[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3402 Introduced in House (IH)]
107th CONGRESS
1st Session
H. R. 3402
To provide tax incentives for the recovery of businesses in the City of
New York which were impacted by the September 11, 2001, terrorist
attacks.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 4, 2001
Mr. Rangel (for himself, Mr. Nadler, Mrs. Maloney of New York, Mr.
Serrano, Mr. Towns, Mr. Hinchey, Mrs. McCarthy of New York, and Mr.
McNulty) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To provide tax incentives for the recovery of businesses in the City of
New York which were impacted by the September 11, 2001, terrorist
attacks.
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 ``New York Recovery From Terrorism Act
of 2001''.
SEC. 2. EXPANSION OF WORK OPPORTUNITY TAX CREDIT TARGETED CATEGORIES TO
INCLUDE CERTAIN EMPLOYEES IN NEW YORK CITY.
(a) In General.--For purposes of section 51 of the Internal Revenue
Code of 1986 (relating to work opportunity credit), a New York Recovery
Zone business employee shall be treated as a member of a targeted
group.
(b) New York Recovery Zone Business Employee.--For purposes of this
section--
(1) In general.--The term ``New York Recovery Zone business
employee'' means, with respect to the period beginning after
September 10, 2001, and ending before January 1, 2005, any
employee of a New York Recovery Zone business if--
(A) substantially all the services performed during
such period by such employee for such business are
performed in a trade or business of such business
located in an area described in paragraph (2), and
(B) with respect to any employee of such business
described in paragraph (2)(B), such employee is
certified by the New York State Department of Labor as
not exceeding, when added to all other employees
previously certified with respect to such period as New
York Recovery Zone business employees with respect to
such business, the number of employees of such business
on September 11, 2001, in the New York Recovery Zone.
(2) New york recovery zone business.--The term ``New York
Recovery Zone business'' means any business establishment which
is--
(A) located in the New York Recovery Zone, or
(B) located in the City of New York, New York,
outside the New York Recovery Zone, as the result of
the destruction or damage of such establishment by the
September 11, 2001, terrorist attack.
(3) New york recovery zone.--The term ``New York Recovery
Zone'' means the area located on or south of Canal Street, East
Broadway (east of its intersection with Canal Street), or Grand
Street (east of its intersection with East Broadway) in the
Borough of Manhattan in the City of New York, New York.
(4) Special rules for determining amount of credit.--For
purposes of applying subpart E of part IV of subchapter B of
chapter 1 of the Internal Revenue Code of 1986 to wages paid or
incurred to any New York Recovery Zone business employee--
(A) section 51(a) of such Code shall be applied by
substituting ``qualified wages'' for ``qualified first-
year wages'',
(B) section 51(d)(12)(A)(i) of such Code shall be
applied to the certification of individuals employed by
a New York Recovery Zone business before April 1, 2002,
by substituting ``on or before May 1, 2002'' for ``on
or before the day on which such individual begins work
for the employer'',
(C) subsections (c)(4) and (i)(2) of section 51 of
such Code shall not apply, and
(D) in determining qualified wages, the following
shall apply in lieu of section 51(b) of such Code:
(i) Qualified wages.--The term ``qualified
wages'' means the wages paid or incurred by the
employer for work performed during the period
beginning on September 11, 2001, and ending on
December 31, 2004, to individuals who are New
York Recovery Zone business employees of such
employer.
(ii) Only first $6,000 of wages per taxable
year taken into account.--The amount of the
qualified wages which may be taken into account
with respect to any individual shall not exceed
$6,000 per taxable year of the employer.
(c) Credit Allowed Against Regular and Minimum Tax.--
(1) In general.--Subsection (c) of section 38 of the
Internal Revenue Code of 1986 (relating to limitation based on
amount of tax) is amended by redesignating paragraph (3) as
paragraph (4) and by inserting after paragraph (2) the
following new paragraph:
``(3) Special rules for new york recovery zone business
employee credit.--
``(A) In general.--In the case of the New York
Recovery Zone business employee credit--
``(i) this section and section 39 shall be
applied separately with respect to such credit,
and
``(ii) in applying paragraph (1) to such
credit--
``(I) the tentative minimum tax
shall be treated as being zero, and
``(II) the limitation under
paragraph (1) (as modified by subclause
(I)) shall be reduced by the credit
allowed under subsection (a) for the
taxable year (other than the New York
Recovery Zone business employee
credit).
