[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[S. 763 Placed on Calendar Senate (PCS)]
Calendar No. 34
107th CONGRESS
1st Session
S. 763
[Report No. 107-12]
To amend the Internal Revenue Code of 1986 to allow tax-free
expenditures from education individual retirement accounts for
elementary and secondary school expenses, to increase the maximum
annual amount of contributions to such accounts, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 24, 2001
Mr. Grassley, from the Committee on Finance, reported the following
original bill; which was read twice and placed on the calendar
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to allow tax-free
expenditures from education individual retirement accounts for
elementary and secondary school expenses, to increase the maximum
annual amount of contributions to such accounts, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; AMENDMENT OF 1986 CODE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Affordable
Education Act of 2001''.
(b) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this Act an amendment or repeal is expressed in
terms of an amendment to, or repeal of, a section or other provision,
the reference shall be considered to be made to a section or other
provision of the Internal Revenue Code of 1986.
(c) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; amendment of 1986 Code; table of contents.
TITLE I--EDUCATION SAVINGS INCENTIVES
Sec. 101. Modifications to education individual retirement accounts.
Sec. 102. Modifications to qualified tuition programs.
TITLE II--EDUCATIONAL ASSISTANCE
Sec. 201. Extension of exclusion for employer-provided educational
assistance.
Sec. 202. Elimination of 60-month limit on student loan interest
deduction.
Sec. 203. Exclusion of certain amounts received under the National
Public Health Service Corps Scholarship
Program and the F. Edward Hebert Armed
Forces Health Professions Scholarship and
Financial Assistance Program.
Sec. 204. Exclusion from income of certain amounts contributed to
Coverdell education savings accounts.
TITLE III--LIBERALIZATION OF TAX-EXEMPT FINANCING RULES FOR PUBLIC
SCHOOL CONSTRUCTION
Sec. 301. Additional increase in arbitrage rebate exception for
governmental bonds used to finance
educational facilities.
Sec. 302. Treatment of qualified public educational facility bonds as
exempt facility bonds.
TITLE I--EDUCATION SAVINGS INCENTIVES
SEC. 101. MODIFICATIONS TO EDUCATION INDIVIDUAL RETIREMENT ACCOUNTS.
(a) Maximum Annual Contributions.--
(1) In general.--Section 530(b)(1)(A)(iii) (defining
education individual retirement account) is amended by striking
``$500'' and inserting ``$2,000''.
(2) Conforming amendment.--Section 4973(e)(1)(A) is amended
by striking ``$500'' and inserting ``$2,000''.
(b) Modification of AGI Limits To Remove Marriage Penalty.--Section
530(c)(1) (relating to reduction in permitted contributions based on
adjusted gross income) is amended--
(1) by striking ``$150,000'' in subparagraph (A)(ii) and
inserting ``$190,000'', and
(2) by striking ``$10,000'' in subparagraph (B) and
inserting ``$30,000''.
(c) Tax-Free Expenditures for Elementary and Secondary School
Expenses.--
(1) In general.--Section 530(b)(2) (defining qualified
higher education expenses) is amended to read as follows:
``(2) Qualified education expenses.--
``(A) In general.--The term `qualified education
expenses' means--
``(i) qualified higher education expenses
(as defined in section 529(e)(3)), and
``(ii) qualified elementary and secondary
education expenses (as defined in paragraph
(4)).
``(B) Qualified state tuition programs.--Such term
shall include any contribution to a qualified State
tuition program (as defined in section 529(b)) on
behalf of the designated beneficiary (as defined in
section 529(e)(1)); but there shall be no increase in
the investment in the contract for purposes of applying
section 72 by reason of any portion of such
contribution which is not includible in gross income by
reason of subsection (d)(2).''.
