1.
(a)Congress
finds that:
(1)Localism,
competition, and diversity of voices have long been the stated goals of United
States telecommunications and media policy.
(2)In support of
these goals, it has been long-standing United States telecommunications and
media policy to facilitate diversity of ownership in the telecommunications and
media industry, to foster ownership of telecommunications and media by socially
disadvantaged businesses, and to disseminate spectrum licenses among a wide
variety of applicants, including small businesses and businesses owned by
members of minority groups and women.
(3)Diversification
of ownership of telecommunications and media properties remains a preeminent
public interest concern that should be reflected in United States
telecommunications, media, and tax policy.
(4)In the years
between 1995 and 2008, as broadcast media ownership rules have been relaxed,
ownership opportunities of broadcast properties for socially disadvantaged
individuals have decreased significantly. Businesses owned or controlled by
socially disadvantaged individuals, including, but not limited to, members of
minority groups and women, have continued to be underrepresented as owners of
telecommunications and media properties. As a result of the convergence and
consolidation taking place in telecommunications and media markets, as of 2008
a smaller number of firms provide the gateway to news, information, and
entertainment programming.
(5)Fostered by the
relaxation of the broadcast media ownership rules, local broadcast markets are
increasingly characterized by consolidated ownership, with individual entities
owning multiple broadcast stations within a single market that allow them to
exploit economies of scale in the advertising market not available to smaller
or individual operators. This results in individual operators frequently being
shut out of large amounts of advertising revenues.
(6)The cable
television industry is increasingly characterized by firms that cluster their
ownership of cable systems in a small number of markets, with the result that
many local markets are dominated by a single cable company that serves most or
all of the jurisdictions in that market and enjoys a favorable competitive and
negotiating position in that market.
(7)Tax policy has
fostered telecommunications and media convergence and consolidation by
providing a favorable tax consequence to telecommunications and media firms
selling their properties to large entities that can purchase the properties
using tax-free like-kind exchanges. This puts socially disadvantaged businesses
at a greater disadvantage because often they are not able to purchase the
properties through an exchange of stock.
(8)Socially
disadvantaged businesses and other small businesses are less likely to be able
to purchase telecommunications and media properties through a tax-free
like-kind exchange than are established businesses.
(9)Prior to 1995,
the tax treatment of the sale of appreciated telecommunications and media
properties for transactions not involving like-kind exchanges was partially
offset by the Federal Communications Commission tax certificate policy, a
program that allowed firms that sold telecommunications and media properties to
minority or women-owned firms to defer some of the taxes imposed on their sale
of appreciated properties. This program was eliminated in 1995.
(10)As a result of
the elimination of the tax certificate program, the changes in
telecommunications and media ownership rules, and the market forces toward
convergence and consolidation, opportunities for socially disadvantaged
businesses to participate and grow in telecommunications and media markets have
decreased substantially despite the fact that this has been an active period
for the sale of telecommunications and media properties.
(11)These recent
trends exacerbate the pattern of businesses owned or controlled by socially
disadvantaged individuals, who have historically been economically
disadvantaged within the telecommunications industry, having greater difficulty
obtaining access to capital and facing higher costs of capital than do other
businesses. It is consistent with the public interest to provide incentives
that will increase diversity in telecommunications and media ownership by
facilitating socially disadvantaged business investment in, and acquisition of,
telecommunications and media properties, and to eliminate obstacles to such
ownership.
(12)Facilitating
voluntary, pro-competitive transactions that will promote ownership of
telecommunications and media properties by socially disadvantaged businesses by
reducing distortions in tax policy will aid in providing the investment and
capital that are crucial to the development of diversity of ownership in this
sector.
(b)The
purpose of this Act is to facilitate voluntary, pro-competitive transactions
that will promote socially disadvantaged business ownership of
telecommunications and media properties in order to diversify
telecommunications and media ownership.
2.Treatment of
gain on qualified sales of telecommunications businesses
(a)Subchapter O of chapter 1 of the Internal Revenue Code of
1986 (relating to gain or loss on disposition of property) is amended by
inserting after part IV the following new part:
VCERTAIN SALES OF
TELECOMMUNICATIONS BUSINESSES
Sec. 1071. Treatment of gain on certain
sales of telecommunications businesses.
