[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2102 Introduced in House (IH)]

103d CONGRESS
  1st Session
                                H. R. 2102

To amend the Internal Revenue Code of 1986 to enable small, zero-coupon 
 municipal bonds to be issued and later redeemed at an accreted value 
                   less an early redemption penalty.


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                    IN THE HOUSE OF REPRESENTATIVES

                              May 12, 1993

Mr. Lewis of Georgia introduced the following bill; which was referred 
                   to the Committee on Ways and Means

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                                 A BILL


 
To amend the Internal Revenue Code of 1986 to enable small, zero-coupon 
 municipal bonds to be issued and later redeemed at an accreted value 
                   less an early redemption penalty.

    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 ``Tax-Exempt Municipal Savings Bond 
Act of 1993''.

SEC. 2. CHANGES IN RULES RELATING TO TAX-EXEMPT BONDS.

    (a) Temporary Period Exception for Small Denomination Original 
Issue Discount Bonds Increased to 12 Months.--Subsection (c) of section 
148 of the Internal Revenue Code of 1986 is amended by adding at the 
end thereof the following new paragraph:
            ``(3) Longer temporary period for small denomination 
        original issue discount bonds.--The temporary period referred 
        to in paragraph (1) shall not exceed 12 months with respect to 
        bonds that are issued as original issue discount bonds in 
        denominations of $1,000 or less and are sold to individuals 
        within the State of the issuing jurisdiction.''
    (b) Change in Rules for Reasonably Required Reserve Fund for Small 
Denomination Original Issue Discount Bonds.--Subsection (d) of section 
148 is amended as follows:
            (1) Paragraph (1) of subsection (d) is amended by adding at 
        the end thereof the following new sentence: ``However, in the 
        case of original issue discount bonds that are issued in 
        denominations of $1,000 or less and are sold to individuals 
        within the State of the issuing jurisdiction a higher amount is 
        permitted for reasonably expected redemptions that are 
        exercised at the option of the holder of the bond at 
        predetermined rates established at the time of issuance.''
            (2) Paragraph (2) of subsection (d) is amended by striking 
        the paragraph and inserting in its place the following:
            ``(2) Limitation on amount in reserve or replacement fund 
        which may be financed by issue.--A bond issue as part of an 
        issue shall be treated as an arbitrage bond if the amount of 
        the proceeds from the sale of such issue which is part of any 
        reserve or replacement fund exceeds 10 percent of the proceeds 
        of the issue (or such higher amount which the issuer 
        establishes is necessary to the satisfaction of the Secretary 
        or for the early redemption of such small denomination original 
        issue discount bonds).''
            (3) Paragraph (3) of subsection (d) is amended by adding at 
        the end of the words in the last phrase ``on the issue for the 
        bond year'' in (B)(i) the following:
                ``unless an additional amount is required to meet 
                reasonably anticipated early redemptions of such small 
                denomination original issue discount bonds''.
    (c) Effective Date.--The amendments made by this section shall 
apply to obligations issued after the date of enactment.

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