(2) Qualified elementary and secondary education
expenses.--Section 530(b) (relating to definitions and special
rules) is amended by adding at the end the following new
paragraph:
``(4) Qualified elementary and secondary education
expenses.--
``(A) In general.--The term `qualified elementary
and secondary education expenses' means--
``(i) expenses for tuition, fees, academic
tutoring, special needs services, books,
supplies, computer equipment (including related
software and services), and other equipment
which are incurred in connection with the
enrollment or attendance of the designated
beneficiary of the trust as an elementary or
secondary school student at a public, private,
or religious school, and
``(ii) expenses for room and board,
uniforms, transportation, and supplementary
items and services (including extended day
programs) which are required or provided by a
public, private, or religious school in
connection with such enrollment or attendance.
``(B) School.--The term `school' means any school
which provides elementary education or secondary
education (kindergarten through grade 12), as
determined under State law.''.
(3) Conforming amendments.--Section 530 is amended--
(A) by striking ``higher'' each place it appears in
subsections (b)(1) and (d)(2), and
(B) by striking ``higher'' in the heading for
subsection (d)(2).
(d) Waiver of Age Limitations for Children With Special Needs.--
Section 530(b)(1) (defining education individual retirement account) is
amended by adding at the end the following flush sentence:
``The age limitations in subparagraphs (A)(ii) and (E), and
paragraphs (5) and (6) of subsection (d), shall not apply to
any designated beneficiary with special needs (as determined
under regulations prescribed by the Secretary).''.
(e) Entities Permitted To Contribute to Accounts.--Section
530(c)(1) (relating to reduction in permitted contributions based on
adjusted gross income) is amended by striking ``The maximum amount
which a contributor'' and inserting ``In the case of a contributor who
is an individual, the maximum amount the contributor''.
(f) Time When Contributions Deemed Made.--
(1) In general.--Section 530(b) (relating to definitions
and special rules), as amended by subsection (c)(2), is amended
by adding at the end the following new paragraph:
``(5) Time when contributions deemed made.--An individual
shall be deemed to have made a contribution to an education
individual retirement account on the last day of the preceding
taxable year if the contribution is made on account of such
taxable year and is made not later than the time prescribed by
law for filing the return for such taxable year (not including
extensions thereof).''.
(2) Extension of time to return excess contributions.--
Subparagraph (C) of section 530(d)(4) (relating to additional
tax for distributions not used for educational expenses) is
amended--
(A) by striking clause (i) and inserting the
following new clause:
``(i) such distribution is made before the
first day of the sixth month of the taxable
year following the taxable year, and'', and
(B) by striking ``due date of return'' in the
heading and inserting ``certain date''.
(g) Coordination With Hope and Lifetime Learning Credits and
Qualified Tuition Programs.--
(1) In general.--Section 530(d)(2)(C) is amended to read as
follows:
``(C) Coordination with hope and lifetime learning
credits and qualified tuition programs.--For purposes
of subparagraph (A)--
``(i) Credit coordination.--The total
amount of qualified higher education expenses
with respect to an individual for the taxable
year shall be reduced--
``(I) as provided in section
25A(g)(2), and
``(II) by the amount of such
expenses which were taken into account
in determining the credit allowed to
the taxpayer or any other person under
section 25A.
``(ii) Coordination with qualified tuition
programs.--If, with respect to an individual
for any taxable year--
``(I) the aggregate distributions
during such year to which subparagraph
(A) and section 529(c)(3)(B) apply,
exceed
``(II) the total amount of
qualified education expenses (after the
application of clause (i)) for such
year,
the taxpayer shall allocate such expenses among
such distributions for purposes of determining
the amount of the exclusion under subparagraph
(A) and section 529(c)(3)(B).''.
(2) Conforming amendments.--
(A) Subsection (e) of section 25A is amended to
read as follows:
``(e) Election Not To Have Section Apply.--A taxpayer may elect not
to have this section apply with respect to the qualified tuition and
related expenses of an individual for any taxable year.''.
(B) Section 135(d)(2)(A) is amended by striking
``allowable'' and inserting ``allowed''.
(C) Section 530(d)(2)(D) is amended--
(i) by striking ``or credit'', and
(ii) by striking ``credit or'' in the
heading.
(D) Section 4973(e)(1) is amended by adding ``and''
at the end of subparagraph (A), by striking
subparagraph (B), and by redesignating subparagraph (C)
as subparagraph (B).
