[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 502 Introduced in Senate (IS)]







109th CONGRESS
  1st Session
                                 S. 502

  To revitalize rural America and rebuild main street, and for other 
                               purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             March 3, 2005

   Mr. Coleman (for himself, Mr. Pryor, Mr. DeWine, and Mr. Graham) 
introduced the following bill; which was read twice and referred to the 
                          Committee on Finance

_______________________________________________________________________

                                 A BILL


 
  To revitalize rural America and rebuild main street, 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.

    This Act may be cited as the ``Rural Renaissance Act''.

SEC. 2. RURAL RENAISSANCE CORPORATION.

    Subtitle D of the Consolidated Farm and Rural Development Act (7 
U.S.C. 1981 et seq.) is amended by adding at the end the following new 
section:

``SEC. 379E. RURAL RENAISSANCE CORPORATION.

    ``(a) Establishment and Status.--There is established a body 
corporate to be known as the `Rural Renaissance Corporation' (hereafter 
in this section referred to as the `Corporation'). The Corporation is 
not a department, agency, or instrumentality of the United States 
Government, and shall not be subject to title 31, United States Code.
    ``(b) Principal Office; Application of Laws.--The principal office 
and place of business of the Corporation shall be in the District of 
Columbia, and, to the extent consistent with this section, the District 
of Columbia Business Corporation Act (D.C. Code 29-301 et seq.) shall 
apply.
    ``(c) Functions of Corporation.--The Corporation shall--
            ``(1) issue rural renaissance bonds for the financing of 
        qualified projects as required under section 54 of the Internal 
        Revenue Code of 1986,
            ``(2) establish an allocation plan as required under 
        section 54(f)(2)(A) of such Code,
            ``(3) establish and operate the Rural Renaissance Trust 
        Account as required under section 54(i) of such Code,
            ``(4) perform any other function the sole purpose of which 
        is to carry out the financing of qualified projects through 
        rural renaissance bonds, and
            ``(5) not later than February 15 of each year submit a 
        report to Congress--
                    ``(A) describing the activities of the Corporation 
                for the preceding year, and
                    ``(B) specifying whether the amounts deposited and 
                expected to be deposited in the Rural Renaissance Trust 
                Account are sufficient to fully repay at maturity the 
                principal of any outstanding rural renaissance bonds 
                issued pursuant to such section 54.
    ``(d) Powers of Corporation.--The Corporation--
            ``(1) may sue and be sued, complain and defend, in its 
        corporate name, in any court of competent jurisdiction,
            ``(2) may adopt, alter, and use a seal, which shall be 
        judicially noticed,
            ``(3) may prescribe, amend, and repeal such rules and 
        regulations as may be necessary for carrying out the functions 
        of the Corporation,
            ``(4) may make and perform such contracts and other 
        agreements with any individual, corporation, or other private 
        or public entity however designated and wherever situated, as 
        may be necessary for carrying out the functions of the 
        Corporation,
            ``(5) may determine and prescribe the manner in which its 
        obligations shall be incurred and its expenses allowed and 
        paid,
            ``(6) may, as necessary for carrying out the functions of 
        the Corporation, employ and fix the compensation of employees 
        and officers,
            ``(7) may lease, purchase, or otherwise acquire, own, hold, 
        improve, use, or otherwise deal in and with such property 
        (real, personal, or mixed) or any interest therein, wherever 
        situated, as may be necessary for carrying out the functions of 
        the Corporation,
            ``(8) may accept gifts or donations of services or of 
        property (real, personal, or mixed), tangible or intangible, in 
        furtherance of the purposes of this section, and
            ``(9) shall have such other powers as may be necessary and 
        incident to carrying out this section.
    ``(e) Nonprofit Entity; Restriction on Use of Moneys; Conflict of 
Interests; Independent Audits.--
            ``(1) Nonprofit entity.--The Corporation shall be a 
        nonprofit corporation and shall have no capital stock.
            ``(2) Restriction.--No part of the Corporation's revenue, 