1071.Treatment of
gain on certain sales of telecommunications businesses
(a)In the case of an eligible taxpayer, at the election of
the taxpayer—
(1)the tax imposed
by this subtitle on the qualifying gain from a qualified telecommunications
sale may be paid on or before the date that is 3 years after the date
prescribed by section 6151(a) for payment of such tax, or
(2)the recognition
of such qualifying gain shall be deferred by reducing the basis of depreciable
property (as defined in section 1017(b)(3)) held by the taxpayer immediately
after such sale or acquired within 1 year after such sale by the amount of such
qualifying gain.
(b)For purposes of this section, the term eligible
taxpayer means the seller in a qualified telecommunications sale if such
seller has received a qualifying gain certificate from the purchaser in such
sale.
(c)For purposes of this section, the term qualifying
gain means the amount that is so much of the gain on any qualified
telecommunications sale as does not exceed the amount of the qualifying gain
certificate received by the seller in such sale from the purchaser.
(d)Qualified
telecommunications sale
(1)For purposes of this section, the term qualified
telecommunications sale means any sale to a qualified business
of—
(A)the assets of a
telecommunications business,
(B)stock in a
corporation if, immediately after such sale—
(i)the qualified
business owns stock possessing at least the applicable percentage of the total
combined voting power of all classes of stock entitled to vote and at least the
applicable percentage of the total number of shares of all other classes of
stock of such corporation, and
(ii)substantially all
of the assets of such corporation are assets of one or more telecommunications
businesses, or
(C)an interest in a
partnership if, immediately after such sale—
(i)the qualified
business owns a partnership interest possessing—
(I)a percentage that
is at least equal to the applicable percentage of the total combined voting
power of all classes of partnership interests entitled to vote,
(II)control over the
management of the partnership,
(III)a percentage
that is at least equal to the applicable percentage of the capital interests of
the partnership, and
(IV)a distributive
share that is at least equal to the applicable percentage of each item of the
partnership’s income, gain, loss, deduction or credit, and
(ii)substantially
all of the assets of such partnership are assets of one or more
telecommunications businesses.
(2)For purposes of this section—
(A)The term qualified business means any entity
in which a socially disadvantaged individual or a member of a socially
disadvantaged group has a qualified interest.
(B)
(i)A business shall not be a qualified business under this
section unless such business has been certified by the Federal Communications
Commission as meeting the requirements of subparagraph (A).
(ii)
(I)Any business certified by the Federal Communications
Commission under this subparagraph shall report to such Commission any event
that would lead to a change in the eligibility of the business for such
certification.
(II)Revision of
structure or revocation of certificationIf the Federal
Communications Commission determines that such business no longer meets the
requirements of subparagraph (A) as a result of a reportable event under
subclause (I), such business may revise its ownership structure in order to
meet such requirements. If such business fails to revise its ownership
structure in a manner sufficient to meet such requirements, the certification
of such business under this subparagraph shall be revoked.
(iii)Qualifying
gain certificates
(I)Upon certification of any business under this
subparagraph, the Federal Communications Commission shall issue qualifying gain
certificates to such business for use in the purchase of telecommunications
businesses through qualified telecommunications sales.
(II)The
aggregate amount of the qualifying gain certificates issued to a business under
this clause for any calendar year shall not exceed $350,000,000 reduced by the
aggregate amount of qualifying gain certificates issued to such business during
the preceding 5 calendar years.
(iv)The
Federal Communications Commission shall issue regulations to establish a
process for granting certification to qualified businesses and for requiring
reporting and review under this subparagraph.
(v)The Federal Communications Commission shall submit to
the Secretary on or before January 31 of each year a list of all businesses
certified as qualified businesses in the previous calendar year.
(C)An interest in an entity shall be treated as qualified
if such interest represents a percentage that is at least equal to the
applicable percentage of—
(i)the total assets
of the entity, and
(ii)the total
combined voting power in such entity of all classes of interests entitled to
vote.
(D)Socially
disadvantaged individualThe term socially disadvantaged
individual means an individual that is—
(i)a
United States citizen, and
(ii)socially and
economically disadvantaged, as determined by the Federal Communications
Commission using the following criteria:
(I)An individual may be considered socially
disadvantaged if such individual has been subjected to racial or ethnic
prejudice or cultural bias within United States society because of the
individual's identity as a member of a group and without regard to individual
qualities. The social disadvantage must stem from circumstances beyond the
individual's control.
