Interest on State and local bonds
Exclusion
Exceptions
Subsection (a) shall not apply to—
Private activity bond which is not a qualified bond
Arbitrage bond
Bond not in registered form, etc.
Definitions
For purposes of this section and part IV—
State or local bond
State
Source
(Aug. 16, 1954, ch. 736, 68A Stat. 29; Pub. L. 90–364, title I, § 107(a),Notes
Amendments
Effective Date of 1988 Amendment
Effective Date of 1986 Amendment
Except as provided in subparagraph (B), the amendment made by paragraph (1) [amending this section] shall apply to obligations issued after the date of the enactment of this Act [
At the election of the issuer (made at such time and in such manner as the Secretary of the Treasury or his delegate shall prescribe), the amendment made by paragraph (1) shall apply to any obligation issued on or before the date of the enactment of this Act.”
Effective Date of 1984 Amendment
In general.—
Except as otherwise provided in this subsection, the amendments made by this section [amending this section and section 103A of this title] shall apply with respect to bonds issued after
Exception.—
The amendments made by this section shall not apply to obligations issued for the Essex County New Jersey Resource Recovery Project authorized by the Port Authority of New York and New Jersey on
In general.—
Except as otherwise provided in this subsection the amendment made by subsection (a) [amending this section] shall apply to obligations issued after the date of enactment of this Act [
Exceptions for certain student loan programs.—
In general.—
The amendments made by this section [amending this section] shall not apply to obligations issued by a program described in the following table to the extent the aggregate face amount of such obligations does not exceed the amount of allowable obligations specified in the following table with respect to such program:
Program | Amount of Allowable Obligations |
|---|---|
Colorado Student Obligation Bond Authority | $60 million |
Connecticut Higher Education Supplementary Loan Authority | $15.5 million |
District of Columbia | $50 million |
Illinois Higher Education Authority | $70 million |
State of Iowa | $16 million |
Louisiana Public Facilities Authority | $75 million |
Maine Health and Higher Education Facilities Authority | $5 million |
Maryland Higher Education Supplemental Loan Program | $24 million |
Massachusetts College Student Loan Authority | $90 million |
Minnesota Higher Education Coordinating Board | $60 million |
New Hampshire Higher Education and Health Facilities Authority | $39 million |
New York Dormitory Authority | $120 million |
Pennsylvania Higher Education Assistance Agency | $300 million |
Georgia Private Colleges and University Authority | $31 million |
Wisconsin State Building Commission | $60 million |
South Dakota Health and Educational Facilities Authority | $6 million |
Pennsylvania higher education assistance agency.—
Subparagraph (A) shall apply to obligations issued by the Pennsylvania Higher Education Assistance Agency only if such obligations are issued solely for the purpose of refunding student loan bonds outstanding on
Certain tax-exempt mortgage subsidy bonds.—
For purposes of applying section 103(o) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], the term ‘consumer loan bond’ shall not include any mortgage subsidy bond (within the meaning of section 103A(b) of such Code) to which the amendments made by section 1102 of the Mortgage Subsidy Bond Tax Act of 1980 [enacting section 103A of this title] do not apply.
Refunding exception.—
The amendments made by this section [amending this section] shall not apply to any obligation or series of obligations the proceeds of which are used exclusively to refund obligations issued before
the amount of the refunding obligations may not exceed 101 percent of the aggregate face amount of the refunded obligations, and
the maturity date of any refunding obligation may not be later than the date which is 17 years after the date on which the refunded obligation was issued (or, in the case of a series of refundings, the date on which the original obligation was issued).
Exception for certain established programs.—
The amendments made by this section [amending this section] shall not apply to any obligation substantially all of the proceeds of which are used to carry out a program established under State law which has been in effect in substantially the same form during the 30-year period ending on the date of enactment of this Act [
in the same manner in which,
in the same (or lesser) amount per participant, and
for the same purposes for which,
such program was operated on
Certain bonds for renewable energy property.—
The amendments made by this section [amending this section] shall not apply to any obligations described in section 243 of the Crude Oil Windfall Profit Tax Act of 1980 [Pub. L. 96–223, set out as a note below].