(h) Renaming Education Individual Retirement Accounts as Coverdell
Education Savings Accounts.--
(1) In general.--
(A) Section 530 (as amended by the preceding
provisions of this section) is amended by striking ``an
education individual retirement account'' each place it
appears and inserting ``a Coverdell education savings
account''.
(B) Section 530(a) is amended--
(i) by striking ``An education individual
retirement account'' and inserting ``A
Coverdell education savings account'', and
(ii) by striking ``the education individual
retirement account'' and inserting ``the
Coverdell education savings account''.
(C) Section 530(b)(1) is amended--
(i) by striking ``education individual
retirement account'' in the text and inserting
``Coverdell education savings account'', and
(ii) by striking ``Education individual
retirement account'' in the heading and
inserting ``Coverdell education savings
account''.
(D) Sections 530(d)(5) and 530(e) are amended by
striking ``any education individual retirement
account'' each place it appears and inserting ``any
Coverdell education savings account''.
(E) The heading for section 530 is amended to read
as follows:
``SEC. 530. COVERDELL EDUCATION SAVINGS ACCOUNTS.''.
(F) The item in the table of contents for part VII
of subchapter F of chapter 1 relating to section 530 is
amended to read as follows:
``Sec. 530. Coverdell education savings
accounts.''.
(2) Conforming amendments.--
(A) The following provisions are amended by
striking ``an education individual retirement'' each
place it appears and inserting ``a Coverdell education
savings'':
(i) Section 72(e)(9).
(ii) Section 135(c)(2)(C).
(iii) Section 4973(a).
(iv) Subsections (c) and (e) of section
4975.
(B) The following provisions are amended by
striking ``education individual retirement'' each place
it appears in the text and inserting ``Coverdell
education savings'':
(i) Section 26(b)(2)(E).
(ii) Section 4973(e).
(iii) Section 6693(a)(2)(D).
(C) The headings for the following provisions are
amended by striking ``education individual retirement
accounts'' each place it appears and inserting
``Coverdell education savings accounts''.
(i) Section 72(e)(9).
(ii) Section 135(c)(2)(C).
(iii) Section 4973(e).
(iv) Section 4975(c)(5).
(i) Effective Dates.--
(1) In general.--Except as provided in paragraph (2), the
amendments made by this section shall apply to taxable years
beginning after December 31, 2001.
(2) Subsection (h).--The amendments made by subsection (h)
shall take effect on the date of the enactment of this Act.
SEC. 102. MODIFICATIONS TO QUALIFIED TUITION PROGRAMS.
(a) Eligible Educational Institutions Permitted To Maintain
Qualified Tuition Programs.--
(1) In general.--Section 529(b)(1) (defining qualified State
tuition program) is amended--
(A) by inserting ``or by 1 or more eligible
educational institutions'' after ``maintained by a
State or agency or instrumentality thereof'' in the
matter preceding subparagraph (A), and
(B) by adding at the end the following new flush
sentence:
``Except to the extent provided in regulations, a program
established and maintained by 1 or more eligible educational
institutions shall not be treated as a qualified tuition
program unless such program has received a ruling or
determination that such program meets the applicable
requirements for a qualifed tuition program.''.
(2) Private qualified tuition programs limited to benefit
plans.--Clause (ii) of section 529(b)(1)(A) is amended by
inserting ``in the case of a program established and maintained
by a State or agency or instrumentality thereof,'' before ``may
make''.
(3) Conforming amendments.--
(A) Sections 72(e)(9), 135(c)(2)(C), 135(d)(1)(D),
529, 530(b)(2)(B), 4973(e), and 6693(a)(2)(C) are
amended by striking ``qualified State tuition'' each
place it appears and inserting ``qualified tuition''.
(B) The headings for sections 72(e)(9) and
135(c)(2)(C) are amended by striking ``qualified state
tuition'' each place it appears and inserting
``qualified tuition''.
(C) The headings for sections 529(b) and
530(b)(2)(B) are amended by striking ``Qualified state
tuition'' each place it appears and inserting
``Qualified tuition''.
