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108th CONGRESS
1st Session
H. R. 694
To amend the Internal Revenue Code of 1986 to provide an interest-free
source of capital to cover the costs of installing residential solar
energy equipment.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
February 11, 2003
Mr. McDermott (for himself, Ms. Norton, Mr. Brown of Ohio, Mr. George
Miller of California, Ms. Carson of Indiana, Mr. Frost, Mr. Owens, Ms.
Jackson-Lee of Texas, Mr. Sanders, Mr. Inslee, Mr. Matsui, and Mr.
Lantos) introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide an interest-free
source of capital to cover the costs of installing residential solar
energy equipment.
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 ``Residential Solar Energy Act of
2003''.
SEC. 2. CREDIT TO HOLDERS OF RESIDENTIAL SOLAR ENERGY BONDS.
(a) In General.--Subpart B 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. 30B. CREDIT TO HOLDERS OF RESIDENTIAL SOLAR ENERGY BONDS.
``(a) Allowance of Credit.--In the case of a taxpayer who holds a
Residential Solar Energy 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 Residential Solar Energy 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 Residential Solar Energy 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
(1), 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 issuance of the issue) on outstanding long-term
corporate debt obligations (determined under regulations
prescribed by the Secretary).
``(4) 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) Residential Solar Energy Bond.--For purposes of this
section--
``(1) In general.--The term `Residential Solar Energy Bond'
means any bond issued as part of an issue if--
``(A) 95 percent or more of the proceeds of such
issue are to be used to make qualified solar energy
loans,
``(B) the bond is issued by a qualified utility,
``(C) the issuer designates such bond for purposes
of this section, and
``(D) the term of each bond which is part of such
issue does not exceed 15 years.
``(2) Qualified solar energy loan.--
``(A) In general.--The term `qualified solar energy
loan' means any loan without interest to the owner of
any qualified residential property for the purchase and
installation of photovoltaic cells on such property but
only if--
``(i) the excess of the electricity
produced by such cells over the electricity
consumed at the residential property is
transmitted from such property for use by
others,
``(ii) the net electricity produced or
consumed at the residential property is
metered,
``(iii) the owner receives a credit against
future electricity consumption for the excess
described in clause (i),
``(iv) the principal amount of the loan is
payable in equal installments over 15 years
(or, if shorter, the period specified by the
utility), and
``(v) the loan is made under a program of
the utility that--
``(I) specifies an approved list of
photovoltaic cell equipment and
installers, and
``(II) contains other safeguards to
ensure that the loan is used for its
intended purpose.
``(B) Qualified utility.--The term `qualified
utility' means any entity (including a governmental
unit) engaged in the sale of electrical energy at
retail in the United States
``(C) Qualified residential property.--The term
`qualified residential property' means any single-
family or multi-family residence.
``(d) Limitation on Amount of Bonds Designated.--
``(1) In general.--The maximum aggregate face amount of
bonds which may be designated under subsection (c)(1) by any
qualified utility shall not exceed the limitation amount
allocated to such utility under paragraph (3).
``(2) National limitation on amount of bonds designated.--
There is a national Residential Solar Energy Bond limitation of
$24,000,000,000.
``(3) Allocation of limitation among utilities.--
``(A) In general.--The national Residential Solar
Energy Bond limitation shall be allocated by the
Secretary of Energy during 2004, 2005, 2006, and 2007
to qualified utilities. In making such allocations,
such Secretary shall give priorities to qualified
utilities which provide subsidies (other than through
the use of such Bonds) for the purchase and
installation by residential customers of photovoltaic
cells on their residences.
``(B) Unused allocations.--Any allocation made to a
qualified utility which is not used within 6 months
after the date of the allocation may be reallocated by
the Secretary of Energy.
``(e) 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 part
IV of subchapter A (other than subpart C thereof,
relating to refundable credits).
``(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.
``(f) Other Definitions.--For purposes of this section--
``(1) Credit allowance date.--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.
``(2) Bond.--The term `bond' includes any obligation.
``(g) 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 (e)) and the amount so
included shall be treated as interest income.
``(h) Special Rules Relating to Arbitrage.--
``(1) In general.--A bond shall not be treated as failing
to meet the requirements of subsection (c)(1) solely by reason
of the fact that the proceeds of the issue of which such bond
is a part are invested for a reasonable temporary period until
such proceeds are used in making qualified solar energy loans.
``(2) Earnings on proceeds.--Any earnings on proceeds
during the temporary period shall be treated as proceeds of the
issue for purposes of applying subsection (c)(1) and paragraph
(1) of this subsection.
``(3) Treatment of loan repayments.--Principal repayments
received during any calendar quarter shall not be treated as
failing to meet the requirements of subsection (c)(1) if,
before the end of the following calendar quarter, the amount of
such repayments is used to make qualified solar energy loans,
to redeem residential solar energy bonds, or to acquire zero
interest State and local government series bonds. The term of a
loan made from such repayments may extend beyond the last day
that any bond issued as part of the issue financing the loan
being repaid is outstanding; and, if so, the requirement that a
loan be without interest shall not apply to the period after
such last day.
``(i) Other Special Rules.--
``(1) Bonds held by regulated investment companies.--If any
Residential Solar Energy 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.
``(2) 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
Residential Solar Energy 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 Residential Solar
Energy Bond as if it were a stripped bond and to the
credit under this section as if it were a stripped
coupon.
``(3) Treatment for estimated tax purposes.--Solely for
purposes of sections 6654 and 6655, the credit allowed by this
section to a taxpayer by reason of holding a Residential Solar
Energy 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.
``(4) Credit may be transferred.--Nothing in any law or
rule of law shall be construed to limit the transferability of
the credit allowed by this section through sale and repurchase
agreements.
``(5) Reporting.--Issuers of Residential Solar Energy Bonds
shall submit reports similar to the reports required under
section 149(e).
``(j) Recapture of Portion of Credit Where Cessation of Qualified
Use.--
``(1) In general.--If any bond which when issued purported
to be a Residential Solar Energy Bond ceases to meet the
requirements of subsection (c), the issuer shall pay to the
United States (at the time required by the Secretary) an amount
equal to the aggregate of the credits allowable under this
section (determined without regard to subsection (e)) for
taxable years ending during the calendar year in which such
cessation occurs and the 2 preceding calendar years.
``(2) Failure to pay.--If the issuer fails to timely pay
the amount required by paragraph (1) with respect to any issue,
the tax imposed by this chapter on each holder of any 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.''
(b) Reporting.--Subsection (d) of section 6049 of such Code
(relating to returns regarding payments of interest) is amended by
adding at the end the following new paragraph:
``(8) Reporting of credit on residential solar energy
bonds.--
``(A) In general.--For purposes of subsection (a),
the term `interest' includes amounts includible in
gross income under section 30B(g) and such amounts
shall be treated as paid on the credit allowance date
(as defined in section 30B(f)(1)).
``(B) Reporting to corporations, etc.--Except as
otherwise provided in regulations, in the case of any
interest described in subparagraph (A) of this
paragraph, subsection (b)(4) of this section shall be
applied without regard to subparagraphs (A), (H), (I),
(J), (K), and (L)(i).
``(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.''
(c) Conforming Amendment.--The table of sections for subpart B of
part IV of subchapter A of chapter 1 of such Code is amended by adding
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