Credit to holders of qualified abandoned mine land area redevelopment bonds

(a)

In general

Subpart B of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

30B.

Credit to holders of qualified abandoned mine land area redevelopment bonds

(a)

Allowance of credit

In the case of a taxpayer who holds a qualified abandoned mine land area redevelopment bond on a credit allowance date of such bond which occurs during the taxable year, there shall be allowed as a credit against the tax imposed by this chapter for such taxable year an amount equal to the sum of the credits determined under subsection (b) with respect to credit allowance dates during such year on which the taxpayer holds such bond. (b)

Amount of credit

(1)

In general

The amount of the credit determined under this subsection with respect to any credit allowance date for a qualified abandoned mine land area redevelopment bond is 25 percent of the annual credit determined with respect to such bond. (2)

Annual credit

The annual credit determined with respect to any qualified abandoned mine land area redevelopment bond is the product of— (A)the applicable credit rate, multiplied by (B)the outstanding face amount of the bond. (3)

Applicable credit rate

For purposes of paragraph (1), the applicable credit rate with respect to an issue is the rate equal to an average market yield (as of the day before the date of issuance of the issue) on outstanding long-term corporate debt obligations (determined under regulations prescribed by the Secretary). (4)

Special rule for issuance and redemption

In the case of a bond which is issued during the 3-month period ending on a credit allowance date, the amount of the credit determined under this subsection with respect to such credit allowance date shall be a ratable portion of the credit otherwise determined based on the portion of the 3-month period during which the bond is outstanding. A similar rule shall apply when the bond is redeemed. (c)

Qualified abandoned mine land area redevelopment bond

For purposes of this section— (1)

In general

The term qualified abandoned mine land area redevelopment bond means any bond issued as part of an issue if— (A)the issuer is an approved special purpose entity, (B)all of the net proceeds of the issue are deposited into either— (i)an approved segregated program fund, or (ii)a sinking fund for payment of principal on the bonds at maturity, (C)the issuer designates such bond for purposes of this section, and (D)the term of each bond which is part of such issue does not exceed 30 years.

Not more than 1/6 of the net proceeds of an issue may be deposited into a sinking fund referred to in subparagraph (B)(ii).

(2)

Limitation on amount of bonds designated

The maximum aggregate face amount of bonds designated by an approved special purpose entity shall not exceed the portion of the national volume cap allocated to that entity by the Administrator of the Environmental Protection Agency. (3)

National volume cap

The national volume cap is $20,000,000,000. The Administrator of the Environmental Protection Agency shall allocate such amount among the approved special purpose entities, except that not less than $2,000,000,000 of such amount shall be allocated to an entity whose comprehensive plan only covers abandoned mine land areas containing anthracite coal. (4)

Approved special purpose entity

The term approved special purpose entity means a State or local governmental entity, or an entity described in section 501(c) and exempt from tax under section 501(a), if— (A)such entity is established and operated exclusively to carry out qualified purposes, (B)such entity has a comprehensive plan to restore and redevelop abandoned mine land areas, and (C)such entity and plan are approved by the Administrator of the Environmental Protection Agency. (5)

Approved segregated program fund

The term approved segregated program fund means any segregated fund the amounts in which may be used only for qualified purposes, but only if such fund has safeguards approved by such Administrator to assure that such amounts are only used for such purposes. (d)

Limitation based on amount of tax

(1)

In general

The credit allowed under subsection (a) for any taxable year shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (B)the sum of the credits allowable under part IV of subchapter A (other than this section and subpart C thereof, relating to refundable credits). (2)

Carryover of unused credit

If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by paragraph (1) for such taxable year, the excess shall be carried to the succeeding taxable year and added to the amount allowable as a credit under subsection (a) for such succeeding taxable year. (e)

Other definitions

For purposes of this section— (1)

Abandoned mine land areas

The term abandoned mine land areas means lands and water eligible pursuant to section 404 of the Surface Mining Control and Reclamation Act of 1977 (30 U.S.C. 1234) for expenditures from the Abandoned Mine Reclamation Fund under title IV of such Act (30 U.S.C. 1231 et seq.). (2)