``(B) New york recovery zone business employee
credit.--For purposes of this subsection, the term `New
York Recovery Zone business employee credit' means the
portion of work opportunity credit under section 51
determined under section 2 of the New York Recovery
From Terrorism Act of 2001.''.
(2) Conforming amendment.--Subclause (II) of section
38(c)(2)(A)(ii) of such Code is amended by inserting ``or the
New York Recovery Zone business employee credit'' after
``employment credit''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after September 11, 2001.
SEC. 3. TAX-EXEMPT PRIVATE ACTIVITY BONDS FOR REBUILDING PORTION OF NEW
YORK CITY DAMAGED IN THE SEPTEMBER 11, 2001, TERRORIST
ATTACK.
(a) Treatment as Qualified Bonds.--For purposes of the Internal
Revenue Code of 1986, any qualified NYC recovery bond shall be treated
as an exempt facility bond under section 141(e) of such Code.
(b) Qualified NYC Recovery Bond.--For purposes of this section, the
term ``qualified NYC recovery bond'' means any bond which--
(1) is issued by the State of New York or any political
subdivision thereof (or any agency, instrumentality or
constituted authority on behalf thereof), and
(2) meets the requirements of subsections (c) through (f).
(c) Designation Requirements.--A bond meets the requirements of
this subsection if it is issued as part of an issue designated as a
qualified NYC recovery bond by the Mayor of the City of New York, New
York, or an individual specifically appointed to make such designation.
(d) Issuance and Volume Requirements.--
(1) In general.--Except as provided in paragraph (3), a
bond issued as part of an issue meets the requirements of this
subsection if such bond is issued during 2002 (or during the
period elected under paragraph (2)) and the aggregate face
amount of the bonds issued pursuant to such issue, when added
to the aggregate face amount of qualified NYC recovery bonds
previously issued, does not exceed $12,500,000,000.
(2) Elective carryforward of unused limitation.--If the
volume cap under paragraph (1) exceeds the aggregate amount of
qualified NYC recovery bonds issued during 2002, the issuing
authority under subsection (b) may elect to carry forward such
excess volume cap for an additional 3-year period under rules
similar to the rules of section 146(f) of the Internal Revenue
Code of 1986 (other than paragraph (2) thereof).
(3) Certain current refundings not counted.--For purposes
of paragraph (1), there shall not be taken into account any
current refunding bond the proceeds of which are used to refund
any bond described in paragraph (1) to the extent the face
amount of such current refunding bond does not exceed the
outstanding face amount of the refunded bond.
(e) Qualified Project Requirements.--
(1) In general.--A bond meets the requirements of this
subsection if it is issued as part of an issue at least 95
percent of the net proceeds of which are to be used for
qualified project costs.
(2) Qualified project costs.--For purposes of this
subsection--
(A) In general.--The term ``qualified project
costs'' means--
(i) with respect to a qualified project
described in paragraph (3)(A)(i), the costs of
acquisition, construction, reconstruction, and
renovation of commercial real property and
residential rental real property, including--
(I) buildings and their structural
components,
(II) fixed tenant improvements, and
(III) public utility property, and
(ii) with respect to a qualified project
described in paragraph (3)(A)(ii), the costs of
acquisition, construction, reconstruction, and
renovation of commercial real property,
including--
(I) buildings and their structural
components, and
(II) fixed tenant improvements.
(B) Limitations.--
(i) Residential rental real property.--Such
term shall not include costs with respect to
residential rental real property to the extent
such costs for all such property exceed 20
percent of the aggregate face amount of the
bonds issued under this section.
(ii) Retail sales property.--Such term
shall not include costs with respect to
property used for retail sales of tangible
property and functionally related and
subordinate property to the extent such costs
for all such property exceeds 10 percent of the
aggregate face amount of the bonds issued under
this section.
(iii) Movable fixtures and equipment.--Such
term shall not include costs with respect to
movable fixtures and equipment.
(3) Qualified projects.--For purposes of this subsection--
(A) In general.--The term ``qualified project''
means any project--
(i) located within the New York Recovery
Zone, or
(ii) located within the City of New York,
New York, but outside of the New York Recovery
Zone, but only if--
(I) such project consists of at
least 100,000 square feet of usable
office or other commercial space
located in a single building or
multiple adjacent buildings, and
(II) the aggregate face amount of
the bonds issued to finance such
project, when added to the aggregate
face amount of all bonds issued to
finance all other projects described in
this clause, does not exceed
$7,000,000,000.