        earnings, or other income or property shall inure to the 
        benefit of any of its directors, officers, or employees, and 
        such revenue, earnings, or other income or property shall only 
        be used for carrying out the purposes of this section.
            ``(3) Conflict of interests.--No director, officer, or 
        employee of the Corporation shall in any manner, directly or 
        indirectly participate in the deliberation upon or the 
        determination of any question affecting his or her personal 
        interests or the interests of any corporation, partnership, or 
        organization in which he or she is directly or indirectly 
        interested.
            ``(4) Independent audits.--An independent certified public 
        accountant shall audit the financial statements of the 
        Corporation each year. The audit shall be carried out at the 
        place at which the financial statements normally are kept and 
        under generally accepted auditing standards. A report of the 
        audit shall be available to the public and shall be included in 
        the report required under subsection (c)(5).
    ``(f) Tax Exemption.--The Corporation, including its franchise and 
income, is exempt from taxation imposed by the United States, by any 
territory or possession of the United States, or by any State, county, 
municipality, or local taxing authority.
    ``(g) Management of Corporation.--
            ``(1) Board of directors; membership; designation of 
        chairperson and vice chairperson; appointment considerations; 
        term; vacancies.--
                    ``(A) Board of directors.--The management of the 
                Corporation shall be vested in a board of directors 
                composed of 7 members appointed by the President, by 
                and with the advice and consent of the Senate.
                    ``(B) Chairperson and vice chairperson.--The 
                President shall designate 1 member of the Board to 
                serve as Chairperson of the Board and 1 member to serve 
                as Vice Chairperson of the Board.
                    ``(C) Individuals from private life.--Five members 
                of the Board shall be appointed from private life.
                    ``(D) Federal officers and employees.--Two members 
                of the Board shall be appointed from among officers and 
                employees of agencies of the United States concerned 
                with rural development.
                    ``(E) Appointment considerations.--All members of 
                the Board shall be appointed on the basis of their 
                understanding of and sensitivity to rural development 
                processes. Members of the Board shall be appointed so 
                that not more than 4 members of the Board are members 
                of any 1 political party.
                    ``(F) Terms.--Members of the Board shall be 
                appointed for terms of 3 years, except that of the 
                members first appointed, as designated by the President 
                at the time of their appointment, 2 shall be appointed 
                for terms of 1 year and 2 shall be appointed for terms 
                of 2 years.
                    ``(G) Vacancies.--A member of the Board appointed 
                to fill a vacancy occurring before the expiration of 
                the term for which that member's predecessor was 
                appointed shall be appointed only for the remainder of 
                that term. Upon the expiration of a member's term, the 
                member shall continue to serve until a successor is 
                appointed and is qualified.
            ``(2) Compensation, actual, necessary, and transportation 
        expenses.--Members of the Board shall serve without additional 
        compensation, but may be reimbursed for actual and necessary 
        expenses not exceeding $100 per day, and for transportation 
        expenses, while engaged in their duties on behalf of the 
        Corporation.
            ``(3) Quorum.--A majority of the Board shall constitute a 
        quorum.
            ``(4) President of corporation.--The Board of Directors 
        shall appoint a president of the Corporation on such terms as 
        the Board may determine.''.

SEC. 3. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    (a) In General.--Part IV of subchapter A of chapter 1 of the 
Internal Revenue Code of 1986 (relating to credits against tax) is 
amended by adding at the end the following new subpart:

  ``Subpart H--Nonrefundable Credit for Holders of Rural Renaissance 
                                 Bonds

        ``Sec. 54. Credit to holders of rural renaissance bonds.

``SEC. 54. CREDIT TO HOLDERS OF RURAL RENAISSANCE BONDS.