Exception for certain downtown redevelopment project.—
The amendments made by this section [amending this section] shall not apply to any obligation which is issued as part of an issue 95 percent or more of the proceeds of which are to be used to provide a project to acquire and redevelop a downtown area if—
on
before
the State supreme court issued a ruling regarding the proposed financing structure for such project on
The aggregate face amount of obligations to which this paragraph applies shall not exceed $85,000,000 and such obligations must be issued before
Private Activity Bond Cap.—
In general.—
Except as otherwise provided in this subsection, the amendment made by section 621 [amending this section] shall apply to obligations issued after
Inducement resolution before june 19, 1984.—
The amendment made by section 621 shall not apply to any issue of obligations if—
there was an inducement resolution (or other comparable preliminary approval) for the issue before
the issue is issued before
Certain projects preliminarily approved before october 19, 1983, given approval.—
If—
there was an inducement resolution (or other comparable preliminary approval) for a project before
a substantial user of such project notifies the issuing authority within 30 days after the date of the enactment of this Act [
construction of such project began before
such issuing authority shall allocate its share of the limitation under section 103(n) of such Code for the calendar year during which the obligations were to be issued pursuant to such resolution (or other approval) first to such project. If the amount of obligations required by all projects which meet the requirements of the preceding sentence exceeds the issuing authority’s share of the limitation under section 103(n) of such Code, priority under the preceding sentence shall be provided first to those projects for which substantial expenditures were incurred before
Exception for certain bonds for a convention center and resource recovery project.—
In the case of any city, if—
the city council of such city authorized a feasibility study for a convention center on
on
the amendment made by section 621 shall not apply to any issue, issued during 1984, 1985, 1986, or 1987 and substantially all of the proceeds of which are to be used to finance the convention center (or access ramps and parking facilities therefor) described in subparagraph (A) or the facility described in subparagraph (B).
Property Financed With Tax-Exempt Bonds Required To Be Depreciated on Straight-Line Basis.—
In general.—
Except as otherwise provided in this section, the amendments made by section 628(b) [amending section 168 of this title] shall apply to property placed in service after
Exceptions.—
Construction or binding agreement.—
The amendments made by section 628(b) shall not apply with respect to facilities—
the original use of which commences with the taxpayer and the construction, reconstruction, or rehabilitation of which began before
with respect to which a binding contract to incur significant expenditures was entered into before
Refunding.—
In general.—
Except as provided in clause (ii), in the case of property placed in service after
Significant expenditures.—
In the case of facilities the original use of which commences with the taxpayer and with respect to which significant expenditures are made before
Facilities.—
In the case of an inducement resolution or other comparable preliminary approval adopted by an issuing authority before
Other Provisions Relating to Tax-Exempt Bonds.—
In general.—
Except as otherwise provided in this subtitle, the amendments made by sections 622, 623, 627, and 628(c), (d), and (e) (and the provisions of sections 625(c), 628(f), and 629(b)) [amending this section and enacting provisions set out as notes under this section] shall apply to obligations issued after
Obligations invested in federally insured deposits.—
Notwithstanding any other provision of this section, clause (ii) of section 103(h)(2)(B) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as amended by this subtitle) shall apply to obligations issued after
Exceptions.—
Construction or binding agreement.—
The amendments (and provisions) referred to in paragraph (1) shall not apply to obligations with respect to facilities—
the original use of which commences with the taxpayer and the construction, reconstruction, or rehabilitation of which began before
the original use of which commences with the taxpayer and with respect to which a binding contract to incur significant expenditures for construction, reconstruction, or rehabilitation was entered into before
acquired after
Facilities.—
Subparagraph (C) of subsection (b)(2) shall apply for purposes of subparagraph (A) of this paragraph.
Exception.—
Subparagraph (A) shall not apply with respect to the amendment made by section 628(e) and the provisions of sections 628(f) and 629(b) [amending this section and enacting provisions set out as notes under this section].
Repeal of advance refunding of qualified public facilities.—
The amendment made by section 628(g) [amending this section] shall apply to refunding obligations issued after the date of the enactment of this Act [
Special rule for health club facilities.—
In the case of any health club facility, with respect to the amendment made by section 627(c) [amending this section]—
paragraph (1) shall be applied by substituting ‘
paragraph (3) shall be applied by substituting ‘
Provisions of This Subtitle Not To Apply to Certain Property.—
The amendments made by this subtitle [sections 621–632 of Pub. L. 98–369, amending this section and sections 103A and 168 of this title and enacting provisions set out as notes under this section] shall not apply to any property (and shall not apply to obligations issued to finance such property) if such property is described in any of the following paragraphs:
Any property described in paragraph (5), (6), or (7) of section 31(g) of this Act [set out as an Effective Date of 1984 Amendment note under section 168 of this title].
