II 110th CONGRESS 1st Session S. 1850 IN THE SENATE OF THE UNITED STATES July 23, 2007 Mr. Smith (for himself and Mr. Baucus) 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 provide for the treatment of Indian tribal governments as State governments for purposes of issuing tax-exempt governmental bonds, and for other purposes.

1.

Short title

This Act may be cited as the Tribal Government Tax-Exempt Bond Parity Act of 2007.

2.

Modifications of authority of Indian tribal governments to issue tax-exempt bonds

(a)

In general

Subsection (c) of section 7871 of the Internal Revenue Code of 1986 (relating to Indian tribal governments treated as States for certain purposes) is amended to read as follows: (c)

Additional requirements for tax-exempt bonds

(1)

In general

Subsection (a) of section 103 shall apply to any obligation issued by an Indian tribal government (or subdivision thereof) only if— (A)such obligation is part of an issue 95 percent or more of the net proceeds of which are to be used to finance any facility located on the Indian reservation of such Indian tribal government, or (B)such obligation is part of an issue substantially all of the proceeds of which are to be used in the exercise of any essential governmental function. (2)

Exclusion of gaming

An obligation described in subparagraph (A) or (B) of paragraph (1) may not be used to finance any portion of a building in which class II or III gaming (as defined in section 4 of the Indian Gaming Regulatory Act (25 U.S.C. 2702)) is conducted or housed or any other property actually used in the conduct of such gaming. (3)

Definitions

For purposes of this subsection— (A)

Indian tribe

The term Indian tribe means any Indian tribe, band, nation, or other organized group or community which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians. (B)

Indian reservation

The term Indian reservation means a reservation, as defined in section 4(10) of the Indian Child Welfare Act of 1978 (25 U.S.C. 1903(10)). .

3.

Essential governmental function

Subsection (e) of section 7871 of the Internal Revenue Code of 1986 (defining essential governmental function) is amended to read as follows: (e)

Essential governmental function

The term essential governmental function includes any function which is performed by a State or local government with general taxing powers. .

4.

Exemption from registration requirements

The first sentence of section 3(a)(2) of the Securities Act of 1933 (15 U.S.C. 77c(a)(2)) is amended by inserting or by any Indian tribal government or subdivision thereof (within the meaning of section 7871 of the Internal Revenue Code of 1986), after or Territories,.

5.

Effective date

The amendments made by this Act shall apply to obligations issued after the date of the enactment of this Act.