(B) New york recovery zone.--The term ``New York
Recovery Zone'' means the area located on or south of
Canal Street, East Broadway (east of its intersection
with Canal Street), or Grand Street (east of its
intersection with East Broadway) in the Borough of
Manhattan in the City of New York, New York.
(f) General Requirements.--A bond meets the requirements of this
subsection if it is issued as part of an issue which meets the
requirements of part IV of subchapter B of chapter 1 of the Internal
Revenue Code of 1986 applicable to an exempt facility bond, except as
follows:
(1) Sections 142(d) and 150(b)(2) (relating to qualified
residential rental project), and section 146 (relating to
volume cap) of such Code shall not apply to bonds issued under
this section.
(2) The application of section 147(c) of such Code
(relating to limitation on use for land acquisition) shall be
determined by reference to the aggregate authorized face amount
of all bonds issued under this section rather than the net
proceeds of each issue.
(3) Section 147(d) of such Code (relating to acquisition of
existing property not permitted) shall be applied by
substituting ``50 percent'' for ``15 percent'' each place it
appears.
(4) Section 148(f)(4)(C) of such Code (relating to
exception from rebate for certain proceeds to be used to
finance construction expenditures) shall apply to construction
proceeds of bonds issued under this section.
(5) Rules similar to the rules of section 143(a)(2)(A)(iv)
of such Code (relating to use of loan repayments) shall apply
to bonds issued under this section.
(g) Bond Interest not an AMT Preference Item.--For purposes of
section 57(a)(5) of the Internal Revenue Code of 1986, a qualified NYC
recovery bond shall not be treated as a specified private activity
bond.
(h) Separate Issue Treatment of Portions of an Issue.--This section
shall not apply to the portion of the proceeds of an issue which (if
issued as a separate issue) would be treated as a qualified bond or as
a bond that is not a private activity bond (determined without regard
to subsection (a)), if the issuer elects to so treat such portion.
(i) Net Proceeds.--For purposes of this section, the term ``net
proceeds'' has the meaning given such term by section 150(a)(3) of the
Internal Revenue Code of 1986.
(j) Interest on Debt Used To Purchase or Carry Qualified NYC
Recovery Bonds.--
(1) In general.--Clause (i) of section 265(b)(3)(A) of such
Act (relating to exception for certain tax-exempt obligations)
of such Code is amended by adding at the end the following new
flush sentence:
``Such term includes a tax-exempt obligation
issued pursuant to section 3 of the New York
Recovery From Terrorism Act of 2001.''
(2) Refundings.--Subparagraph (D) of section 265(b)(3) of
such Code is by adding at the end the following new clause:
``(iv) Refundings of certain obligations.--
In the case of a refunding (or a series of
refundings) of a qualified tax-exempt
obligation that is an obligation issued
pursuant to section 3 of the New York Recovery
From Terrorism Act of 2001, the refunding
obligation shall be treated as a qualified tax-
exempt obligation if the refunding obligation
meets the requirements of such section.''.
(2) Effective date.--The amendments made by this subsection
shall apply to taxable years ending on or after the date of the
enactment of this Act.
SEC. 4. ADDITIONAL ADVANCE REFUNDING PERMITTED OF CERTAIN BONDS.
Paragraph (3) of section 149(d) of the Internal Revenue Code of
1986 shall not apply to the first advance refunding after the date of
the enactment of this Act of any issue if--
(1) the original bond was issued by--
(A) the City of New York,
(B) the Port Authority of New York and New Jersey,
(C) the Metropolitan Transit Authority of the City
of New York,
(D) the New York City Municipal Water Authority, or
(E) any hospital which is located in the City of
New York, described in section 501(c)(3) of such Code,
and exempt from tax under section 501(a) of such Code,
(2) no bond (issued as part of the refunding issue) is
issued to advance refund a private activity bond (other than a
qualified hospital bond which is a qualified 501(c)(3) bond, as
such terms are defined in section 145 of such Code), and
(3) other than the bonds being refunded by such refunding
issue, the original bonds and all prior refundings of such
bonds have been redeemed as of the date of the enactment of this Act.
The preceding sentence shall apply only if the refunding bonds meet the
requirements of clauses (iii), (iv), and (v) of section 149(d)(3)(A) of
such Code.
SEC. 5. GAIN OR LOSS FROM PROPERTY DAMAGED OR DESTROYED IN NEW YORK
RECOVERY ZONE.