(D) The heading for section 529 is amended by
striking ``state''.
(E) The item relating to section 529 in the table
of sections for part VIII of subchapter F of chapter 1
is amended by striking ``State''.
(b) Exclusion From Gross Income of Education Distributions From
Qualified Tuition Programs.--
(1) In general.--Section 529(c)(3)(B) (relating to
distributions) is amended to read as follows:
``(B) Distributions for qualified higher education
expenses.--For purposes of this paragraph--
``(i) In-kind distributions.--No amount
shall be includible in gross income under
subparagraph (A) by reason of a distribution
which consists of providing a benefit to the
distributee which, if paid for by the
distributee, would constitute payment of a
qualified higher education expense.
``(ii) Cash distributions.--In the case of
distributions not described in clause (i), if--
``(I) such distributions do not
exceed the qualified higher education
expenses (reduced by expenses described
in clause (i)), no amount shall be
includible in gross income, and
``(II) in any other case, the
amount otherwise includible in gross
income shall be reduced by an amount
which bears the same ratio to such
amount as such expenses bear to such
distributions.
``(iii) Exception for institutional
programs.--In the case of any taxable year
beginning before January 1, 2004, clauses (i)
and (ii) shall not apply with respect to any
distribution during such taxable year under a
qualified tuition program established and
maintained by 1 or more eligible educational
institutions.
``(iv) Treatment as distributions.--Any
benefit furnished to a designated beneficiary
under a qualified tuition program shall be
treated as a distribution to the beneficiary
for purposes of this paragraph.
``(v) Coordination with hope and lifetime
learning credits.--The total amount of
qualified higher education expenses with
respect to an individual for the taxable year
shall be reduced--
``(I) as provided in section
25A(g)(2), and
``(II) by the amount of such
expenses which were taken into account
in determining the credit allowed to
the taxpayer or any other person under
section 25A.
``(vi) Coordination with coverdell
education savings accounts.--If, with respect
to an individual for any taxable year--
``(I) the aggregate distributions
to which clauses (i) and (ii) and
section 530(d)(2)(A) apply, exceed
``(II) the total amount of
qualified higher education expenses
otherwise taken into account under
clauses (i) and (ii) (after the
application of clause (v)) for such
year,
the taxpayer shall allocate such expenses among
such distributions for purposes of determining
the amount of the exclusion under clauses (i)
and (ii) and section 530(d)(2)(A).''.
(2) Conforming amendments.--
(A) Section 135(d)(2)(B) is amended by striking
``the exclusion under section 530(d)(2)'' and inserting
``the exclusions under sections 529(c)(3)(B) and
530(d)(2)''.
(B) Section 221(e)(2)(A) is amended by inserting
``529,'' after ``135,''.
(c) Rollover to Different Program for Benefit of Same Designated
Beneficiary.--Section 529(c)(3)(C) (relating to change in
beneficiaries) is amended--
(1) by striking ``transferred to the credit'' in clause (i)
and inserting ``transferred--
``(I) to another qualified tuition
program for the benefit of the
designated beneficiary, or
``(II) to the credit'',
(2) by adding at the end the following new clause:
``(iii) Limitation on certain rollovers.--
Clause (i)(I) shall only apply to the first 3
transfers with respect to a designated
beneficiary.'', and
(3) by inserting ``or programs'' after ``beneficiaries'' in
the heading.
(d) Member of Family Includes First Cousin.--Section 529(e)(2)
(defining member of family) is amended by striking ``and'' at the end
of subparagraph (B), by striking the period at the end of subparagraph
(C) and by inserting ``; and'', and by adding at the end the following
new subparagraph:
``(D) any first cousin of such beneficiary.''.
(e) Adjustment of Limitation on Room and Board Distributions.--
Section 529(e)(3)(B)(ii) is amended to read as follows:
``(ii) Limitation.--The amount treated as
qualified higher education expenses by reason
of clause (i) shall not exceed--
``(I) the allowance (applicable to
the student) for room and board
included in the cost of attendance (as
defined in section 472 of the Higher
Education Act of 1965 (20 U.S.C.
