[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4873 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 4873

 To amend the Internal Revenue Code of 1986 to encourage investment in 
                          affordable housing.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 2, 2006

 Mr. Ramstad 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 encourage investment in 
                          affordable housing.

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

SECTION 1. LOW-INCOME HOUSING CREDIT IMPROVEMENTS.

    (a) Renaming the Low-Income Housing Credit as the Affordable 
Housing Credit.--
            (1) In general.--The heading of section 42 of the Internal 
        Revenue Code of 1986 (relating to low-income housing credit) is 
        amended by striking ``low-income'' and inserting 
        ``affordable''.
            (2) Conforming amendments.--
                    (A) Sections 38(b)(5), 42(a), 772(a)(7), and 
                772(d)(5) of such Code are each amended by striking 
                ``low-income'' and inserting ``affordable''.
                    (B) The headings of subparagraphs (3)(D) and (6)(B) 
                of section 469(i) of such Code are each amended by 
                striking ``low-income'' and inserting ``affordable''.
                    (C) The table of sections for subpart D of part IV 
                of subchapter A of chapter 1 of such Code is amended by 
                striking the item relating to section 42 and inserting 
                the following:

``Sec. 42. Affordable housing credit.''.
    (b) Modification of Rules for Determining Applicable Percentage.--
            (1) In general.--Subsection (b) of section 42 of the 
        Internal Revenue Code of 1986 (relating to applicable 
        percentage: 70 percent present value credit for certain new 
        buildings; 30 percent present value credit for certain other 
        buildings) is amended to read as follows:
    ``(b) Applicable Percentage.--
            ``(1) In general.--For purposes of this section, the term 
        `applicable percentage' means--
                    ``(A) 9 percent in the case of any building to 
                which subparagraph (B) does not apply, and
                    ``(B) 4 percent in the case of--
                            ``(i) any existing building, and
                            ``(ii) any new building if, at any time 
                        during the taxable year or any prior taxable 
                        year, there is or was outstanding any 
                        obligation--
                                    ``(I) not taken into account under 
                                section 146,
                                    ``(II) which is exempt from tax 
                                under section 103, and
                                    ``(III) the proceeds of which are 
                                or were used (directly or indirectly) 
                                with respect to such building or the 
                                operation thereof.
            ``(2) Cross references.--
                    ``(A) For treatment of certain rehabilitation 
                expenditures as separate new buildings, see subsection 
                (e).
                    ``(B) For determination of applicable percentage 
                for increases in qualified basis after the 1st year of 
                the credit period, see subsection (f)(3).
                    ``(C) For authority of housing credit agency to 
                limit applicable percentage and qualified basis which 
                may be taken into account under this section with 
                respect to any building, see subsection (h)(7).''.
            (2) Modification of rules related to federal subsidies.--
        Paragraph (2) of section 42(i) of such Code (relating to 
        determination of whether building is Federally subsidized) is 
        amended to read as follows:
            ``(2) Exceptions for certain new buildings otherwise 
        subject to 4 percent credit limitation.--
                    ``(A) Election to reduce eligible basis by proceeds 
                of obligations.--A tax-exempt obligation shall not be 
                taken into account under subsection (b)(1)(B)(ii) if 
                the taxpayer elects to exclude the proceeds of such 
                obligation from the eligible basis of the building for 
                purposes of subsection (d).
                    ``(B) Special rule for subsidized construction 
                financing.--A tax-exempt obligation used to provide 
                construction financing for any building shall not be 
                taken into account under subsection (b)(1)(B)(ii) if--
                            ``(i) such obligation (when issued) 
                        identified the building for which the proceeds 
                        of such obligation would be used, and
                            ``(ii) such obligation is redeemed before 
                        such building is placed in service.''.
    (c) Increase in Credit for Buildings in State Designated Areas.--
            (1) In general.--Clause (i) of section 42(d)(5)(C) of the 
        Internal Revenue Code of 1986 (relating to increase in credit 
        for buildings in high cost areas) is amended by striking ``or 
        difficult development area'' and inserting ``, difficult 
        development area, or State designated project''.
            (2) State designated project.--Subparagraph (C) of section 
        42(d)(5) of such Code is amended by adding at the end the 
        following new clause:
                            ``(v) State designated project.--For 
                        purposes of this subparagraph, the term `State 
                        designated project' means any project 
                        designated by the housing credit agency as 
                        meeting such criteria for designation under 
                        this clause as the State in which such project 
                        is located may specify. The rules of clauses 
                        (ii)(II) and (iv) shall not apply for purposes 
                        designations made under this clause.''.
            (3) Conforming amendment.--The heading of subparagraph (C) 
        of section 42(d)(5) of such Code is amended by striking 
        ``buildings in high cost areas'' and inserting ``certain 
        buildings''.
    (d) Modification of Scattered Site Rule.--Paragraph (7) of section 
42(g) of the Internal Revenue Code of 1986 (relating to scattered site 
projects) is amended to read as follows:
            ``(7) Scattered site projects.--Buildings which would (but 
        for their lack of proximity) be treated as a project for 
        purposes of this section shall be so treated if the rent-
        restricted (within the meaning of paragraph (2)) residential 
        units of such project are distributed among such buildings in 
        proportion to the number of residential units in each 
        building.''.
    (e) Affordable Housing Credits Allowed for Section 8 Moderate 
Rehabilitation Developments.--Paragraph (2) of section 42(c) of the 
Internal Revenue Code of 1986 (relating to qualified low-income 
building) is amended by striking the last sentence.
    (f) Effective Date.--The amendments made by this section shall 
apply to--
            (1) housing credit dollar amounts allocated after December 
        31, 2006, and
            (2) buildings placed in service after such date to the 
        extent paragraph (1) of section 42(h) of the Internal Revenue 
        Code of 1986 does not apply to such building by reason of 
        paragraph (4) thereof, but only with respect to bonds issued 
        after such date.

