[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3580 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  2d Session
                                S. 3580

 To amend the Internal Revenue Code of 1986 to provide a tax credit to 
taxpayers who provide reductions in rent to low-income senior renters, 
                        and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 11, 2018

  Mr. Heller 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 a tax credit to 
taxpayers who provide reductions in rent to low-income senior renters, 
                        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 ``Seniors Affordable Housing Tax 
Credit Act''.

SEC. 2. LOW-INCOME SENIORS RENT CREDIT.

    (a) In General.--Subpart D of 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 section:

``SEC. 45T. LOW-INCOME SENIORS RENT CREDIT.

    ``(a) Determination of Credit Amount.--
            ``(1) In general.--For purposes of section 38, the amount 
        of the low-income seniors rent credit determined under this 
        section for any taxable year is the sum of the amounts 
        determined under paragraph (2) for all qualified buildings with 
        a credit period which includes months occurring during the 
        taxable year.
            ``(2) Qualified building amount.--The amount determined 
        under this paragraph with respect to any qualified building for 
        any taxable year shall be an amount equal to the lesser of--
                    ``(A) the aggregate rental reduction amounts for 
                all eligible senior units within such building for 
                months occurring during the taxable year which are 
                within the credit period for such building, or
                    ``(B) the rental reduction credit amount allocated 
                to such building for such months.
            ``(3) Qualified building.--For purposes of this section, 
        the term `qualified building' means any building which is 
        residential rental property (as defined in section 
        168(e)(2)(A)) of the taxpayer with respect to which--
                    ``(A) a rental reduction credit amount has been 
                allocated by a rental reduction credit agency of a 
                State, and
                    ``(B) a qualified rental reduction agreement is in 
                effect.
        A building shall not fail to be treated as a qualified building 
        merely because a credit was allowed under section 42 with 
        respect to such building or there was any other Federal 
        assistance in the construction or rehabilitation of such 
        building.
    ``(b) Rental Reduction Amount.--For purposes of this section--
            ``(1) In general.--The term `rental reduction amount' 
        means, with respect to any eligible senior unit for any month, 
        an amount equal to the applicable percentage (as determined 
        under subsection (d)(1)) of the excess of--
                    ``(A) the applicable standard fair market rent for 
                such unit, over
                    ``(B) the family rental payment required for such 
                unit.
            ``(2) Applicable standard fair market rent.--The term 
        `applicable standard fair market rent' means, with respect to 
        any eligible senior unit for any month, the lesser of--
                    ``(A) the amount of rent which would be charged for 
                a substantially similar unit in the same building which 
                is not an eligible senior unit, or
                    ``(B) an amount equal to the average modest rent 
                (as determined in accordance with the State rental 
                reduction allocation plan) for units with the same 
                number of bedrooms in the same statistical area (as 
                defined in section 143(k)(2)).
            ``(3) Family rental payment requirements.--
                    ``(A) In general.--Each qualified rental reduction 
                agreement with respect to any qualified building shall 
                require that the family rental payment for an eligible 
                senior unit within such building for any month shall be 
                equal to the lesser of--
                            ``(i) 30 percent of the monthly family 
                        income of the residents of the unit (as 
                        determined under subsection (d)(5)), or
                            ``(ii) the applicable standard fair market 
                        rent for such unit determined under paragraph 
                        (2).
                    ``(B) Utility costs.--Any utility allowance 
                (determined by the Secretary after taking into account 
                such determinations under section 8 of the United 
                States Housing Act of 1937) paid by residents of an 
                eligible senior unit shall be taken into account as 
                rent in determining the family rental payment for such 
                unit for purposes of this paragraph.
    ``(c) Rental Reduction Credit Amount.--For purposes of this 
section--
            ``(1) Determination of amount.--
                    ``(A) In general.--The term `rental reduction 
                credit amount' means, with respect to any qualified 
                building, the dollar amount which is allocated to such 
                building (and to eligible senior units within such 
                building) under this subsection. Such dollar amount 
                shall be allocated to months in the credit period with 
                respect to such building (and units) on the basis of 
                reasonable estimates of rents, family incomes, and 
                vacancies in accordance with procedures established by 
                the State as part of its State rental reduction 
                allocation plan.