(a) General Rule.--For purposes of the Internal Revenue Code of
1986, if a taxpayer elects the application of this section with respect
to any eligible property, then any gain or loss on the disposition of
the property shall be determined without regard to any compensation (by
insurance or otherwise) received by the taxpayer for damages sustained
to the property as a result of the terrorist attacks occurring on
September 11, 2001. Such election shall be made at such time and in
such manner as the Secretary of the Treasury may prescribe, and, once
made, is irrevocable.
(b) Limitation Based on Purchase of Replacement Property.--
(1) In general.--Subsection (a) shall apply to compensation
received with respect to eligible property only to the extent
of the cost of any qualified replacement property purchased by
the taxpayer.
(2) Allocation.--If the aggregate compensation received by
a taxpayer with respect to all eligible property exceeds the
aggregate cost of all qualified replacement property purchased
by the taxpayer, such cost shall be allocated to such eligible
property in accordance with rules prescribed by the Secretary.
(3) Special rule for consolidated groups.--For purposes of
paragraph (1), an affiliated group filing a consolidated return
may elect to treat any qualified replacement property purchased
by a member of the group as purchased by another member of the
group.
(c) Eligible Property.--For purposes of this section, the term
``eligible property'' means any tangible property--
(1) which is section 1245 property (as defined in section
1245(a)(3) of the Internal Revenue Code of 1986) or qualified
leasehold improvement property (as defined in section 168(k)(3)
of such Code),
(2) substantially all of the use of which as of September
11, 2001, was in a business establishment of the taxpayer
located in the New York Recovery Zone, and
(3) which was damaged or destroyed in the terrorist attacks
of September 11, 2001.
(d) Qualified Replacement Property.--For purposes of this section--
(1) In general.--The term ``qualified replacement
property'' means tangible property--
(A) which is described in subsection (c)(1),
(B) which is purchased by the taxpayer on or after
September 11, 2001, and placed in service in the City
of New York, New York, before January 1, 2007,
(C) the original use of which in such city begins
with the taxpayer, and
(D) substantially all of the use of which is
reasonably expected to be in connection with a business
establishment of the taxpayer located in such city.
(2) Recapture.--The Secretary shall, by regulations,
provide for the recapture of any Federal tax benefit provided
by this section in cases where a taxpayer ceases to use
property as qualified replacement property and such recapture
is necessary to prevent the avoidance of the purposes of this
section.
(e) Coordination With Other Provisions of Code.--For purposes of
the Internal Revenue Code of 1986--
(1) Special rule for treatment of unrecognized gain in
eligible property.--Sections 1245 and 1250 of such Code shall
not apply to any gain on the disposition of eligible property
not recognized by reason of this section.
(2) Loss election not to apply to eligible property.--If a
taxpayer elects the application of this section with respect to
any eligible property, the taxpayer may not make an election
under section 165(i) of such Code with respect to any loss
attributable to the property.
(3) Basis adjustments of qualified replacement property.--
(A) In general.--The basis of any qualified
replacement property shall be reduced by the amount of
any compensation disregarded by reason of subsection
(a).
(B) Special rules for recapture.--For purposes of
sections 1245 and 1250 of such Code, any reduction
under subparagraph (A) shall be treated as a deduction
allowed for depreciation, except that for purposes of
section 1250(b) of such Code, the determination of what
would have been the depreciation adjustments under the
straight line method shall be made as if there had been
no reduction under subparagraph (A).
(4) Special rules for applying section 1033.--For purposes
of applying section 1033 of such Code to converted property
which is eligible property with respect to which an election
under subsection (a) has been made--
(A) the amount realized from the eligible property
shall not include any compensation received by the
taxpayer which is disregarded by reason of subsection
(a), and
(B) any qualified replacement property shall be
disregarded in determining whether property was
acquired for the purposes of replacing the converted
property.
(f) Other Definitions and Rules.--For purposes of this section--
(1) New york recovery zone.--The term ``New York Recovery
Zone'' means the area located on or south of Canal Street, East
Broadway (east of its intersection with Canal Street), or Grand
Street (east of its intersection with East Broadway) in
the Borough of Manhattan in the City of New York, New York.
(2) Time for assessment.--Rules similar to the rules of
subparagraphs (C) and (D) of section 1033(a)(2) of such Code
shall apply for purposes of this section.
(3) Related party limitation.--Section 1033(i) of such Code
shall apply for purposes of this section.
SEC. 6. CREDIT FOR INDIVIDUALS RESIDING IN LOWER MANHATTAN.
(a) In General.--Subpart A of part IV of subchapter A of chapter 1
of the Internal Revenue Code of 1986 (relating to nonrefundable
personal credits) is amended by inserting after section 25B the
following:
``SEC. 25C. CREDIT FOR RESIDENTS OF LOWER MANHATTAN.