(II)Members of
designated groups
- (aa)There shall be a
rebuttable presumption that—
(AA)those
individuals asserting membership in a group previously designated as socially
disadvantaged by the Small Business Administration according to procedures set
forth under section 124.103 of title 13, Code of Federal Regulations (or a
successor regulation), including Black Americans, Hispanic Americans, Native
Americans, Asian Pacific Americans, and members of other groups that have been
so designated, and
(BB)those entities
that are deemed socially disadvantaged under section 124.109 of title 13, Code
of Federal Regulations (or a successor regulation),
shall be
considered socially disadvantaged for purposes of this section.
- (bb)In
order to be considered a member of a socially disadvantaged group, the Federal
Communications Commission may require that an individual has held himself or
herself out, and has been identified by others, as a member of such
group.
- (cc)The presumption
of membership in a socially disadvantaged group may be overcome with the
presentation of credible evidence to the contrary. Individuals in possession or
knowledge of such evidence shall submit such information in writing to the
Federal Communications Commission at such time and in such manner as such
Commission shall require.
(III)Individuals
not members of a designated groupAn individual who is not a
member of a group described in subclause (II)(aa) must establish individual
social disadvantage by a preponderance of the evidence, which must include the
following elements:
- (aa)At
least one objective distinguishing feature that has contributed to the social
disadvantage of the individual, such as race, ethnic origin, gender, physical
handicap, long-term residence in an environment isolated from the mainstream of
United States society, or other similar features not common to individuals who
are not socially disadvantaged.
- (bb)Personal
experiences of substantial and chronic social disadvantage in United States
society.
- (cc)Negative impact
of social disadvantage on entry into or advancement in the business world. This
impact may be proven by any relevant evidence showing that the totality of
circumstances reflects disadvantage in entering into or advancing in the
business world, but such evidence must include information concerning the
education, employment, and business history of the individual as
follows:
(AA)Evidence
relating to education may include such factors as denial of equal access to
institutions of higher education, exclusion from social and professional
association with students or teachers, denial of educational honors rightfully
earned, and social patterns or pressures which discouraged the individual from
pursuing a professional or business education.
(BB)Evidence
relating to employment may include such factors as unequal treatment in hiring,
promotions, or other aspects of professional advancement, pay and fringe
benefits, and other terms and conditions of employment, retaliatory or
discriminatory behavior by an employer, and social patterns or pressures which
have channeled the individual into nonprofessional or nonbusiness
fields.
(CC)Evidence
relating to business history may include such factors as unequal access to
credit or capital, acquisition of credit or capital under commercially
unfavorable circumstances, unequal treatment in opportunities for government
contracts or other work, unequal treatment by potential customers and business
associates, and exclusion from business or professional organizations.
(IV)Economically
disadvantaged
- (aa)An individual may be considered economically
disadvantaged if such individual is socially disadvantaged, as determined under
subclauses (I) through (III), and if the individual's ability to compete in the
free enterprise system has been impaired due to diminished capital and credit
opportunities as compared to others in the same or similar line of business who
are not socially disadvantaged.
- (bb)In considering whether an individual has been
impaired by diminished capital and credit opportunities, the Federal
Communications Commission shall examine factors relating to the financial
conditions of any persons claiming disadvantaged status, including the personal
financial condition of the individual and the fair market value of the stock
and assets, whether encumbered or not, of any business under the control of the
individual, and the financial condition of the individual compared to the
financial profiles of other businesses in the same or similar line of business
which are not owned and controlled by socially and economically disadvantaged
individuals. The financial profiles so compared shall include total assets, net
sales, pre-tax profit, and sales to working capital ratio.
- (cc)There
shall be a rebuttable presumption that entities that are deemed economically
disadvantaged under section 124.109 of title 13, Code of Federal Regulations
(or a successor regulation) shall be considered economically disadvantaged for
purposes of this section.
(E)Socially
disadvantaged group
(i)The term socially disadvantaged group means
a group that—
(I)is described in
subparagraph (D)(ii)(II)(aa), or has been subjected to racial or ethnic
prejudice or cultural bias within United States society because of
circumstances or qualities beyond the individual control of the members of such
group, and
(II)is economically
disadvantaged, as determined under subparagraph (D)(ii)(IV) by applying the
rules of such subparagraph to the group as a whole.