                    ``(B) Allocation on project basis.--In the case of 
                a project which includes (or will include) more than 1 
                building, the rental reduction credit amount shall be 
                the dollar amount which is allocated to such project 
                for all buildings included in such project. Such amount 
                shall be allocated among such buildings in the manner 
                specified by the taxpayer unless the qualified rental 
                reduction agreement with respect to such project 
                provides for such allocation.
            ``(2) State allocation.--Each rental reduction credit 
        agency of a State shall each calendar year allocate its portion 
        of the State rental reduction credit ceiling to buildings (and 
        to eligible senior units within such building) in accordance 
        with the State rental reduction allocation plan.
            ``(3) Allocated credit amount to apply to all taxable years 
        ending during or after credit allocation year.--Any rental 
        reduction credit amount allocated to any building out of the 
        State rental reduction credit ceiling for any calendar year--
                    ``(A) shall apply to such building for months in 
                the credit period ending during or after such calendar 
                year, and
                    ``(B) shall reduce the portion of such ceiling of 
                the allocating agency only for such calendar year.
            ``(4) State rental reduction credit ceiling.--
                    ``(A) In general.--The State rental reduction 
                credit ceiling applicable to any State for any calendar 
                year shall be an amount equal to the sum of--
                            ``(i) the greater of--
                                    ``(I) the per capita amount 
                                multiplied by the State population, or
                                    ``(II) the minimum ceiling amount, 
                                plus
                            ``(ii) the amount of the State rental 
                        reduction credit ceiling returned in the 
                        calendar year.
                    ``(B) Return of state ceiling amounts.--For 
                purposes of subparagraph (A)(ii), the amount of the 
                State rental reduction credit ceiling returned in a 
                calendar year equals the amount of the rental reduction 
                credit amount allocated to any building which, after 
                the close of the calendar year for which the allocation 
                is made, is canceled by mutual consent of the rental 
                reduction credit agency and the taxpayer.
                    ``(C) Per capita dollar amount; minimum ceiling 
                amount.--For purposes of this paragraph--
                            ``(i) Per capita dollar amount.--The per 
                        capita dollar amount is $1.75.
                            ``(ii) Minimum ceiling amount.--The minimum 
                        ceiling amount is $2,000,000.
                    ``(D) Cost-of-living adjustment.--
                            ``(i) In general.--In the case of a 
                        calendar year after 2019, the $1.75 amount in 
                        subparagraph (C)(i) and the $2,000,000 amount 
                        in subparagraph (C)(ii) shall each be increased 
                        by an amount equal to--
                                    ``(I) such dollar amount, 
                                multiplied by
                                    ``(II) the cost-of-living 
                                adjustment determined under section 
                                1(f)(3) for such calendar year by 
                                substituting `calendar year 2018' for 
                                `calendar year 2016' in subparagraph 
                                (A)(ii) thereof.
                            ``(ii) Rounding.--
                                    ``(I) In the case of the $1.75 
                                amount, any increase under clause (i) 
                                which is not a multiple of 5 cents 
                                shall be rounded to the next lowest 
                                multiple of 5 cents.
                                    ``(II) In the case of the 
                                $2,000,000 amount, any increase under 
                                clause (i) which is not a multiple of 
                                $5,000 shall be rounded to the next 
                                lowest multiple of $5,000.
                    ``(E) Population.--For purposes of this paragraph, 
                population shall be determined in accordance with 
                section 146(j).
                    ``(F) Unused rental reduction credit allocated 
                among certain states.--
                            ``(i) In general.--The unused rental 
                        reduction credit of a State for any calendar 
                        year shall be assigned to the Secretary for 
                        allocation among qualified States for the 
                        succeeding calendar year.
                            ``(ii) Unused rental reduction credit.--For 
                        purposes of this subparagraph, the unused 
                        rental reduction credit of a State for any 
                        calendar year is the excess (if any) of--
                                    ``(I) the State rental reduction 
                                credit ceiling for the year preceding 
                                such year, over
                                    ``(II) the aggregate rental 
                                reduction credit amounts allocated for 
                                such year.