Qualified purpose

The term qualified purpose means, with respect to any qualified abandoned mine land area redevelopment bond— (A)the purchase, restoration, and redevelopment of abandoned mine land areas, (B)the cleanup of waterways and their tributaries, both surface and subsurface, on abandoned mine land areas from acid mine drainage and other pollution, (C)the provision of financial and technical assistance for infrastructure construction and upgrading water and sewer systems on abandoned mine land areas, (D)research and development relating to abandoned mine land areas, (E)other environmental and economic development purposes relating to abandoned mine land areas, and (F)such other purposes as are set forth in the comprehensive plan prepared by the issuer and approved by the Administrator of the Environmental Protection Agency. (3)

Credit allowance date

The term credit allowance date means— (A)March 15, (B)June 15, (C)September 15, and (D)December 15.

Such term includes the last day on which the bond is outstanding.

(4)

Bond

The term bond includes any obligation. (f)

Credit included in gross income

Gross income includes the amount of the credit allowed to the taxpayer under this section (determined without regard to subsection (d)) and the amount so included shall be treated as interest income. (g)

Bonds held by regulated investment companies

If any qualified abandoned mine land area redevelopment bond is held by a regulated investment company, the credit determined under subsection (a) shall be allowed to shareholders of such company under procedures prescribed by the Secretary. (h)

Credits may be stripped

Under regulations prescribed by the Secretary— (1)

In general

There may be a separation (including at issuance) of the ownership of a qualified abandoned mine land area redevelopment bond and the entitlement to the credit under this section with respect to such bond. In case of any such separation, the credit under this section shall be allowed to the person who on the credit allowance date holds the instrument evidencing the entitlement to the credit and not to the holder of the bond. (2)

Certain rules to apply

In the case of a separation described in paragraph (1), the rules of section 1286 shall apply to the qualified abandoned mine land area redevelopment bond as if it were a stripped bond and to the credit under this section as if it were a stripped coupon. (i)

Treatment for estimated tax purposes

Solely for purposes of sections 6654 and 6655, the credit allowed by this section to a taxpayer by reason of holding a qualified abandoned mine land area redevelopment bond on a credit allowance date shall be treated as if it were a payment of estimated tax made by the taxpayer on such date. (j)

Credit may be transferred

Nothing in any law or rule of law shall be construed to limit the transferability of the credit allowed by this section through sale and repurchase agreements. (k)

Reporting

The issuer of qualified abandoned mine land area redevelopment bonds shall submit reports similar to the reports required under section 149(e). (l)

Termination

This section shall not apply to any bond issued more than 10 years after the date that the first qualified abandoned mine land area redevelopment bond is issued.

(b)

Reporting

Subsection (d) of section 6049 of such Code (relating to returns regarding payments of interest) is amended by adding at the end the following new paragraph:

(8)

Reporting of credit on qualified abandoned mine land area redevelopment bonds

(A)

In general

For purposes of subsection (a), the term interest includes amounts includible in gross income under section 30B(f) and such amounts shall be treated as paid on the credit allowance date (as defined in section 30B(e)(3)). (B)

Reporting to corporations, etc

Except as otherwise provided in regulations, in the case of any interest described in subparagraph (A) of this paragraph, subsection (b)(4) of this section shall be applied without regard to subparagraphs (A), (H), (I), (J), (K), and (L)(i). (C)

Regulatory authority

The Secretary shall prescribe such regulations as are necessary or appropriate to carry out the purposes of this paragraph, including regulations which require more frequent or more detailed reporting.

(c)

Conforming amendment

The table of sections for subpart B of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 30B. Credit to holders of qualified abandoned mine land area redevelopment bonds

(d)

Deadline for regulations

The Secretary of the Treasury shall prescribe the regulations required by section 6049(d)(8) of the Internal Revenue Code of 1986 (as added by this section) not later than 120 days after the date of the enactment of this Act. (e)

Approval of bonds, etc., by Administrator of the Environmental Protection Agency

The Administrator of the Environmental Protection Agency shall act on any request for an approval required by section 30B of the Internal Revenue Code of 1986 (as added by this section) not later than 60 days after the date such request is submitted to such Administrator. (f)

Effective date

The amendments made by this section shall apply to obligations issued after December 31, 2005.