Any property described in paragraph (4), (8), or (17) of section 31(g) of this Act [set out as an Effective Date of 1984 Amendment note under section 168 of this title] but only if the obligation is issued before
Any property described in paragraph (3) of section 216(b) of the Tax Equity and Fiscal Responsibility Act of 1982 [set out as an Effective Date of 1982 Amendment note under section 168 of this title].
Any solid waste disposal facility described in section 103(b)(4)(E) of the Internal Revenue Code of 1986 if—
a State public authority created pursuant to State legislation which took effect on
such authority issues obligations for any such facility before
expenditures have been made for the development of any such facility before
Any solid waste disposal facility described in section 103(b)(4)(E) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] if—
a city government, by resolutions adopted on
such city government (or a public authority on its behalf) issues obligations for such facility before
expenditures have been made for the development of such facility before
Determination of Significant Expenditure.—
In general.—
For purposes of this section, the term ‘significant expenditures’ means expenditures which equal or exceed the lesser of—
$15,000,000, or
20 percent of the estimated cost of the facilities.
Certain grants treated as expenditures.—
For purposes of paragraph (1), the amount of any UDAG grant preliminarily approved on
Exceptions for Certain Other Amendments.—
If—
there was an inducement resolution (or other comparable preliminary approval) for an issue before
such issue is issued before
the amendments made by section 623 [amending this section],
the amendments made by subsections (a) and (b) of section 627 [amending this section] (except to the extent such amendments relate to farm land),
in the case of a race track, the amendment made by section 627(c) [amending this section], and
the amendments made by section 628(c) [amending this section].”
Effective Date of 1983 Amendment
Effective Date of 1982 Amendment
Composite issues; small issue exemption.—
The amendments made by subsections (a) and (b) [amending this section] shall apply to obligations issued after the date of the enactment of this Act [
Termination.—
The amendment made by subsection (c) [amending this section] shall take effect on the date of the enactment of this Act [
Research expenditures.—
The amendment made by subsection (d) [amending this section] shall apply with respect to expenditures made after the date of the enactment of this Act [
Certain facilities.—
The amendment made by subsection (e) [amending this section] shall apply to obligations issued after
Public approval.—
The amendment made by subsection (a) [amending this section] shall apply to obligations issued after
was issued before
has a maturity which does not exceed 3 years.
Information reporting.—
The amendments made by subsection (b) [amending this section] shall apply to obligations issued after
In general.—
Except as provided in paragraph (2), the amendments made by this section [amending this section and section 1104 of Pub. L. 96–499, formerly set out as a note under section 103A of this title] shall apply to obligations issued after the date of the enactment of this Act [
Exception.—
The amendments made by this section shall not apply with respect to any obligation to which the amendments made by section 1103 of the Mortgage Subsidy Bond Tax Act of 1980 [section 1103 of Pub. L. 96–499, amending this section] do not apply by reason of section 1104 of such Act [section 1104 of Pub. L. 96–499, formerly set out as a note under section 103A of this title].”
In general.—
Except as otherwise provided in this subsection, the amendments made by this section [enacting section 4701 of this title and section 757c–5 of former Title 31, Money and Finance, and amending this section and sections 103A, 163, 165, 312, and 1232 of this title] shall apply to obligations issued after
[Repealed. Pub. L. 98–216, § 6(b), Feb. 14, 1984, 98 Stat. 8.]
Exception for certain warrants, etc.—
The amendments made by subsection (b) [enacting section 4701 of this title and amending this section and sections 163, 165, 312, and 1232 of this title] shall not apply to any obligations issued after
Effective Date of 1981 Amendment
Effective Date of 1980 Amendment
Effective Date of 1978 Amendment
The amendments made by subsection (a) [amending this section] shall apply to—
obligations issued after
capital expenditures made after
The amendment made by subsection (b) [amending this section] shall apply to—
obligations issued after
capital expenditures made after
Effective Date of 1976 Amendment
Effective Date of 1975 Amendment
Effective Date of 1971 Amendment
Effective Date of 1969 Amendment
Effective Date of 1968 Amendment
Transfer of Functions
Coordination of Certain Amendments Made by Pub. L. 97–424 and Pub. L. 97–473
Validation of Sinking Fund Regulations
Treasury Regulation section 1.103–13(g) (1979) is hereby enacted into positive law.