(ii)Rebuttable
presumption of disadvantage; evidence; etcFor purposes of this
subparagraph, rules similar to the rules of subclauses (II) and (III) of
subparagraph (D)(ii) shall apply by applying such rules to the group as a
whole.
(F)For purposes of this subsection, all persons treated as a
single employer under subsection (a) or (b) of section 52 or subsection (m) or
(o) of section 414 shall be treated as one person.
(3)For purposes of this subsection—
(A)Except as provided in subparagraph (B), the term
applicable percentage means the percentage prescribed by the
Federal Communications Commission in regulations implementing this section.
Such percentage shall not be less than—
(i)in the case of
interest in the total assets of an entity, 20 percent, and
(ii)in the case of
interest in the total combined voting power in an entity of all classes of
interests entitled to vote, 51 percent.
(B)Publicly traded
corporationsIn the case of a corporation the shares of which are
regularly traded on an established securities market, the applicable percentage
is 51 percent.
(C)Restriction on
agreements concerning voting of stock or partnership
interestsAny interest relied upon to meet the applicable
percentage shall not be subject to any agreement, arrangement, or understanding
which provides for, or relates to—
(i)the voting of
such interest in any manner by, or at the direction of, any person other than a
socially disadvantaged individual or a member of a socially disadvantaged
group, or
(ii)the right of any
person other than a socially disadvantaged individual or a member of a socially
disadvantaged group to acquire such interest through purchase of shares,
partnership interests, or otherwise.
(e)Qualifying gain
certificateFor purposes of this section, the term
qualifying gain certificate means a certificate that is issued to
a qualified business by the Federal Communications Commission under subsection
(d)(2)(B)(iii).
(f)Telecommunications
businessThe term telecommunications business means
any business providing communication services by wire, cable, radio, satellite,
or other technology if the providing of such services is governed by the
Communications Act of 1934 or the
Telecommunications Act of 1996.
(g)Recapture of tax
benefit if telecommunications business resold within 3 years, etc
(1)If, within 3 years after the date of any qualified
telecommunications sale, there is a recapture event with respect to the
property involved in such sale, then the qualified business’s tax imposed by
this chapter for the taxable year in which such event occurs shall be increased
by 20 percent of the consideration furnished by such business in such
sale.
(2)Exception for
reinvested amountsParagraph (1) shall not apply to any recapture
event which is a sale if—
(A)the sale is a
qualified telecommunications sale, or
(B)during the 60-day
period beginning on the date of such sale, the qualified business is the
purchaser in another qualified telecommunications sale in which the
consideration furnished by such business is not less than the amount realized
on the recapture event sale.
(3)For purposes of this subsection, the term recapture
event means, with respect to any qualified telecommunications
sale—
(A)any sale or other
disposition of the assets, stock, or interest referred to in subsection (d)(1)
which were acquired by the qualified business in such sale,
(B)in the case of a
qualified telecommunications sale described in subsection (d)(1)(B)—
(i)any sale or other
disposition of a telecommunications business by the corporation referred to in
such subsection, or
(ii)any other
transaction which results in the qualified business not having control (as
defined in subsection (d)(1)(B)(i)) of such corporation, and
(C)in the case of a
qualified telecommunications sale described in subsection (d)(1)(C)—
(i)any sale or other
disposition of a telecommunications business by the partnership referred to in
such subsection, or
(ii)any other
transaction which results in the qualified business not having control (as
defined in subsection (d)(1)(C)(i)) of such partnership.
Such term
shall not include any sale or other disposition resulting from the default, or
imminent default, of any indebtedness of the taxpayer.(h)
(1)For
authority of the Secretary to require security in the case of an extension
under subsection (a)(1), see section 6165.
(2)For extension of the period of limitation in the case
of an extension under subsection (a)(1), see section
6503(k).
.
(b)The table of parts for subchapter O of chapter 1 of the
Internal Revenue Code of 1986 is amended by inserting after the item relating
to part IV the following new item:
Part V. Certain Sales of Telecommunications
Businesses.
.