    ``(a) Allowance of Credit.--In the case of a taxpayer who holds a 
rural renaissance 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 rural renaissance 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 rural renaissance 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 
        (2), 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 sale of the issue) on outstanding long-term corporate 
        debt obligations (determined in such manner as the Secretary 
        prescribes).
            ``(4) Credit allowance date.--For purposes of this section, 
        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.
            ``(5) 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) 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 this 
                part (other than this subpart and subpart C).
            ``(2) Carryover of unused credit.--If the credit allowable 
        under subsection (a) exceeds the limitation imposed by 
        paragraph (1) for such taxable year, such excess shall be 
        carried to the succeeding taxable year and added to the credit 
        allowable under subsection (a) for such taxable year.
    ``(d) 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 (c)) and the amount so 
included shall be treated as interest income.
    ``(e) Rural Renaissance Bond.--For purposes of this part, the term 
`rural renaissance bond' means any bond issued as part of an issue if--
            ``(1) 95 percent or more of the proceeds from the sale of 
        such issue are to be used--
                    ``(A) for expenditures incurred after the date of 
                the enactment of this section for any qualified 
                project, or
                    ``(B) for deposit in the Rural Renaissance Trust 
                Account for repayment of rural renaissance bonds at 
                maturity,
            ``(2) the bond is issued by the Rural Renaissance 
        Corporation, is in registered form, and meets the rural 
        renaissance bond limitation requirements under subsection (f),
            ``(3) except for bonds issued in accordance with subsection 
        (f)(4), the term of each bond which is part of such issue does 
        not exceed 30 years,
            ``(4) the payment of principal with respect to such bond is 
        the obligation of the Rural Renaissance Corporation, and
            ``(5) the issue meets the requirements of subsection (g) 
        (relating to arbitrage).
    ``(f) Limitation on Amount of Bonds Designated.--
            ``(1) National limitation.--There is a rural renaissance 
        bond limitation for each calendar year. Such limitation is--
                    ``(A) for 2006--
                            ``(i) with respect to bonds described in 
                        subsection (e)(1)(A), $50,000,000,000, plus
                            ``(ii) with respect to bonds described in 
                        subsection (e)(1)(B), such amount (not to 
                        exceed $15,000,000,000) as determined necessary 
                        by the Rural Renaissance Corporation to provide 
                        funds in the Rural Renaissance Trust Account 
                        for the repayment of rural renaissance bonds at 
                        maturity, and
                    ``(B) except as provided in paragraph (3), zero 
                thereafter.
            ``(2) Limitation allocated to qualified projects among 
        states.--
                    ``(A) In general.--Subject to subparagraph (B), the 
                limitation applicable under paragraph (1)(A)(i) for any 
                calendar year shall be allocated by the Rural 
                Renaissance Corporation for qualified projects among 
                the States under an allocation plan established by the 
                Corporation and submitted to Congress for 
                consideration.
                    ``(B) Minimum allocations to states.--In 
                establishing the allocation plan under subparagraph 
                (A), the Rural Renaissance Corporation shall ensure 
                that the aggregate amount allocated for qualified 
                projects located in each State under such plan is not 
                less than $500,000,000.
            ``(3) Carryover of unused limitation.--If for any calendar 
        year--
                    ``(A) the rural renaissance bond limitation amount, 
                exceeds
                    ``(B) the amount of bonds issued during such year 
                by the Rural Renaissance Corporation, the rural 
                renaissance bond limitation amount for the following 
                calendar year shall be increased by the amount of such 
                excess. Any carryforward of a rural renaissance bond 
                limitation amount may be carried only to calendar year 
                2007 or 2008.
            ``(4) Issuance of small denomination bonds.--From the rural 
        renaissance bond limitation for each year, the Rural 
        Renaissance Corporation shall issue a limited quantity of rural 
        renaissance bonds in small denominations suitable for purchase 
        as gifts by individual investors wishing to show their support 
        for investing in rural America.
    ``(g) Special Rules Relating to Arbitrage.--