Except as provided in clause (ii), subparagraph (A) shall apply to obligations sold after
Treasury Regulation section 1.103–13(g) (1979) as enacted into positive law by subparagraph (A) shall cease to apply to the extent hereafter modified by the Secretary of the Treasury or his delegate by regulations.”
Bonds Issued To Refund Subsection (o)(3) Obligations
Plan Amendments Not Required Until January 1, 1989
Treatment of Certain Guarantees by Farmers Home Administration
such guarantee is pursuant to a commitment made by the Farmers Home Administration before
such obligation is issued to finance a convention center project in Carbondale, Illinois.”
Treatment of Certain Obligations Used To Finance Solid Waste Disposal Facility
In general.—
Any obligation which is part of an issue a substantial portion of the proceeds of which is to be used to finance a solid waste disposal facility described in paragraph (2) shall not, for purposes of section 103(h) of the Internal Revenue Code of 1954 [now 1986], be treated as an obligation which is federally guaranteed by reason of the sale of fuel, steam, electricity, or other forms of usable energy to the Federal Government or any agency or instrumentality thereof.
Solid waste disposal facility.—
A solid waste disposal facility is described in this paragraph if such facility is described in section 103(b)(4)(E) of such Code and—
if—
a public State authority created pursuant to State legislation which took effect on
such authority issues obligations for such facility before
expenditures have been made for the development of such facility before
if—
such facility is operated by the South Eastern Public Service Authority of Virginia, and
on
if—
a political subdivision of a State took formal action on
such facility has a contract to sell steam to a naval base,
such political subdivision issues obligations for such facility before
expenditures have been made for the development of such facility before
if—
such facility is a thermal transfer facility,
is to be built and operated by the Elk Regional Resource Authority, and
is to be on land leased from the United States Air Force at Arnold Engineering Development Center near Tullahoma, Tennessee.
Limitations.—
In the case of a solid waste disposal facility described in paragraph (2)(A), the aggregate face amount of obligations to which paragraph (1) applies shall not exceed $65,000,000.
In the case of a solid waste disposal facility described in paragraph (2)(B), the aggregate face amount of obligations to which paragraph (1) applies shall not exceed $20,000,000. Such amount shall be in addition to the amount permitted under the Internal Revenue Service ruling referred to in paragraph (2)(B)(ii).
In the case of a solid waste disposal facility described in paragraph (2)(C), the aggregate face amount of obligations to which paragraph (1) applies shall not exceed $75,000,000.
In the case of a solid waste disposal facility described in paragraph (2)(D), the aggregate face amount of obligations to which paragraph (1) applies shall not exceed $25,000,000.”
Transitional Rule for Limit on Small Issue Exception
“The amendment made by section 623 of the Tax Reform Act of 1984 [section 623 of Pub. L. 98–369, amending this section] shall not apply to any obligation (or series of obligations) issued to refund another tax-exempt IDB to which the amendment made by such section 623 did not apply if—
the average maturity of the issue of which the refunding obligation is a part does not exceed the average maturity of the obligations to be refunded by such issue,
the amount of the refunding obligation does not exceed the amount of the refunded obligation, and
the proceeds of the refunding obligation are used to redeem the refunded obligation not later than 90 days after the date of the issuance of the refunding obligation.
For purposes of the preceding sentence, the term ‘tax-exempt IDB’ means any industrial development bond (as defined in section 103(b) of the Internal Revenue Code of 1954 [now 1986]) the interest on which is exempt from tax under section 103(a) of such Code. For purposes of paragraph (1), average maturity shall be determined in accordance with subsection (b)(14)(B)(i) of such Code.”
Exception From 1984 Amendment for Downtown Muskogee Revitalization Project
such obligation is issued before
such obligation is issued after such date to provide additional financing for such project except that the aggregate amount of obligations to which this subsection applies shall not exceed $10,000,000.”
Transitional Rules
Treatment of certain obligations issued by the city of baltimore.—
Obligations issued by the city of Baltimore, Maryland, after
such obligations are not industrial development bonds (within the meaning of section 103(b)(2) of the Internal Revenue Code of 1954 [now 1986]),
the portion of the proceeds of such obligations so used is attributable to debt approved by voter referendum on or before
the loans to such nonexempt persons were approved by the Board of Estimates of the city of Baltimore on or before
the aggregate amount of such temporary advances financed or refinanced by such obligations does not exceed $27,000,000.