1087ll), as in effect on the date of
the enactment of the Affordable
Education Act of 2001) as determined by
the eligible educational institution
for such period, or
``(II) if greater, the actual
invoice amount the student residing in
housing owned or operated by the
eligible educational institution is
charged by such institution for room
and board costs for such period.''.
(f) Technical Amendments.--Section 529(c)(3)(D) is amended--
(1) by inserting ``except to the extent provided by the
Secretary,'' before ``all distributions'' in clause (ii), and
(2) by inserting ``except to the extent provided by the
Secretary,'' before ``the value'' in clause (iii).
(g) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2001.
TITLE II--EDUCATIONAL ASSISTANCE
SEC. 201. PERMANENT EXTENSION OF EXCLUSION FOR EMPLOYER-PROVIDED
EDUCATIONAL ASSISTANCE.
(a) In General.--Section 127 (relating to exclusion for educational
assistance programs) is amended by striking subsection (d) and by
redesignating subsection (e) as subsection (d).
(b) Repeal of Limitation on Graduate Education.--The last sentence
of section 127(c)(1) is amended by striking ``, and such term also does
not include any payment for, or the provision of any benefits with
respect to, any graduate level course of a kind normally taken by an
individual pursuing a program leading to a law, business, medical, or
other advanced academic or professional degree''.
(c) Conforming Amendment.--Section 51A(b)(5)(B)(iii) is amended by
striking ``or would be so excludable but for section 127(d)''.
(d) Effective Date.--The amendments made by this section shall
apply with respect to expenses relating to courses beginning after
December 31, 2001.
SEC. 202. ELIMINATION OF 60-MONTH LIMIT AND INCREASE IN INCOME
LIMITATION ON STUDENT LOAN INTEREST DEDUCTION.
(a) Elimination of 60-Month Limit.--
(1) In general.--Section 221 (relating to interest on
education loans), as amended by section 102(b)(2)(B), is
amended by striking subsection (d) and by redesignating
subsections (e), (f), and (g) as subsections (d), (e), and (f),
respectively.
(2) Conforming amendment.--Section 6050S(e) is amended by
striking ``section 221(e)(1)'' and inserting ``section
221(d)(1)''.
(3) Effective date.--The amendments made by this subsection
shall apply with respect to any loan interest paid after
December 31, 2001, in taxable years ending after such date.
(b) Increase in Income Limitation.--
(1) In general.--Section 221(b)(2)(B) (relating to amount
of reduction) is amended by striking clauses (i) and (ii) and
inserting the following:
``(i) the excess of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $50,000 ($100,000 in the
case of a joint return), bears to
``(ii) $15,000 ($30,000 in the case of a
joint return).''.
(2) Conforming amendment.--Section 221(g)(1) is amended by
striking ``$40,000 and $60,000 amounts'' and inserting
``$50,000 and $100,000 amounts''.
(3) Effective date.--The amendments made by this subsection
shall apply to taxable years ending after December 31, 2001.
SEC. 203. EXCLUSION OF CERTAIN AMOUNTS RECEIVED UNDER THE NATIONAL
HEALTH SERVICE CORPS SCHOLARSHIP PROGRAM AND THE F.
EDWARD HEBERT ARMED FORCES HEALTH PROFESSIONS SCHOLARSHIP
AND FINANCIAL ASSISTANCE PROGRAM.
(a) In General.--Section 117(c) (relating to the exclusion from
gross income amounts received as a qualified scholarship) is amended--
(1) by striking ``Subsections (a)'' and inserting the
following:
``(1) In general.--Except as provided in paragraph (2),
subsections (a)'', and
(2) by adding at the end the following new paragraph:
``(2) Exceptions.--Paragraph (1) shall not apply to any
amount received by an individual under--
``(A) the National Health Service Corps Scholarship
Program under section 338A(g)(1)(A) of the Public
Health Service Act, or
``(B) the Armed Forces Health Professions
Scholarship and Financial Assistance program under
subchapter I of chapter 105 of title 10, United States
Code.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply to amounts received in taxable years beginning after December 31,
2001.