            ``(1) In general.--Subject to paragraph (2), an issue shall 
        be treated as meeting the requirements of this subsection if as 
        of the date of issuance, the Rural Renaissance Corporation 
        reasonably expects--
                    ``(A) to spend at least 95 percent of the proceeds 
                from the sale of the issue for 1 or more qualified 
                projects within the 3-year period beginning on such 
                date,
                    ``(B) to incur a binding commitment with a third 
                party to spend at least 10 percent of the proceeds from 
                the sale of the issue, or to commence construction, 
                with respect to such projects within the 6-month period 
                beginning on such date, and
                    ``(C) to proceed with due diligence to complete 
                such projects and to spend the proceeds from the sale 
                of the issue.
            ``(2) Rules regarding continuing compliance after 3-year 
        determination.--If at least 95 percent of the proceeds from the 
        sale of the issue is not expended for 1 or more qualified 
        projects within the 3-year period beginning on the date of 
        issuance, but the requirements of paragraph (1) are otherwise 
        met, an issue shall be treated as continuing to meet the 
        requirements of this subsection if either--
                    ``(A) the Rural Renaissance Corporation uses all 
                unspent proceeds from the sale of the issue to redeem 
                bonds of the issue within 90 days after the end of such 
                3-year period, or
                    ``(B) the following requirements are met:
                            ``(i) The Rural Renaissance Corporation 
                        spends at least 75 percent of the proceeds from 
                        the sale of the issue for 1 or more qualified 
                        projects within the 3-year period beginning on 
                        the date of issuance.
                            ``(ii) The Rural Renaissance Corporation 
                        spends at least 95 percent of the proceeds from 
                        the sale of the issue for 1 or more qualified 
                        projects within the 4-year period beginning on 
                        the date of issuance, and uses all unspent 
                        proceeds from the sale of the issue to redeem 
                        bonds of the issue within 90 days after the end 
                        of the 4-year period beginning on the date of 
                        issuance.
    ``(h) Recapture of Portion of Credit Where Cessation of 
Compliance.--
            ``(1) In general.--If any bond which when issued purported 
        to be a rural renaissance bond ceases to be such a qualified 
        bond, the Rural Renaissance Corporation shall pay to the United 
        States (at the time required by the Secretary) an amount equal 
        to the sum of--
                    ``(A) the aggregate of the credits allowable under 
                this section with respect to such bond (determined 
                without regard to subsection (c)) for taxable years 
                ending during the calendar year in which such cessation 
                occurs and the 2 preceding calendar years, and
                    ``(B) interest at the underpayment rate under 
                section 6621 on the amount determined under 
                subparagraph (A) for each calendar year for the period 
                beginning on the first day of such calendar year.
            ``(2) Failure to pay.--If the Rural Renaissance Corporation 
        fails to timely pay the amount required by paragraph (1) with 
        respect to such bond, the tax imposed by this chapter on each 
        holder of any such bond which is part of such issue shall be 
        increased (for the taxable year of the holder in which such 
        cessation occurs) by the aggregate decrease in the credits 
        allowed under this section to such holder for taxable years 
        beginning in such 3 calendar years which would have resulted 
        solely from denying any credit under this section with respect 
        to such issue for such taxable years.
            ``(3) Special rules.--
                    ``(A) Tax benefit rule.--The tax for the taxable 
                year shall be increased under paragraph (2) only with 
                respect to credits allowed by reason of this section 
                which were used to reduce tax liability. In the case of 
                credits not so used to reduce tax liability, the 
                carryforwards and carrybacks under section 39 shall be 
                appropriately adjusted.
                    ``(B) No credits against tax.--Any increase in tax 
                under paragraph (2) shall not be treated as a tax 
                imposed by this chapter for purposes of determining--
                            ``(i) the amount of any credit allowable 
                        under this part, or
                            ``(ii) the amount of the tax imposed by 
                        section 55.
    ``(i) Rural Renaissance Trust Account.--
            ``(1) In general.--The following amounts shall be held in a 