White pine power project.—
The amendment made by section 626(a) of the Tax Reform Act of 1984 [section 626(a) of Pub. L. 98–369, amending this section] shall not apply to any obligation issued during 1984 to provide financing for the White Pine Power Project in Nevada.
Tax increment bonds.—
The amendment made by section 626(a) of the Tax Reform Act of 1984 shall not apply to any tax increment financing obligation issued before
substantially all of the proceeds of the issue are to be used to finance—
sewer, street, lighting, or other governmental improvements to real property,
the acquisition of any interest in real property (by a governmental unit having the power to exercise eminent domain), the preparation of such property for new use, or the transfer of such interest to a private developer, or
payments of reasonable relocation costs of prior users of such real property,
all of the activities described in subparagraph (A) are pursuant to a redevelopment plan adopted by the issuing authority before the issuance of such issue,
repayment of such issue is secured exclusively by pledges of that portion of any increase in real property tax revenues (or their equivalent) attributable to the redevelopment resulting from the issue (or similar issues), and
none of the property described in subparagraph (A) is subject to a real property or other tax based on a rate or valuation method which differs from the rate and valuation method applicable to any other similar property located within the jurisdiction of the issuing authority.
Eastern maine electric cooperative.—
The amendment made by section 626(a) of the Tax Reform Act of 1984 shall not apply to obligations issued by Massachusetts Municipal Wholesale Electric Company Project No. 6 if—
such obligation is issued before
such obligation is issued after such date to refund a prior obligation for such project, except that the aggregate amount of obligations to which this subparagraph applies shall not exceed $100,000,000, or
such obligation is issued after such date to provide additional financing for such project except that the aggregate amount of obligations to which this subparagraph applies shall not exceed $45,000,000.
Subparagraph (B) shall not apply to any obligation issued for the advance refunding of any obligation.”
Treatment of Obligations To Finance St. Johns River Power Park
In general.—
The amendment made by section 626(a) of the Tax Reform Act of 1984 [section 626(a) of Pub. L. 98–369, amending this section] shall not apply to any obligation issued to finance the project described in subparagraph (B) if—
such obligation is issued before
such obligation is issued after such date to refund a prior tax exemption obligation for such project, the amount of such obligation does not exceed the outstanding amount of the refunded obligation, and such prior tax exempt obligation is retired not later than the date 30 days after the issuance of the refunding obligation, or
such obligation is issued after such date to provide additional financing for such project except that the aggregate amount of obligations to which this clause applies shall not exceed $150,000,000.
Clause (ii) shall not apply to any obligation issued for the advance refunding of any obligation.
Description of project.—
The project described in this subparagraph in the St. Johns River Power Park system in Florida which was authorized by legislation enacted by the Florida Legislature in February of 1982.”
Certain Public Utilities Treated as Exempted Persons Under Section 103(b); Special Rules for Certain Railroads
Certain Public Utilities.—
For purposes of applying section 103(b)(3) of the Internal Revenue Code [of 1986] with respect to—
any obligations issued after the date of enactment of this Act [
any obligations issued after
the term ‘exempt person’ shall include a regulated public utility having any customer service area within a State served by a public power authority which was required as a condition of a Federal Power Commission license specified by an Act of Congress enacted prior to the enactment of section 107 of the Revenue and Expenditure Control Act of 1968 (Public Law 90–364) [
Certain Railroads.—
Section 103(b)(1) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall not apply to any obligation which is described in section 103(b)(6)(A) of such Code if—
substantially all of the proceeds of such obligation are used to acquire railroad track and right-of-way from a railroad involved in a title 11 or similar proceeding (within the meaning of section 368(a)(3)(A) of such Code), and
the Federal Railroad Administration provides joint financing for such acquisitions.
Special Rules for Subsection (a).—
Obligations subject to cap.—
Any obligation described in subsection (a) shall be treated as a private activity bond for purposes of section 103(n) of the Internal Revenue Code of 1986.
Limitation on amount of obligations to which subsection (a)(1) applies—
The aggregate amount of obligations to which subsection (a)(1) applies shall not exceed $911,000,000.