SEC. 204. EXCLUSION FROM INCOME OF CERTAIN AMOUNTS CONTRIBUTED TO
COVERDELL EDUCATION SAVINGS ACCOUNTS.
(a) In General.--Section 127 (relating to education assistance
programs), as amended by section 201(a), is amended by redesignating
subsection (d) as subsection (e) and by inserting after subsection (c)
the following new subsection:
``(d) Qualified Coverdell Education Savings Account
Contributions.--
``(1) In general.--Gross income of an employee shall not
include amounts paid or incurred by the employer for a
qualified Coverdell education savings account contribution on
behalf of the employee.
``(2) Qualified coverdell education savings account
contribution.--For purposes of this subsection--
``(A) In general.--The term `qualified Coverdell
education savings account contribution' means an amount
contributed pursuant to an educational assistance
program described in subsection (b) by an employer to a
Coverdell education savings account established and
maintained for the benefit of an employee or the
employee's spouse, or any lineal descendent of either.
``(B) Dollar limit.--A contribution by an employer
to a Coverdell education savings account shall not be
treated as a qualified Coverdell education savings
account contribution to the extent that the
contribution, when added to prior contributions by the
employer during the calendar year to Coverdell
education savings accounts established and maintained
for the same beneficiary, exceeds $500.
``(3) Special rules.--
``(A) Contributions not treated as educational
assistance in determining maximum exclusion.--For
purposes of subsection (a)(2), qualified Coverdell
education savings account contributions shall not be
treated as educational assistance.
``(B) Self-employed not treated as employee.--For
purposes of this subsection, subsection (c)(2) shall
not apply.
``(C) Adjusted gross income phaseout of account
contribution not applicable to individual employers.--
The limitation under section 530(c) shall not apply to
a qualified Coverdell education savings account
contribution made by an employer who is an individual.
``(D) Contributions not treated as an investment in
the contract.--For purposes of section 530(d), a
qualified Coverdell education savings account
contribution shall not be treated as an investment in the contract.''.
(b) Reporting Requirement.--Section 6051(a) (relating to receipts
for employees) is amended by striking ``and'' at the end of paragraph
(10), by striking the period at the end of paragraph (11) and inserting
``, and'', and by adding at the end the following new paragraph:
``(12) the amount of any qualified Coverdell education
savings account contribution under section 127(d) with respect
to such employee.''.
(c) Conforming Amendment.--Section 221(e)(2)(A) is amended by
inserting ``(other than under subsection (d) thereof)'' after ``section
127''.
(d) Effective Date.--The amendments made by this section shall
apply to contributions made in taxable years beginning after December
31, 2001.
TITLE III--LIBERALIZATION OF TAX-EXEMPT FINANCING RULES FOR PUBLIC
SCHOOL CONSTRUCTION
SEC. 301. ADDITIONAL INCREASE IN ARBITRAGE REBATE EXCEPTION FOR
GOVERNMENTAL BONDS USED TO FINANCE EDUCATIONAL
FACILITIES.
(a) In General.--Section 148(f)(4)(D)(vii) (relating to increase in
exception for bonds financing public school capital expenditures) is
amended by striking ``$5,000,000'' the second place it appears and
inserting ``$10,000,000''.
(b) Effective Date.--The amendment made by subsection (a) shall
apply to obligations issued in calendar years beginning after December
31, 2001.
SEC. 302. TREATMENT OF QUALIFIED PUBLIC EDUCATIONAL FACILITY BONDS AS
EXEMPT FACILITY BONDS.
(a) Treatment as Exempt Facility Bond.--Subsection (a) of section
142 (relating to exempt facility bond) is amended by striking ``or'' at
the end of paragraph (11), by striking the period at the end of
paragraph (12) and inserting ``, or'', and by adding at the end the
following new paragraph:
``(13) qualified public educational facilities.''.