SEC. 2. REPEAL OF REQUIRED USE OF CERTAIN PRINCIPAL REPAYMENTS ON 
              QUALIFIED MORTGAGE ISSUES TO REDEEM BONDS.

    (a) In General.--Subparagraph (A) of section 142(a)(2) of the 
Internal Revenue Code of 1986 (relating to qualified mortgage issue 
defined) is amended by inserting ``and'' at the end of clause (ii), by 
striking ``, and'' at the end of clause (iii) and inserting a period, 
and by striking clause (iv) and the last sentence.
    (b) Conforming Amendment.--Clause (ii) of section 142(a)(2)(D) of 
such Code is amended by striking ``(and clause (iv) of subparagraph 
(A))''.
    (c) Effective Date.--The amendments made by this section shall 
apply to repayments received after the date of the enactment of this 
Act.

SEC. 3. COORDINATION OF CERTAIN RULES APPLICABLE TO AFFORDABLE HOUSING 
              CREDIT AND QUALIFIED RESIDENTIAL RENTAL PROJECT EXEMPT 
              FACILITY BONDS.

    (a) Determination of Next Available Unit.--Paragraph (3) of section 
142(d) of the Internal Revenue Code of 1986 (relating to current income 
determinations) is amended by adding at the end the following new 
subparagraph:
                    ``(C) Exception for projects with respect to which 
                affordable housing credit is allowed.--In the case of a 
                project with respect to which credit is allowed under 
                section 42, the second sentence of subparagraph (B) 
                shall be applied by substituting `building (within the 
                meaning of section 42)' for `project'.''.
    (b) Students.--Paragraph (2) of section 142(d) of the Internal 
Revenue Code of 1986 (relating to definitions and special rules) is 
amended by adding at the end the following new subparagraph:
                    ``(C) Students.--Students (as defined in section 
                151(c)(4)) shall not be treated as satisfying the 
                requirements of subparagraph (A) or (B) of paragraph 
                (1) except under rules similar to the rules of 
                42(i)(3)(D).''.
    (c) Single-Room Occupancy Units.--Paragraph (2) of section 142(d) 
of the Internal Revenue Code of 1986 (relating to definitions and 
special rules), as amended by this Act, is further amended by adding at 
the end the following new subparagraph:
                    ``(D) Single-room occupancy units.--A unit shall 
                not fail to be treated as a residential unit merely 
                because such unit is a single-room occupancy unit 
                (within the meaning of section 42).''.
    (d) Effective Date.--The amendments made by this section shall 
apply to determinations of the status of qualified residential rental 
projects for periods beginning after the date of the enactment of this 
Act, with respect to bonds issued before, on, or after such date.

SEC. 4. DISPLACED HOMEMAKERS, SINGLE PARENTS, AND CERTAIN DISASTER 
              VICTIMS TREATED AS FIRST-TIME HOME BUYERS UNDER RULES FOR 
              MORTGAGE REVENUE BONDS.