Limitation on purposes.—
Subsection (a)(1) shall only apply to obligations issued as part of an issue substantially all the proceeds of which are used to provide 1 or more of the following:
Cable facilities.
Small hydroelectric facilities.
The acquisition of an interest in an electrical generating facility.
Improvements to existing generating facilities.
Transmission lines.
Electric generating facilities.”
Treatment of Certain Residential Real Property as Residential Rental Property
Public Approval Requirement in the Case of Public Airport
“If—
the proceeds of any issue are to be used to finance a facility or facilities located on a public airport, and
the governmental unit issuing such obligations is the owner or operator of such airport,
such governmental unit shall be deemed to be the only governmental unit having jurisdiction over such airport for purposes of subsection (k) of section 103 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to public approval for industrial development bonds).”
Small Issue Limit in Case of Certain Urban Development Action Grants
such obligation is part of an issue,
substantially all of the proceeds of such issue are used to provide facilities with respect to which an urban development action grant under section 119 of the Housing and Community Development Act of 1974 [42 U.S.C. 5318] was preliminarily approved by the Secretary of Housing and Urban Development on
the Secretary of Housing and Urban Development determines, at the time such grant is approved, that the amount of such grant will equal or exceed 5 percent of the total capital expenditures incurred with respect to such facilities.”
Student Loan Bonds
Arbitrage Regulations.—
In general.—
The Secretary shall prescribe regulations which specify the circumstances under which a qualified student loan bond shall be treated as an arbitrage bond for purposes of section 103 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]. Such regulations may provide that—
paragraphs (4) and (5) of section 103(c) of such Code shall not apply, and
rules similar to section 103(c)(6) shall apply,
to qualified student loan bonds.
Definitions.—
For purposes of this subsection—
Qualified student loan bond.—
The term ‘qualified student loan bond’ has the meaning given to such term by section 103(o)(3) of the Internal Revenue Code of 1986 (as amended by this Act).
Arbitrage bond.—
The term ‘arbitrage bond’ has the meaning given to such term by section 103(c)(2).
Effective date.—
In general.—
Except as otherwise provided in this paragraph, any regulations prescribed by the Secretary under paragraph (1) shall apply to obligations issued after the qualified date.
Qualified date.—
In general.—
For purposes of this paragraph, the term ‘qualified date’ means the earlier of—
the date on which the Higher Education Act of 1965 [20 U.S.C. 1001 et seq.] expires, or
the date, after the date of enactment of this Act [
Publication of regulations.—
Notwithstanding clause (i), the qualified date shall not be a date which is prior to the date that is 6 months after the date on which the regulations prescribed under paragraph (1) are published in the Federal Register.
Refunding obligations.—
Regulations prescribed by the Secretary under paragraph (1) shall not apply to any obligation (or series of refunding obligations) issued exclusively to refund any qualified student loan bond which was issued before the qualified date, except that the requirements of subparagraphs (A) and (B) of section 626(b)(4) of this Act [set out in Effective Date of 1984 Amendment note above] must be met with respect to such refunding.
Fulfillment of commitments.—
Regulations prescribed by the Secretary under paragraph (1) shall not apply to any obligations which are needed to fulfill written commitments to acquire or finance student loans which are originated after
such commitments are binding on the qualified date, and
the amount of such commitments is consistent with practices of the issuer which were in effect on
Arbitrage Limitation on Student Loan Bonds Which Are Not Qualified Student Loan Bonds.—
Under regulations prescribed by the Secretary of the Treasury or his delegate, any student loan bond (other than a qualified student loan bond) issued after
Issuance of Student Loan Bonds Which Are Not Tax-Exempt.—
Any issuer who may issue obligations described in section 103(a) of the Internal Revenue Code of 1986 may elect to issue student loan bonds which are not described in such section 103(a) of such Code without prejudice to—
the status of any other obligations issued, or to be issued, by such issuer as obligations described in section 103(a) of such Code, or
the status of the issuer as an organization exempt from taxation under such Code.
Federal Executive Branch Jurisdiction Over Tax-Exempt Status.—
For purposes of Federal law, any determination by the executive branch of the Federal Government of whether interest on any obligation is exempt from taxation under the Internal Revenue Code of 1986 shall be exclusively within the jurisdiction of the Department of the Treasury.