        Rural Renaissance Trust Account by the Rural Renaissance 
        Corporation:
                    ``(A) The proceeds from the sale of all bonds 
                issued under this section.
                    ``(B) The amount of any matching contributions with 
                respect to such bonds.
                    ``(C) The investment earnings on proceeds from the 
                sale of such bonds.
                    ``(D) Any earnings on any amounts described in 
                subparagraph (A), (B), or (C).
            ``(2) Use of funds.--Amounts in the Rural Renaissance Trust 
        Account may be used only to pay costs of qualified projects, 
        redeem rural renaissance bonds, and fund the operations of the 
        Rural Renaissance Corporation, except that amounts withdrawn 
        from the Rural Renaissance Trust Account to pay costs of 
        qualified projects may not exceed the aggregate proceeds from 
        the sale of rural renaissance bonds described in subsection 
        (e)(1)(A).
            ``(3) Use of remaining funds in rural renaissance trust 
        account.--Upon the redemption of all rural renaissance bonds 
        issued under this section, any remaining amounts in the Rural 
        Renaissance Trust Account shall be available to the Rural 
        Renaissance Corporation for any qualified project.
    ``(j) Qualified Project.--For purposes of this section--
            ``(1) In general.--Subject to paragraph (3), the term 
        `qualified project' means a project which--
                    ``(A) includes 1 or more of the projects described 
                in paragraph (2),
                    ``(B) is located in a rural area, and
                    ``(C) is proposed by a State and approved by the 
                Rural Renaissance Corporation.
            ``(2) Projects described.--A project described in this 
        paragraph is--
                    ``(A) a water or waste treatment project,
                    ``(B) a conservation project, including any project 
                to protect water quality or air quality (including odor 
                abatement), any project to prevent soil erosion, and 
                any project to protect wildlife habitat, including any 
                project to assist agricultural producers in complying 
                with Federal, State, or local regulations,
                    ``(C) an affordable housing project,
                    ``(D) a community facility project, including 
                hospitals, fire and police stations, and nursing and 
                assisted-living facilities,
                    ``(E) a value-added agriculture or renewable energy 
                facility project for agricultural producers or farmer-
                owned entities, including any project to promote the 
                production or processing of ethanol, biodiesel, animal 
                waste, biomass, raw commodities, or wind as a fuel,
                    ``(F) a rural venture capital project for, among 
                others, farmer-owned entities,
                    ``(G) a distance learning or telemedicine project,
                    ``(H) a project to expand broadband technology, and
                    ``(I) a rural teleworks project.
            ``(3) Special rules.--For purposes of this subsection--
                    ``(A) any project described in subparagraph (E) or 
                (F) of paragraph (2) for a farmer-owned entity may be 
                considered a qualified project if such entity is 
                located in a rural area, or in the case of a farmer-
                owned entity the headquarters of which are located in a 
                nonrural area, if the project is located in a rural 
                area, and
                    ``(B) any project for a farmer-owned entity which 
                is a facility described in paragraph (2)(E) for 
                agricultural producers may be considered a qualified 
                project regardless of whether the facility is located 
                in a rural or nonrural area.
            ``(4) Approval guidelines and criteria.--
                    ``(A) In general.--Not later than 60 days after the 
                date of the enactment of this section, the Rural 
                Renaissance Corporation shall consult with the 
                appropriate committees of Congress regarding the 
                development of guidelines and criteria for the approval 
                by the Corporation of projects as qualified projects 
                for inclusion in the allocation plan established under 
                subsection (f)(2)(A) and shall submit such guidelines 
                and criteria to such committees.
                    ``(B) Appropriate committees of congress.--For 
                purposes of subparagraph (A), the term `appropriate 
                committees of Congress' means the Committee on 
                Agriculture, Nutrition, and Forestry, the Committee on 
                Commerce, Science, and Transportation, and the 
                Committee on Finance of the Senate and the Committee on 
                Agriculture, the Committee on Energy and Commerce, and 
                the Committee on Ways and Means of the House of 
                Representatives.