    (a) In General.--Paragraph (2) of section 143(d) of the Internal 
Revenue Code of 1986 (relating to exceptions) is amended by striking 
``and'' at the end of subparagraph (B), and by inserting after 
subparagraph (C) the following new subparagraphs:
                    ``(D) financing provided to a displaced homemaker 
                or a single parent, and
                    ``(E) financing provided for the acquisition of a 
                residence located in an area determined by the 
                President to warrant assistance from the Federal 
                Government under the Robert T. Stafford Disaster Relief 
                and Emergency Assistance Act by an individual whose 
                prior primary residence was in such area and was 
                destroyed or otherwise rendered uninhabitable as a 
                result of such disaster,''.
    (b) Displaced Homemaker; Single Parent.--Subsection (d) of section 
143 of such Code (relating to 3-year requirement) is amended by adding 
at the end the following new paragraph:
            ``(4) Displaced homemaker; single parent.--For purposes of 
        paragraph (2)(D)--
                    ``(A) Displaced homemaker.--The term `displaced 
                homemaker' means an individual who--
                            ``(i) is an adult,
                            ``(ii) has not worked full-time full-year 
                        in the labor force for a number of years but 
                        has, during such years, worked primarily 
                        without remuneration to care for the home and 
                        family, and
                            ``(iii) is unemployed or underemployed and 
                        is experiencing difficulty in obtaining or 
                        upgrading employment.
                    ``(B) Single parent.--The term `single parent' 
                means an individual who--
                            ``(i) is not a married individual, and
                            ``(ii) who has one or more dependents 
                        (within the meaning of section 152).''.
    (c) Effective Date.--The amendment made by this section shall apply 
to bonds originally issued after the date of the enactment of this Act.

SEC. 5. REPEAL OF RECAPTURE BOND RULE.

    (a) In General.--Paragraph (6) of section 42(j) of the Internal 
Revenue Code of 1986 (relating to recapture of credit) is amended to 
read as follows:
            ``(6) No recapture on disposition of building (or interest 
        therein) reasonably expected to continue as a qualified low-
        income building.--
                    ``(A) In general.--In the case of a disposition of 
                a building or an interest therein, the taxpayer shall 
                be discharged from liability for any additional tax 
                under this subsection by reason of such disposition if 
                it is reasonably expected that such building will 
                continue to be operated as a qualified low-income 
                building for the remaining compliance period with 
                respect to such building.
                    ``(B) Statute of limitations.--
                            ``(i) Extension of period.--The period for 
                        assessing a deficiency attributable to the 
                        application of subparagraph (A) with respect to 
                        a building (or interest therein) during the 
                        compliance period with respect to such building 
                        shall not expire before the expiration of 3 
                        years after the end of such compliance period.
                            ``(ii) Assessment.--Such deficiency may be 
                        assessed before the expiration of the 3-year 
                        period referred to in clause (i) 
                        notwithstanding the provisions of any other law 
                        or rule of law which would otherwise prevent 
                        such assessment.''.
    (b) Information Reporting.--
            (1) In general.--Subpart B of part III of subchapter A of 
        chapter 61 of such Code (relating to information concerning 
        transactions with other persons) is amended by inserting after 
        section 6050T the following new section:

``SEC. 6050U. RETURNS RELATING TO PAYMENT OF LOW-INCOME HOUSING CREDIT 
              REPAYMENT AMOUNT.

    ``(a) Requirement of Reporting.--Every person who, at any time 
during the taxable year, is an owner of a building (or an interest 
therein)--
            ``(1) which is in the compliance period at any time during 
        such year, and
            ``(2) with respect to which recapture is required by 
        section 42(j),
shall, at such time as the Secretary may prescribe, make the return 
described in subsection (b).
    ``(b) Form and Manner of Returns.--A return is described in this 
subsection if such return--
            ``(1) is in such form as the Secretary may prescribe, and
            ``(2) contains--
                    ``(A) the name, address, and TIN of each person 
                who, with respect to such building or interest, was 
                formerly an investor in such owner at any time during 
                the compliance period,
                    ``(B) the amount (if any) of any credit recapture 
                amount required under section 42(j), and
                    ``(C) such other information as the Secretary may 
                prescribe.
    ``(c) Statements to Be Furnished to Persons With Respect to Whom 
Information Is Required.--Every person required to make a return under 
subsection (a) shall furnish to each person whose name is required to 
be set forth in such return a written statement showing--
            ``(1) the name and address of the person required to make 
        such return and the phone number of the information contact for 
        such person, and
            ``(2) the information required to be shown on the return 
        with respect to such person.
The written statement required under the preceding sentence shall be 
furnished on or before March 31 of the year following the calendar year 
for which the return under subsection (a) is required to be made.
    ``(d) Compliance Period.--For purposes of this section, the term 
`compliance period' has the meaning given such term by section 
42(i).''.
            (2) Assessable penalties.--
                    (A) Subparagraph (B) of section 6724(d)(1) of such 
                Code (relating to definitions) is amended by 
                redesignating clauses (xiii) through (xviii) as clauses 
                (xiv) through (xix), respectively, and by inserting 
                after clause (xii) the following new clause:
                            ``(xiii) section 6050U (relating to returns 
                        relating to payment of low-income housing 
                        credit repayment amount),''.
                    (B) Paragraph (2) of section 6724(d) of such Code 
                is amended by striking ``or'' at the end of 
                subparagraph (AA), by striking the period at the end of 
                subparagraph (BB) and inserting ``, or'', and by adding 
                after subparagraph (BB) the following new subparagraph:
                    ``(CC) section 6050U (relating to returns relating 
                to payment of low-income housing credit repayment 
                amount).''.
                    (C) Clerical amendment.--The table of sections for 
                subpart B of part III of subchapter A of chapter 61 of 
                such Code is amended by inserting after the item 
                relating to section 6050S the following new item:

``Sec. 6050U. Returns relating to payment of low-income housing credit 
                            repayment amount.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to any liability for the credit recapture 
        amount under section 42(j) of the Internal Revenue Code of 1986 
        that arises after the date of the enactment of this Act.
            (2) Special rule for low-income housing buildings sold 
        before date of enactment of this act.--In the case of a 
        building disposed of before the date of the enactment of this 
        Act with respect to which the taxpayer posted a bond (or 
        alternative form of security) under section 42(j) of the 
        Internal Revenue Code of 1986 (as in effect before the 
        enactment of this Act), the taxpayer may elect (by notifying 
        the Secretary of the Treasury in writing)--
                    (A) to cease to be subject to the bond requirements 
                under section 42(j)(6) of such Code, as in effect 
                before the enactment of this Act, and
                    (B) to be subject to the requirements of section 
                42(j) of such Code, as amended by this Act.

SEC. 6. AFFORDABLE HOUSING CREDIT ALLOWED AGAINST ALTERNATIVE MINIMUM 
              TAX.

    (a) 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 (5) as paragraph (6) and by 
inserting after paragraph (4) the following new paragraph:
            ``(5) Special rules for affordable housing credit.--
                    ``(A) In general.--In the case of the affordable 
                housing 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 affordable 
                                housing credit).
                    ``(B) Affordable housing credit.--For purposes of 
                this subsection, the term `affordable housing credit' 
                means the portion of the credit under subsection (a) 
                which is attributable to the credit determined under 
                section 42 (relating to affordable housing credit). ''.
    (b) Conforming Amendments.--
            (1) Subclause (II) of section 38(c)(2)(A)(ii) of such Code 
        is amended by striking ``and the specified credits'' and 
        inserting ``the specified credits, and the affordable housing 
        credit''.
            (2) Subclause (II) of section 38(c)(3)(A)(ii) of such Code 
        is amended by striking ``and the specified credits'' and 
        inserting ``, the specified credits, and the affordable housing 
        credit''.
            (3) Subclause (II) of section 38(c)(4)(A)(ii) of such Code 
        is amended by inserting ``and the affordable housing credit'' 
        after ``the specified credits''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2005.

SEC. 7. INTEREST ON QUALIFIED MORTGAGE BONDS, QUALIFIED VETERANS' 
              MORTGAGE BONDS, AND QUALIFIED RESIDENTIAL RENTAL PROJECT 
              EXEMPT FACILITY BONDS EXEMPT FROM ALTERNATIVE MINIMUM 
              TAX.

    (a) In General.--Clause (ii) of section 57(a)(5)(C) of the Internal 
Revenue Code of 1986 (relating to exception for qualified 501(c)(3) 
bonds) is amended to read as follows:
                            ``(ii) Exception for certain bonds.--For 
                        purposes of clause (i), the term `private 
                        activity bond' shall not include--
                                    ``(I) any qualified 501(c)(3) bond 
                                (as defined in section 145),
                                    ``(II) any qualified mortgage bond 
                                (as defined in section 143(a)),
                                    ``(III) any qualified veterans' 
                                mortgage bond (as defined in section 
                                143(b)), and
                                    ``(IV) any exempt facility bond (as 
                                defined in section 142(a)) issued as 
                                part of an issue 95 percent or more of 
                                the net proceeds of which are to be 
                                used to provide qualified residential 
                                rental projects (as defined in section 
                                142(d)).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds originally issued after the date of the enactment of this Act.
                                 <all>