Study on Tax-Exempt Student Loan Bonds.—
In general.—
The Comptroller General of the United States and the Director of the Congressional Budget Office, shall conduct studies of—
the appropriate role of tax-exempt bonds which are issued in connection with the guaranteed student loan program and the PLUS program established under the Higher Education Act of 1965 [20 U.S.C. 1001 et seq.], and
the appropriate arbitrage rules for such bonds.
Report.—
The Comptroller General of the United States and the Director of the Congressional Budget Office, shall submit to the Committee on Finance and the Committee on Labor and Human Resources [now Committee on Health, Education, Labor, and Pensions] of the Senate and the Committee on Ways and Means and the Committee on Education and Labor of the House of Representatives reports on the studies conducted under paragraph (1) by no later than 9 months after the date of enactment of this Act [
Obligations Issued To Provide Solid Waste-Energy Producing Facilities
General rule.—
For purposes of section 103 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954], any obligation issued by an authority for 2 or more political subdivisions of a State which is part of an issue substantially all of the proceeds of which are to be used to provide solid waste-energy producing facilities shall be treated as an obligation of a political subdivision of a State which meets the requirements of section 103(b)(4)(E) of such Code (relating to solid waste disposal, etc., facilities). Nothing in the preceding sentence shall be construed to override the limitations of section 103(c) of such Code (relating to arbitrage bonds).
Solid waste-energy producing facilities.—
For purposes of paragraph (1), the term ‘solid waste-energy producing facilities’ means any solid waste disposal facility and any facility for the production of steam and electrical energy if—
substantially all of the fuel for the facility producing steam and electrical energy is derived from solid waste from such solid waste disposal facility,
both such solid waste disposal facility and the facility producing steam and electrical energy are owned and operated by the authority referred to in paragraph (1), and
all of the electrical energy and steam produced by the facility for producing steam and electricity which is not used by such facility is sold, for purposes other than resale, to an agency or instrumentality of the United States.
Solid waste disposal facility.—
For purposes of paragraph (2), the term ‘solid waste disposal facility’ means any solid waste disposal facility within the meaning of section 103(b)(4)(E) of the Internal Revenue Code of 1986 (determined without regard to section 103(g) of such Code).
Obligations must be in registered form.—
This subsection shall not apply to any obligation which is not issued in registered form.”
Alcohol-Producing Facilities
In general.—
Subparagraph (C) of section 103(g)(3) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (as added by subsection (a)) shall not apply to any facility for the production of alcohol from solid waste if—
substantially all of the solid waste derived feedstock for such facility is produced at a facility which—
went into full production in 1977,
is located within the limits of a city, and
is located in the same metropolitan area as the alcohol-producing facility, and
before
Limitation.—
The aggregate amount of obligations which may be issued by reason of paragraph (1) with respect to any project shall not exceed $30,000,000.
Termination.—
This subsection shall not apply to obligations issued after
Hydroelectric Generating Facilities
In general.—
For purposes of section 103(b)(4)(H) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] (relating to qualified hydroelectric generating facilities), in the case of a hydroelectric generating facility described in paragraph (2)—
the facility shall be treated as a qualified hydroelectric generating facility (as defined in section 103(b)(8)(A) of such Code) without regard to clause (ii) of section 48(l)(13)(B) of such Code (relating to maximum generating capacity), and
the fraction referred to in subparagraph (C) of section 103(b)(8) of such Code shall be deemed to be 1.
Facilities to which paragraph (1) applies.—
A facility is described in this paragraph if—
it would be a qualified hydroelectric generating facility (as defined in section 103(b)(8)(A) of such Code) if clause (ii) of section 48(l)(13)(B) did not apply,
it constitutes an expansion of generating capacity at an existing hydroelectric generating facility,
such facility is located at 1 of 2 dams located in the same county where—
the rated capacity of the hydroelectric generating facilities at each such dam on
the construction of the first such dam began in 1956, power at such first dam was first generated in 1959, and full power production at such first dam began in 1961, and
the construction of the second such dam began in 1959, power at such second dam was first generated in 1963, and full power production at such second dam began in 1964,
acquisition or construction of the existing facility referred to in subparagraph (B) was financed with the proceeds of an obligation described in section 103(a)(1) of such Code,
the existing facility is owned and operated by a State, political subdivision of a State, or agency or instrumentality of any of the foregoing,
no more than 60 percent of the electric power and energy produced by such existing facility and of the qualified hydroelectric generating facility is to be sold to anyone other than an exempt person (within the meaning of section 103(b)(3) of such Code), and
the agency of the State in which the facility is located which has jurisdiction over water rights had granted, before
State Obligations for Renewable Energy Property
Certain State Obligations for Renewable Energy Property.—
In general.—
Paragraph (1) of subsection (b) of section 103 of the Internal Revenue Code of 1986 [formerly I.R.C. 1954] shall not apply to any obligation issued as part of an issue substantially all of the proceeds of which are to be used to provide renewable energy property, if—
the obligations are general obligations of a State,
the authority for the issuance of the obligations requires that taxes be levied in sufficient amount to provide for the payment of principal and interest on such obligations,
the amount of such obligations, when added to the sum of the amounts of all such obligations previously issued by the State which are outstanding, does not exceed the smaller of—
$500,000,000 or
one-half of 1 percent of the value of all property in the State,
such obligations are issued pursuant to a program to provide financing for small scale energy projects which was established by a State the legislature of which, before
such obligations meet the requirements of paragraph (1) of section 103(h) of the Internal Revenue Code of 1986.
