II 109th CONGRESS 2d Session S. 2366 IN THE SENATE OF THE UNITED STATES March 3, 2006 Mrs. Lincoln (for herself, Mr. Santorum, and Ms. Snowe) introduced the following bill; which was read twice and referred to the Committee on Finance A BILL To amend the Internal Revenue Code of 1986 to replace the recapture bond provisions of the low income housing tax credit program.

1.

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:

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 6050T 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.