                            ``(iii) Formula for allocation of unused 
                        credit among qualified states.--The amount 
                        allocated under this subparagraph to a 
                        qualified State for any calendar year shall be 
                        the amount determined by the Secretary to bear 
                        the same ratio to the aggregate unused rental 
                        reduction credits of all States for the 
                        preceding calendar year as such State's 
                        population for the calendar year bears to the 
                        population of all qualified States for the 
                        calendar year. For purposes of the preceding 
                        sentence, population shall be determined in 
                        accordance with section 146(j).
                            ``(iv) Qualified state.--For purposes of 
                        this subparagraph, the term `qualified State' 
                        means, with respect to a calendar year, any 
                        State--
                                    ``(I) which allocated its entire 
                                State rental reduction credit ceiling 
                                for the preceding calendar year, and
                                    ``(II) for which a request is made 
                                (not later than May 1 of the calendar 
                                year) to receive an allocation under 
                                clause (iii).
            ``(5) Other definitions.--For purposes of this section--
                    ``(A) Rental reduction credit agency.--The term 
                `rental reduction credit agency' means any agency 
                authorized by a State to carry out this subsection. 
                Such authorization shall include the jurisdictions 
                within the State where the agency may allocate rental 
                reduction credit amounts.
                    ``(B) Possessions treated as states.--The term 
                `State' includes a possession of the United States.
    ``(d) Terms Relating to Rental Reduction Credit and Requirements.--
For purposes of this section--
            ``(1) Applicable percentage.--The term `applicable 
        percentage' means, with respect to any qualified building, the 
        percentage (not greater than 110 percent) set by the rental 
        reduction credit agency at the time it allocates the rental 
        reduction credit amount to the building.
            ``(2) Credit period.--
                    ``(A) In general.--The term `credit period' means, 
                with respect to any qualified building, the 15-year 
                period beginning with the first month for which the 
                qualified rental reduction agreement is in effect with 
                respect to the building.
                    ``(B) State option.--A rental reduction credit 
                agency may provide a credit period for any qualified 
                building which is less than 15 years.
            ``(3) Eligible senior unit.--The term `eligible senior 
        unit' means, with respect to any qualified building, a unit--
                    ``(A) which is occupied by an eligible tenant,
                    ``(B) the rent of which for does not exceed the 
                family rental payment requirement determined under 
                subsection (b)(3), and
                    ``(C) which is certified to the rental reduction 
                credit agency as an eligible senior unit for purposes 
                of this section and the qualified rental reduction 
                agreement.
            ``(4) Eligible tenant.--
                    ``(A) In general.--The term `eligible tenant' means 
                any individual if--
                            ``(i) the individual's family income does 
                        not exceed the greater of--
                                    ``(I) 30 percent of the area median 
                                gross income (as determined under 
                                section 42(g)(1)), or
                                    ``(II) the applicable poverty line 
                                for a family of the size involved, and
                            ``(ii) at least 1 of the occupants of the 
                        unit in which the individual will reside has 
                        attained the age of 55 as of the beginning of 
                        the lease.
                    ``(B) Applicable poverty line.--The term 
                `applicable poverty line' means the most recently 
                published poverty line (within the meaning of section 
                2110(c)(5) of the Social Security Act (42 U.S.C. 
                1397jj(c)(5))) as of the time of the determination as 
                to whether an individual is an eligible tenant.
            ``(5) Family income.--Income of a family shall be 
        determined by the taxpayer annually using the method set forth 
        in the State rental reduction allocation plan.
    ``(e) State Rental Reduction Allocation Plan.--
            ``(1) Adoption of plan required.--For purposes of this 
        section--
                    ``(A) each State shall, before the allocation of 
                its State rental reduction credit ceiling, establish 
                and have in effect a State rental reduction allocation 
                plan meeting the requirements of this subsection, and
                    ``(B) notwithstanding any other provision of this 
                section, the rental reduction credit amount allocated 
                to any building shall be zero unless such amount was 
                allocated pursuant to a State rental reduction 
                allocation plan meeting such requirements.