Renewable energy property.—
For purposes of this subsection, the term ‘renewable energy property’ means property used to produce energy (including heat, electricity, and substitute fuels) from renewable energy sources (including wind, solar, and geothermal energy, waste heat, biomass, and water).
Effective Date.—
Subsection (a) shall apply with respect to obligations issued after the date of enactment of this Act [
Disposition of Amounts Generated by Advance Refunding of Certain Governmental Obligations
General Rule.—
The payment to a charitable organization of a refund profit held in a trust fund or escrow arrangement, or held by an underwriter or other person under a qualified agreement in accordance with that agreement—
shall not cause the refunding obligations out of which the refund profit arose to be treated as arbitrage bonds (within the meaning of section 103(c) of the Internal Revenue Code of 1986 [formerly I.R.C. 1954]) and
may be paid without penalty imposed on the issuer of such obligations.
Rule for Governments Which Have Already Paid Arbitrage Profits to the United States.—
In the case of a State or local government which, before
requested in writing a rule by the Internal Revenue Service with respect to the tax consequences of paying refund profit to charitable organizations,
failed to receive a favorable ruling and did not pay the refund profit to a charitable organization, and
which accounted to the United States for refund profit by direct payment to the United States, or by the purchase of low-interest United States obligations, the Secretary of the Treasury shall pay, out of any amounts in the Treasury not otherwise appropriated, an amount equal to the refund profit for which the State or local government has accounted to the United States. Amounts paid to a State or local government under this subsection shall be distributed to such charitable organizations within 90 days after the date on which the payment is received by the State or local government in the same manner as if the refund profit had not been paid to the United States and met the requirements of subsection (a).
Definitions.—
For purposes of this section—
Refund profit.—
The term ‘Refund profit’ means interest, profit, or other amounts generated by, or arising out of, the advance refunding, before
Charitable organization.—
The term ‘charitable organization’ means an organization described in section 501(c)(3) of such Code and exempt from taxation under section 501(a) of such Code other than an organization described in section 509(a) of such Code.
Qualified agreement.—
The term ‘qualified agreement’ means an agreement (whether or not enforceable) which provides for, or contemplates, the payment of refund profit to one or more charitable organizations.
Low-interest united states obligations.—
The term ‘low-interest United States obligations’ means United States obligations which bear an interest rate lower than the highest rate of interest borne by public debt securities generally available for purchase at the time such obligations were purchased.”
Transitional Provisions for Industrial Development Bonds Issued Before January 1, 1969
the issuance of the obligation (or the project in connection with which the proceeds of the obligations are to be used) was authorized or approved by the governing body of the governmental unit issuing the obligation or by the voters of such governmental unit;
in connection with the issuance of such obligation or with the use of the proceeds to be derived from the sale of such obligation or the property to be acquired or improved with such proceeds, a governmental unit has made a significant financial commitment;
any person (other than a governmental unit) who will use the proceeds to be derived from the sale of such obligation or the property to be acquired or improved with such proceeds has expended (or has entered into a binding contract to expend) for purposes which are related to the use of such proceeds or property, an amount equal to or in excess of 20 percent of such proceeds; or
in the case of an obligation issued in conjunction with a project where financial assistance will be provided by a governmental agency concerned with economic development, such agency has approved the project or an application for financial assistance is pending.”