(b) Qualified Public Educational Facilities.--Section 142 (relating
to exempt facility bond) is amended by adding at the end the following
new subsection:
``(k) Qualified Public Educational Facilities.--
``(1) In general.--For purposes of subsection (a)(13), the
term `qualified public educational facility' means any school
facility which is--
``(A) part of a public elementary school or a
public secondary school, and
``(B) owned by a private, for-profit corporation
pursuant to a public-private partnership agreement with
a State or local educational agency described in
paragraph (2).
``(2) Public-private partnership agreement described.--A
public-private partnership agreement is described in this
paragraph if it is an agreement--
``(A) under which the corporation agrees--
``(i) to do 1 or more of the following:
construct, rehabilitate, refurbish, or equip a
school facility, and
``(ii) at the end of the term of the
agreement, to transfer the school facility to
such agency for no additional consideration,
and
``(B) the term of which does not exceed the term of
the issue to be used to provide the school facility.
``(3) School facility.--For purposes of this subsection,
the term `school facility' means--
``(A) any school building,
``(B) any functionally related and subordinate
facility and land with respect to such building,
including any stadium or other facility primarily used
for school events, and
``(C) any property, to which section 168 applies
(or would apply but for section 179), for use in a
facility described in subparagraph (A) or (B).
``(4) Public schools.--For purposes of this subsection, the
terms `elementary school' and `secondary school' have the
meanings given such terms by section 14101 of the Elementary
and Secondary Education Act of 1965 (20 U.S.C. 8801), as in
effect on the date of the enactment of this subsection.
``(5) Annual aggregate face amount of tax-exempt
financing.--
``(A) In general.--An issue shall not be treated as
an issue described in subsection (a)(13) if the
aggregate face amount of bonds issued by the State
pursuant thereto (when added to the aggregate face
amount of bonds previously so issued during the
calendar year) exceeds an amount equal to the greater
of--
``(i) $10 multiplied by the State
population, or
``(ii) $5,000,000.
``(B) Allocation rules.--
``(i) In general.--Except as otherwise
provided in this subparagraph, the State may
allocate the amount described in subparagraph
(A) for any calendar year in such manner as the
State determines appropriate.
``(ii) Rules for carryforward of unused
limitation.--A State may elect to carry forward
an unused limitation for any calendar year for
3 calendar years following the calendar year in
which the unused limitation arose under rules
similar to the rules of section 146(f), except
that the only purpose for which the
carryforward may be elected is the issuance of
exempt facility bonds described in subsection
(a)(13).''.
(c) Exemption From General State Volume Caps.--Paragraph (3) of
section 146(g) (relating to exception for certain bonds) is amended--
(1) by striking ``or (12)'' and inserting ``(12), or
(13)'', and
(2) by striking ``and environmental enhancements of
hydroelectric generating facilities'' and inserting
``environmental enhancements of hydroelectric generating
facilities, and qualified public educational facilities''.
(d) Exemption From Limitation on Use for Land Acquisition.--Section
147(h) (relating to certain rules not to apply to mortgage revenue
bonds, qualified student loan bonds, and qualified 501(c)(3) bonds) is
amended by adding at the end the following new paragraph:
``(3) Exempt facility bonds for qualified public-private
schools.--Subsection (c) shall not apply to any exempt facility
bond issued as part of an issue described in section 142(a)(13)
(relating to qualified public educational facilities).''.
(e) Conforming Amendment.--The heading for section 147(h) is
amended by striking ``Mortgage Revenue Bonds, Qualified Student Loan
Bonds, and Qualified 501(c)(3) Bonds'' and inserting ``Certain Bonds''.
(f) Effective Date.--The amendments made by this section shall
apply to bonds issued after December 31, 2001.
Calendar No. 34
107th CONGRESS
1st Session
S. 763
[Report No. 107-12]
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A BILL
To amend the Internal Revenue Code of 1986 to allow tax-free
expenditures from education individual retirement accounts for
elementary and secondary school expenses, to increase the maximum
annual amount of contributions to such accounts, and for other
purposes.
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April 24, 2001
Read twice and placed on the calendar