        Such plan shall only be adopted after such plan is made public 
        and a reasonable period of time has been allowed for public 
        comment.
            ``(2) General plan requirements.--A plan shall meet the 
        requirements of this subsection only if--
                    ``(A) the plan sets forth the criteria and 
                priorities which a rental reduction credit agency of 
                the State shall use in allocating the State rental 
                reduction credit ceiling to eligible senior units 
                within a building, and
                    ``(B) the plan provides that no credit allocation 
                shall be made which is not in accordance with the 
                criteria and priorities set forth under subparagraph 
                (A) unless such agency provides a written explanation 
                to the general public for any credit allocation which 
                is not so made and the reasons why such allocation is 
                necessary.
        In establishing the criteria and priorities described in 
        subparagraph (A), the State shall take into account the factors 
        described in subparagraphs (B) and (C) of section 42(m)(1) and 
        shall, to the maximum extent possible, coordinate such criteria 
        and priorities with the State's qualified allocation plan under 
        section 42.
            ``(3) Specific requirements.--A plan shall meet the 
        requirements of this subsection only if--
                    ``(A) the plan provides methods for determining--
                            ``(i) the amount of rent which would be 
                        charged for a substantially similar unit in the 
                        same building which is not an eligible seniors 
                        unit for purposes of subsection (b)(2)(A), and
                            ``(ii) the applicable percentage under 
                        subsection (d)(1),
                    ``(B) the plan provides a procedure that the rental 
                reduction credit agency (or an agent or other private 
                contractor of such agency) will follow in monitoring 
                for--
                            ``(i) noncompliance with the provisions of 
                        this section and the qualified rental reduction 
                        agreement and in notifying the Internal Revenue 
                        Service of any such noncompliance of which the 
                        agency becomes aware, and
                            ``(ii) noncompliance with habitability 
                        standards through regular site visits, and
                    ``(C) the plan requires a person receiving a credit 
                allocation to report to the rental reduction credit 
                agency such information as is necessary to ensure 
                compliance with the provisions of this section and the 
                qualified rental reduction agreement.
    ``(f) Qualified Rental Reduction Agreement.--For purposes of this 
section--
            ``(1) In general.--The term `qualified rental reduction 
        agreement' means, with respect to any residential rental 
        property (as defined in section 168(e)(2)(A)), a written, 
        binding agreement between a rental reduction credit agency and 
        the owner of such building which specifies--
                    ``(A) the number of eligible senior units within 
                such building for which a rental reduction credit 
                amount is being allocated,
                    ``(B) the credit period for such building,
                    ``(C) the rental reduction credit amount allocated 
                to such building (and dwelling units within such 
                building),
                    ``(D) the applicable percentage to be used in 
                computing the qualified rental reduction amounts with 
                respect to the building, and
                    ``(E) the method for determining the amount of rent 
                which may be charged for eligible senior units within 
                the building.
            ``(2) Compliance requirements.--A qualified rental 
        reduction agreement shall provide that the owner of a building 
        receiving a rental reduction credit amount shall comply with 
        all reporting and other procedures established by the State to 
        ensure compliance with this section and the agreement.
            ``(3) Projects.--In the case of a rental reduction credit 
        allocated to a project consisting of more than 1 building, the 
        rental reduction credit agency may provide for a single 
        qualified rental reduction agreement which applies to all 
        buildings which are part of the project.
    ``(g) Transfer of Credit.--
            ``(1) In general.--Subject to paragraph (2) and such 
        regulations or other guidance as the Secretary may provide, the 
        taxpayer may transfer to any person all or a portion of the 
        credit allowable to the taxpayer under subsection (a) for any 
        taxable year with respect to a building.
            ``(2) Certification.--A transfer under paragraph (1) shall 
        be accompanied by a certificate which includes--
                    ``(A) the qualified rental reduction agreement for 
                the building,
                    ``(B) the taxpayer's name, address, and tax 
                identification number,
                    ``(C) the transferee's name, address, and tax 
                identification number,
                    ``(D) the amount of credit being transferred for 
                each taxable year of the taxpayer, and
                    ``(E) such other information as may be required by 
                the Secretary.