``(a) Allowance of Credit.--In the case of an individual who is a
qualified resident with respect to the taxable year, there shall be
allowed as a credit against the tax imposed by this chapter for the
taxable year an amount equal to $5,000.
``(b) Limitations.--
``(1) Limitation based on adjusted gross income.--
``(A) In general.--The amount of the credit allowed
under subsection (a) shall be reduced (but not below
zero) by $50 for each $1,000 (or fraction thereof) by
which the taxpayer's modified adjusted gross income
exceeds $150,000.
``(B) Modified adjusted gross income.--For purposes
of subparagraph (A), the term `modified adjusted gross
income' means adjusted gross income determined without
regard to sections 911, 931, or 933.
``(2) Maximum credit per residence and per qualified
resident.--
``(A) Per residence.--As provided by the Secretary,
the credit under subsection (a) shall not be allowed
with respect to more than 1 individual with respect to
a principal residence for the taxable year.
``(B) Per qualified resident.--The aggregate credit
allowed under subsection (a) with respect to any
individual for all taxable years shall not exceed
$5,000 and no such credit shall be allowed for a
taxable year if the credit was so allowed for a
preceding taxable year.
``(c) Qualified Resident.--For purposes of this section--
``(1) In general.--The term `qualified resident' means an
individual who--
``(A) maintains a principal residence--
``(i) which is located on or south of Canal
Street, East Broadway (east of its intersection
with Canal Street), or Grand Street (east of
its intersection with East Broadway) in the
Borough of Manhattan in the City of New York,
New York, and
``(ii) for at least 6 consecutive months
during calendar year 2002 or 2003,
``(B) makes more than half of the aggregate rental,
mortgage, or any similar payment with respect to the
residence during the period described in subparagraph
(A)(ii), and
``(C) is certified under paragraph (5).
``(2) Multiple residents agreement.--For purposes of
paragraph (1)(B), an individual shall be treated as making more
than half of the aggregate rental, mortgage, or similar
payments for the period with respect to the residence if--
``(A) no one person with respect to the period
makes over half of such payments,
``(B) over half of such aggregate payments are made
by persons each of whom, but for the fact that such
person did not make over half of such payments, would
have been a qualified resident with respect to the
residence,
``(C) the taxpayer contributed over 10 percent of
such payments, and
``(D) each person described in subparagraph (B)
(other than the taxpayer) who contributed over 10
percent of such payments files a written declaration
(in such manner and form as the Secretary may
prescribe) that such person will not claim a credit
with respect to such residence.
``(3) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121, except that
no ownership requirement shall be imposed.
``(4) Year credit allowed.--The credit allowed under
subsection (a) shall be allowed for the taxable year in which
the period described in paragraph (1)(A)(ii) ends.
``(5) Certification.--For purposes of paragraph (1)(C), the
appropriate State or local authority shall--
``(A) certify whether an individual, requesting
such certification, meets the requirements of
subparagraphs (A) and (B) of paragraph (1),
``(B) issue a certification to such individual
meeting such requirements which--
``(i) contains a written statement showing
the name and address of the person making such
certification and the phone number of the
information contact for such person, and
``(ii) is furnished on or before March 1 of
the year following the calendar year in which
the credit under subsection (a) is allowed, and
``(C) not certify more than 32,000
individuals in any calendar year as being
qualified residents for purposes of this
section.
``(d) Verification.--No credit shall be allowed under subsection
(a) to a taxpayer unless the taxpayer includes, on the return of tax
for the taxable year--
``(1) proof of the certification received under subsection
(c)(5), and
``(2) such other information as the Secretary determines
necessary.
``(e) Information Reporting.--
``(1) In general.--Any State or local authority which
issues the certification required under subsection (c)(5) shall
make the return described in paragraph (2) (at such time as the
Secretary may prescribe) with respect to each individual to
whom such certification is provided.
``(2) Form and manner of returns.--A return is described in
this subsection if such return--
``(A) is in such form as the Secretary may
prescribe, and
``(B) contains--
``(i) the name, address, and TIN of the
individual to whom such certification is
provided, and
``(ii) such other information as the
Secretary may reasonably prescribe.''.
(b) Conforming Amendment.--The table of sections for subpart A of
part IV of subchapter A of chapter 1 of such Code is amended by
inserting after the item relating to section 25B the following:
``Sec. 25C. Credit for residents of lower
Manhattan.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
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