    ``(k) Other Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Bond.--The term `bond' includes any obligation.
            ``(2) Rural area.--The term `rural area' means any area 
        other than--
                    ``(A) a city or town which has a population of 
                greater than 50,000 inhabitants, or
                    ``(B) the urbanized area contiguous and adjacent to 
                such a city or town.
            ``(3) Rural renaissance corporation.--The term `Rural 
        Renaissance Corporation' means the Rural Renaissance 
        Corporation established under section 379E of the Consolidated 
        Farm and Rural Development Act.
            ``(4) Treatment of changes in use.--For purposes of 
        subsection (e)(1)(A), the proceeds from the sale of an issue 
        shall not be treated as used for a qualified project to the 
        extent that the Rural Renaissance Corporation takes any action 
        within its control which causes such proceeds not to be used 
        for a qualified project. The Secretary shall specify remedial 
        actions that may be taken (including conditions to taking such 
        remedial actions) to prevent an action described in the 
        preceding sentence from causing a bond to fail to be a rural 
        renaissance bond.
            ``(5) Partnership; s corporation; and other pass-thru 
        entities.--In the case of a partnership, trust, S corporation, 
        or other pass-thru entity, rules similar to the rules of 
        section 41(g) shall apply with respect to the credit allowable 
        under subsection (a).
            ``(6) Bonds held by regulated investment companies.--If any 
        rural renaissance 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.
            ``(7) Credits may be stripped.--Under regulations 
        prescribed by the Secretary--
                    ``(A) In general.--There may be a separation 
                (including at issuance) of the ownership of a rural 
                renaissance 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.
                    ``(B) Certain rules to apply.--In the case of a 
                separation described in subparagraph (A), the rules of 
                section 1286 shall apply to the rural renaissance bond 
                as if it were a stripped bond and to the credit under 
                this section as if it were a stripped coupon.
            ``(8) Reporting.--The Rural Renaissance Corporation shall 
        submit reports similar to the reports required under section 
        149(e).''.
    (b) Amendments to Other Code Sections.--
            (1) Reporting.--Subsection (d) of section 6049 of the 
        Internal Revenue Code of 1986 (relating to returns regarding 
        payments of interest) is amended by adding at the end the 
        following new paragraph:
            ``(8) Reporting of credit on rural renaissance bonds.--
                    ``(A) In general.--For purposes of subsection (a), 
                the term `interest' includes amounts includible in 
                gross income under section 54(d) and such amounts shall 
                be treated as paid on the credit allowance date (as 
                defined in section 54(b)(4)).
                    ``(B) Reporting to corporations, etc.--Except as 
                otherwise provided in regulations, in the case of any 
                interest described in subparagraph (A), subsection 
                (b)(4) shall be applied without regard to subparagraphs 
                (A), (H), (I), (J), (K), and (L)(i) of such subsection.
                    ``(C) Regulatory authority.--The Secretary may 
                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.''.
            (2) Treatment for estimated tax purposes.--
                    (A) Individual.--Section 6654 of such Code 
                (relating to failure by individual to pay estimated 
                income tax) is amended by redesignating subsection (m) 
                as subsection (n) and by inserting after subsection (l) 
                the following new subsection:
    ``(m) Special Rule for Holders of Rural Renaissance Bonds.--For 
purposes of this section, the credit allowed by section 54 to a 
taxpayer by reason of holding a rural renaissance 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.''.
                    (B) Corporate.--Subsection (g) of section 6655 of 
                such Code (relating to failure by corporation to pay 
                estimated income tax) is amended by adding at the end 
                the following new paragraph:
            ``(5) Special rule for holders of rural renaissance 
        bonds.--For purposes of this section, the credit allowed by 
        section 54 to a taxpayer by reason of holding a rural 
        renaissance 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.''.
    (c) Clerical Amendments.--
            (1) The table of subparts for 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 item:
  ``subpart h. nonrefundable credit for holders of rural renaissance 
                               bonds.''.
            (2) Section 6401(b)(1) of such Code is amended by striking 
        ``and G'' and inserting ``G, and H''.
    (d) Effective Date.--The amendments made by this section shall 
apply to obligations issued after December 31, 2005.
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