I
119THCONGRESS
1
STSESSION H. R. 1255
To amend the Internal Revenue Code of 1986 to reinstate advance refunding
bonds.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY12, 2025
Mr. K
USTOFF(for himself, Mr. YAKYM, Ms. MOOREof Wisconsin, and Mr.
P
ANETTA) introduced the following bill; which was referred to the Com-
mittee on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to reinstate
advance refunding bonds.
Be it enacted by the Senate and House of Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Investing in Our Com-4
munities Act’’. 5
SEC. 2. TREATMENT OF ADVANCE REFUNDING BONDS. 6
(a) I
NGENERAL.—Section 149(d) of the Internal 7
Revenue Code of 1986 is amended— 8
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(1) in paragraph (1), by striking ‘‘to advance 1
refund another bond’’ and inserting ‘‘as part of an 2
issue described in paragraph (2), (3), or (4)’’; 3
(2) by redesignating paragraphs (2) and (3) as 4
paragraphs (6) and (7), respectively; and 5
(3) by inserting after paragraph (1) the fol-6
lowing new paragraphs: 7
‘‘(2) C
ERTAIN PRIVATE ACTIVITY BONDS .—An 8
issue is described in this paragraph if any bond 9
(issued as part of such issue) is issued to advance 10
refund a private activity bond (other than a qualified 11
501(c)(3) bond). 12
‘‘(3) O
THER BONDS.— 13
‘‘(A) I
N GENERAL.—An issue is described 14
in this paragraph if any bond (issued as part of 15
such issue), hereinafter in this paragraph re-16
ferred to as the ‘refunding bond’, is issued to 17
advance refund a bond unless— 18
‘‘(i) the refunding bond is only— 19
‘‘(I) the 1st advance refunding of 20
the original bond if the original bond 21
is issued after 1985, or 22
‘‘(II) the 1st or 2nd advance re-23
funding of the original bond if the 24
original bond was issued before 1986, 25
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‘‘(ii) in the case of refunded bonds 1
issued before 1986, the refunded bond is 2
redeemed not later than the earliest date 3
on which such bond may be redeemed at 4
par or at a premium of 3 percent or less, 5
‘‘(iii) in the case of refunded bonds 6
issued after 1985, the refunded bond is re-7
deemed not later than the earliest date on 8
which such bond may be redeemed, 9
‘‘(iv) the initial temporary period 10
under section 148(c) ends— 11
‘‘(I) with respect to the proceeds 12
of the refunding bond not later than 13
30 days after the date of issue of such 14
bond, and 15
‘‘(II) with respect to the proceeds 16
of the refunded bond on the date of 17
issue of the refunding bond, and 18
‘‘(v) in the case of refunded bonds to 19
which section 148(e) did not apply, on and 20
after the date of issue of the refunding 21
bond, the amount of proceeds of the re-22
funded bond invested in higher yielding in-23
vestments (as defined in section 148(b)) 24
which are nonpurpose investments (as de-25
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fined in section 148(f)(6)(A)) does not ex-1
ceed— 2
‘‘(I) the amount so invested as 3
part of a reasonably required reserve 4
or replacement fund or during an al-5
lowable temporary period, and 6
‘‘(II) the amount which is equal 7
to the lesser of 5 percent of the pro-8
ceeds of the issue of which the re-9
funded bond is a part or $100,000 (to 10
the extent such amount is allocable to 11
the refunded bond). 12
‘‘(B) S
PECIAL RULES FOR REDEMP -13
TIONS.— 14
‘‘(i) I
SSUER MUST REDEEM ONLY IF 15
DEBT SERVICE SAVINGS .—Clauses (ii) and 16
(iii) of subparagraph (A) shall apply only 17
if the issuer may realize present value debt 18
service savings (determined without regard 19
to administrative expenses) in connection 20
with the issue of which the refunding bond 21
is a part. 22
‘‘(ii) R
EDEMPTIONS NOT REQUIRED 23
BEFORE 90TH DAY .—For purposes of 24
clauses (ii) and (iii) of subparagraph (A), 25
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the earliest date referred to in such clauses 1
shall not be earlier than the 90th day after 2
the date of issuance of the refunding bond. 3
‘‘(4) A
BUSIVE TRANSACTIONS PROHIBITED .— 4
An issue is described in this paragraph if any bond 5
(issued as part of such issue) is issued to advance 6
refund another bond and a device is employed in 7
connection with the issuance of such issue to obtain 8
a material financial advantage (based on arbitrage) 9
apart from savings attributable to lower interest 10
rates. 11
‘‘(5) S
PECIAL RULES FOR PURPOSES OF PARA -12
GRAPH (3).—For purposes of paragraph (3), bonds 13
issued before the date of the enactment of this sub-14
section shall be taken into account under subpara-15
graph (A)(i) thereof except— 16
‘‘(A) a refunding which occurred before 17
1986 shall be treated as an advance refunding 18
only if the refunding bond was issued more 19
than 180 days before the redemption of the re-20
funded bond, and 21
‘‘(B) a bond issued before 1986, shall be 22
treated as advance refunded no more than once 23
before March 15, 1986.’’. 24
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(b) C ONFORMING AMENDMENT.—Section 1
148(f)(4)(C) of such Code is amended by redesignating 2
clauses (xiv) through (xvi) as clauses (xv) through (xvii) 3
and by inserting after clause (xiii) the following new 4
clause: 5
‘‘(xiv) D
ETERMINATION OF INITIAL 6
TEMPORARY PERIOD .—For purposes of 7
this subparagraph, the end of the initial 8
temporary period shall be determined with-9
out regard to section 149(d)(3)(A)(iv).’’. 10
(c) E
FFECTIVEDATE.—The amendments made by 11
this section shall apply to advance refunding bonds issued 12
after the date of the enactment of this Act. 13
Æ
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