN LIMITATIONS.— 5 (1) IN GENERAL.—Section 144(a)(4) of such 6 Code is amended— 7 (A) in subparagraph (A)(i), by striking 8 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’, 9 and 10 (B) in the heading, by striking 11 ‘‘$10,000,000’’ and inserting ‘‘$30,000,000’’. 12 (2) INCREASE IN ADDITIONAL CAPITAL EX- 13 PENDITURES NOT TAKEN INTO ACCOUNT.—Section 14 144(a)(4)(G) of such Code is amended by inserting 15 ‘‘$30,000,000, in the case of bonds issued after the 16 date of the enactment of the Modernizing Agricul- 17 tural and Manufacturing Bonds Act’’. 18 (3) INCREASE IN AGGREGATE LIMIT PER TAX- 19 PAYER.—Section 144(a)(10)(A) of such Code is 20 amended by striking ‘‘$40,000,000’’ and inserting 21 ‘‘$120,000,000’’. 22 (4) ADJUSTMENT FOR INFLATION.—Section 23 144(a) of the Internal Revenue Code of 1986 is 24 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 3787 IH amended by adding at the end the following new 1 paragraph: 2 ‘‘(13) ADJUSTMENT FOR INFLATION.—In the 3 case of any calendar year after 2023, the 4 $30,000,000 amounts in paragraph (4)(A), the 5 $30,000,000 amount in paragraph (4)(G), and the 6 $120,000,000 amount in paragraph (10)(A) shall 7 each be increased by an amount equal to— 8 ‘‘(A) such dollar amount, multiplied by 9 ‘‘(B) the cost-of-living adjustment deter- 10 mined under section 1(f)(3) for the calendar 11 year, determined by substituting ‘calendar year 12 2022’ for ‘calendar year 2016’ in subparagraph 13 (A)(ii) thereof. 14 If any amount as increased under the preceding sen- 15 tence is not a multiple of $100,000, such amount 16 shall be rounded to the nearest multiple of 17 $100,000.’’. 18 (c) EFFECTIVE DATE.—The amendments made by 19 this section shall apply to obligations issued after the date 20 of the enactment of this Act. 21 SEC. 3. EXPANSION OF CERTAIN EXCEPTIONS TO THE PRI- 22 VATE ACTIVITY BOND RULES FOR FIRST- 23 TIME FARMERS. 24 (a) INCREASE IN DOLLAR LIMITATION.— 25 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 3787 IH (1) IN GENERAL.—Section 147(c)(2)(A) of the 1 Internal Revenue Code of 1986 is amended by strik- 2 ing ‘‘$450,000’’ and inserting ‘‘$1,000,000’’. 3 (2) REPEAL OF SEPARATE LOWER DOLLAR LIM- 4 ITATION ON USED FARM EQUIPMENT.—Section 5 147(c)(2) of such Code is amended by striking sub- 6 paragraph (F) and by redesignating subparagraphs 7 (G) and (H) as subparagraphs (F) and (G), respec- 8 tively. 9 (3) QUALIFIED SMALL ISSUE BOND LIMITATION 10 CONFORMED TO INCREASED DOLLAR LIMITATION.— 11 Section 144(a)(11)(A) of such Code is amended by 12 striking ‘‘$250,000’’ and inserting ‘‘$1,000,000’’. 13 (4) INFLATION ADJUSTMENT.— 14 (A) IN GENERAL.—Section 147(c)(2)(G) of 15 such Code, as redesignated by paragraph (2), is 16 amended— 17 (i) by striking ‘‘after 2008, the dollar 18 amount in subparagraph (A) shall be in- 19 creased’’ and inserting ‘‘after 2023, the 20 dollar amounts in subparagraph (A) and 21 section 144(a)(11)(A) shall each be in- 22 creased’’, 23 (ii) in clause (ii), by striking ‘‘2007’’ 24 and inserting ‘‘2022’’, and 25 VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 3787 IH (iii) in the last sentence, by striking 1 ‘‘$100’’ each place it appears and inserting 2 ‘‘$10,000’’. 3 (B) CROSS-REFERENCE.—Section 4 144(a)(11) of such Code is amended by adding 5 at the end the following new subparagraph: 6 ‘‘(D) INFLATION ADJUSTMENT.—For infla- 7 tion adjustment of dollar amount contained in 8 subparagraph (A), see section 147(c)(2)(G).’’. 9 (b) SUBSTANTIAL FARMLAND DETERMINED ON 10 BASIS OF AVERAGE RATHER THAN MEDIAN FARM 11 SIZE.—Section 147(c)(2)(E) of such Code is amended by 12 striking ‘‘median’’ and inserting ‘‘average’’. 13 (c) EFFECTIVE DATE.—The amendments made by 14 this section shall apply to bonds issued after the date of 15 the enactment of this Act. 16 Æ VerDate Sep 11 2014 03:52 Jun 27, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6301 E:\BILLS\H3787.IH H3787 kjohnson on DSK79L0C42PROD with BILLS