            ``(3) Tax treatment of transfer.--
                    ``(A) Disallowance of deduction.--No deduction 
                shall be allowed for any amount of consideration paid 
                or incurred by the transferee in return for the 
                transfer of any credit under this paragraph.
                    ``(B) Allowance of credit.--The amount of credit 
                transferred under subparagraph (A)--
                            ``(i) shall not be allowed to the 
                        transferor for any taxable year, and
                            ``(ii) shall be allowable to the transferee 
                        as a credit under this section for the taxable 
                        year of the transferee in which such credit is 
                        transferred.
            ``(4) Information reporting.--The transferor and the 
        transferee shall each make such reports regarding the transfer 
        of an amount of credit under paragraph (1), and containing such 
        information, as the Secretary may require. The reports required 
        by this paragraph shall be filed at such time and in such 
        manner as may be required by the Secretary.
    ``(h) Certifications and Other Reports to Secretary.--
            ``(1) Certification with respect to 1st year of credit 
        period.--Following the close of the 1st taxable year in the 
        credit period with respect to any qualified building, the 
        taxpayer shall certify to the Secretary (at such time and in 
        such form and in such manner as the Secretary prescribes)--
                    ``(A) the information described in subsection 
                (f)(1) required to be contained in the qualified rental 
                reduction agreement with respect to the building,
                    ``(B) the transferee (if any) of the credit under 
                subsection (g), and
                    ``(C) such other information as the Secretary may 
                require.
        In the case of a failure to make the certification required by 
        the preceding sentence on the date prescribed therefor, unless 
        it is shown that such failure is due to reasonable cause and 
        not to willful neglect, no credit shall be allowable by reason 
        of subsection (a) with respect to such building for any taxable 
        year ending before such certification is made.
            ``(2) Annual reports to the secretary.--The Secretary may 
        require taxpayers to submit an information return (at such time 
        and in such form and manner as the Secretary prescribes) for 
        each taxable year setting forth--
                    ``(A) the information described in paragraph (1)(A) 
                for the taxable year, and
                    ``(B) such other information as the Secretary may 
                require.
        The penalty under section 6652(j) shall apply to any failure to 
        submit the return required by the Secretary under the preceding 
        sentence on the date prescribed therefor.
            ``(3) Annual reports from housing credit agencies.--Each 
        agency which allocates any housing credit amount to 1 or more 
        buildings for any calendar year shall submit to the Secretary 
        (at such time and in such manner as the Secretary shall 
        prescribe) an annual report specifying--
                    ``(A) the amount of rental reduction credit amounts 
                allocated to each such building for such year,
                    ``(B) sufficient information to identify each such 
                building and the taxpayer with respect thereto,
                    ``(C) information as to the demographic and income 
                characteristics of eligible tenants of all such 
                buildings to which such amounts were allocated, and
                    ``(D) such other information as the Secretary may 
                require.
        The penalty under section 6652(j) shall apply to any failure to 
        submit the report required by the preceding sentence on the 
        date prescribed therefor.''.
    (b) Treatment as Part of General Business Credit.--
            (1) In general.--Section 38(b) of the Internal Revenue Code 
        of 1986 is amended by striking ``plus'' at the end of paragraph 
        (31), by striking the period at the end of paragraph (32) and 
        inserting ``, plus'', and by adding at the end the following 
        new paragraph:
            ``(33) the low-income seniors rent credit determined under 
        section 45T(a).''.
            (2) Allowance against minimum tax.--Section 38(c)(4)(B) of 
        such Code is amended by redesignating clauses (x), (xi), and 
        (xii) as clauses (xi), (xii), and (x)(iii), respectively, and 
        by inserting after clause (ix) the following new clause:
                            ``(x) the low-income seniors rent credit 
                        determined under section 45T(a),''.
    (c) Conforming Amendments.--
            (1) Subsections (i)(3)(C), (i)(6)(B)(i), and (k)(1) of 
        section 469 of such Code are each amended by inserting ``or 
        45T'' after ``42''.
            (2) The table of sections for subpart D of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        at the end the following new item:

``Sec. 42A. Low-income seniors rent credit.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2018.
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