119-hr1255

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1255 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 1255

 To amend the Internal Revenue Code of 1986 to reinstate advance 
 refunding bonds.

_______________________________________________________________________

 IN THE HOUSE OF REPRESENTATIVES

 February 12, 2025

 Mr. Kustoff (for himself, Mr. Yakym, Ms. Moore of Wisconsin, and Mr. 
 Panetta) 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 reinstate advance 
 refunding bonds.

 Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

 This Act may be cited as the ``Investing in Our Communities Act''.

SEC. 2. TREATMENT OF ADVANCE REFUNDING BONDS.

    (a) In General.--

Section 149
            (d) of the Internal Revenue Code of 
1986 is amended--

    (1) in paragraph

    (1) , by striking ``to advance refund 
 another bond'' and inserting ``as part of an issue described in 
 paragraph

    (2) ,

    (3) , or

    (4) '';

    (2) by redesignating paragraphs

    (2) and

    (3) as paragraphs

    (6) and

    (7) , respectively; and

    (3) by inserting after paragraph

    (1) the following new 
 paragraphs:
 ``

    (2) Certain private activity bonds.--An issue is 
 described in this paragraph if any bond (issued as part of such 
 issue) is issued to advance refund a private activity bond 
 (other than a qualified 501
            (c) (3) bond).
 ``

    (3) Other bonds.--
 ``
        (A) In general.--An issue is described in this 
 paragraph if any bond (issued as part of such issue), 
 hereinafter in this paragraph referred to as the 
 `refunding bond', is issued to advance refund a bond 
 unless--
 ``
            (i) the refunding bond is only--
 ``
            (I) the 1st advance refunding of 
 the original bond if the original bond 
 is issued after 1985, or
 ``
            (II) the 1st or 2nd advance 
 refunding of the original bond if the 
 original bond was issued before 1986,
 ``
            (ii) in the case of refunded bonds issued 
 before 1986, the refunded bond is redeemed not 
 later than the earliest date on which such bond 
 may be redeemed at par or at a premium of 3 
 percent or less,
 ``
            (iii) in the case of refunded bonds 
 issued after 1985, the refunded bond is 
 redeemed not later than the earliest date on 
 which such bond may be redeemed,
 ``
            (iv) the initial temporary period under 
 

section 148
            (c) ends--
 ``
            (I) with respect to the proceeds 
 of the refunding bond not later than 30 
 days after the date of issue of such 
 bond, and
 ``
            (II) with respect to the proceeds 
 of the refunded bond on the date of 
 issue of the refunding bond, and
 ``
            (v) in the case of refunded bonds to 
 which 

section 148

    (e) did not apply, on and 
 after the date of issue of the refunding bond, 
 the amount of proceeds of the refunded bond 
 invested in higher yielding investments (as 
 defined in 

section 148

    (b) ) which are nonpurpose 
 investments (as defined in 

section 148

    (f)

    (6)
        (A) ) does not exceed--
 ``
            (I) the amount so invested as 
 part of a reasonably required reserve 
 or replacement fund or during an 
 allowable temporary period, and
 ``
            (II) the amount which is equal to 
 the lesser of 5 percent of the proceeds 
 of the issue of which the refunded bond 
 is a part or $100,000 (to the extent 
 such amount is allocable to the 
 refunded bond).
 ``
        (B) Special rules for redemptions.--
 ``
            (i) Issuer must redeem only if debt 
 service savings.--Clauses
            (ii) and
            (iii) of 
 subparagraph
        (A) shall apply only if the issuer 
 may realize present value debt service savings 
 (determined without regard to administrative 
 expenses) in connection with the issue of which 
 the refunding bond is a part.
 ``
            (ii) Redemptions not required before 90th 
 day.--For purposes of clauses
            (ii) and
            (iii) of 
 subparagraph
        (A) , the earliest date referred to 
 in such clauses shall not be earlier than the 
 90th day after the date of issuance of the 
 refunding bond.
 ``

    (4) Abusive transactions prohibited.--An issue is 
 described in this paragraph if any bond (issued as part of such 
 issue) is issued to advance refund another bond and a device is 
 employed in connection with the issuance of such issue to 
 obtain a material financial advantage (based on arbitrage) 
 apart from savings attributable to lower interest rates.
 ``

    (5) Special rules for purposes of paragraph

    (3) .--For 
 purposes of paragraph

    (3) , bonds issued before the date of the 
 enactment of this subsection shall be taken into account under 
 subparagraph
        (A)
            (i) thereof except--
 ``
        (A) a refunding which occurred before 1986 shall 
 be treated as an advance refunding only if the 
 refunding bond was issued more than 180 days before the 
 redemption of the refunded bond, and
 ``
        (B) a bond issued before 1986, shall be treated 
 as advance refunded no more than once before March 15, 
 1986.''.

    (b) Conforming Amendment.--

Section 148

    (f)

    (4)
            (C) of such Code is 
amended by redesignating clauses
            (xiv) through
            (xvi) as clauses
            (xv) through
            (xvii) and by inserting after clause
            (xiii) the following new 
clause:
 ``
            (xiv) Determination of initial temporary 
 period.--For purposes of this subparagraph, the 
 end of the initial temporary period shall be 
 determined without regard to 

section 149
            (d) (3)
        (A)
            (iv) .''.
            (c) Effective Date.--The amendments made by this section shall 
apply to advance refunding bonds issued after the date of the enactment 
of this Act.
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