(c)
(1)Extension of
period of limitationSection 6503 of the Internal Revenue Code of
1986 (relating to suspension of running of period of limitation) is
amended—
(A)by redesignating
subsection (k) as subsection (l), and
(B)by inserting
after subsection (j) the following new subsection:
(k)Extension of
time for payment of certain telecommunications gain tax
liabilityThe running of any period of limitations for collection
of any amount of tax liability on gain from qualified telecommunications sales
(as defined in section 1071(d)(1)) shall be suspended for the period of any
extension of time under section 1071(a)(1) for payment of such
amount.
.
(2)Subsection (a) of section 1016 of such Code (relating to
general rule) is amended—
(A)by striking
and
at the end of paragraph (36),
(B)by striking the
period at the end of paragraph (37) and inserting , and
,
and
(C)by adding at the
end the following new paragraph:
(38)to the extent
provided in section
1071(a)(2).
.
(d)The amendments made by this section shall apply to sales in
taxable years beginning after the date of the enactment of this Act.
3.Loan guarantee
program to encourage diversity of ownership of telecommunications
businesses
(a)The Administrator of the Small Business Administration
may guarantee any loan made to a qualified business for the purchase of assets,
stock, or interests described in
section
1071(d)(1) of the Internal Revenue Code of 1986 (relating to
qualified telecommunications sale), as added by this Act.
(b)
(1)The
Administrator shall not guarantee any loan under subsection (a) unless the
guaranteed portion of such loan is secured by a first lien position or first
mortgage on the stock, assets, or interests financed by the loan.
(2)Guarantee
percentage; capThe amount of any loan guaranteed by the
Administrator under subsection (a)—
(A)shall not exceed
95 percent of the balance of the financing outstanding at the time of
disbursement of the loan, and
(B)shall not exceed
$8,000,000.
(3)With
respect to each loan guaranteed under subsection (a) (other than a loan that is
repayable in 1 year or less), the Administrator may collect a guarantee fee,
which shall be payable by the participating lender, and may be charged to the
borrower.
(c)For purposes of carrying out this section, the
Administrator may—
(1)enter into
contracts with private and Federal entities for professional and other
services;
(2)enter into
memorandums of understanding with other Federal agencies; and
(3)issue regulations,
including regulations regarding—
(A)notice of and
opportunity to cure a default;
(B)procedures related
to foreclosure; and
(C)such other matters
as the Administrator considers appropriate.
(d)For
purposes of this section:
(1)The
term Administrator means the Administrator of the Small Business
Administration.
(2)The term qualified business has the meaning
given such term in section 1071(d)(2) of the Internal
Revenue Code of 1986, as added by this Act.
(e)Authorization of
appropriationsThere are authorized to be appropriated such sums
as may be necessary to carry out the purposes of this section.
4.
(a)Treatment of
gain on qualifying telecommunications salesNot later than 5 years after the date of
the enactment of this Act, and every 5 years thereafter, the Comptroller
General of the United States shall audit the administration of section 1071 of
the Internal Revenue Code of 1986, as added by this Act, and issue a report on
the results of that audit. The Comptroller General shall include in the report,
notwithstanding any provision of
section
6103 of the Internal Revenue Code of 1986 to the
contrary—
(1)a
list of qualified businesses (as defined in section 1071(d)(2) of such Code)
and any other taxpayer receiving a benefit from the operation of section 1071
as such section was added by this Act,
(2)an assessment of
the effect the amendments made by this Act have on increasing new entry and
growth in the telecommunications industry by qualified businesses, and
(3)an assessment of
whether the $350,000,000 limitation amount under section 1071(d)(2)(B)(iii)(II)
of such Code should be adjusted for inflation in order to respond to the
telecommunications market, and in what year such adjustment should
begin.
(b)Assessment of
loan guarantee programThe report required under subsection (a)
shall include an assessment of the loan guarantee program under section 3 of
this Act, including an assessment of whether the $8,000,000 limitation amount
under section 3(b)(2)(B) of this Act should be adjusted for inflation in order
to respond to the telecommunications market, and in what year such adjustment
should begin.
5.If any provision of this Act or any
amendment made by this Act, or the application of a provision or amendment to
any person or circumstance, is held to be unconstitutional, the remainder of
this Act and the amendments made by this Act, and the application of the
provisions and amendments of this Act to any person or circumstance, shall not
be affected thereby.