26 U.S. Code § 149 - Bonds must be registered to be tax exempt; other requirements

Nothing in section 103(a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any registration-required bond unless such (2) Registration-required bond For purposes of paragraph (1), the term “registration-required bond” means any (A)

For purposes of paragraph (1), a book entry (B) Nominees

The Secretary shall prescribe such regulations as may be necessary to carry out the purpose of paragraph (1) where there is a nominee or chain of nominees.

used in making loans the payment of principal or interest with respect to which are to be guaranteed (in whole or in part) by the United States (or any agency or instrumentality thereof), or

any guarantee by the Federal Housing Administration, the Department of Veterans Affairs , the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or the Government National Mortgage Association,

any guarantee by the Bonneville Power Authority pursuant to the Northwest Power Act (16 U.S.C. 839d) as in effect on the date of the enactment of the Tax Reform Act of 1984, or

subject to subparagraph (E), any guarantee by a Federal home loan bank made in connection with the original issuance of aDecember 31, 2010 (or a renewal or extension of a guarantee so made).

proceeds of the issue invested for an initial temporary period until such proceeds are needed for the purpose for which such issue was issued,

Except as provided in paragraph (2)(B)(ii), a loans to a financial institution or there is a guarantee by a financial institution unless such guarantee constitutes a federally insured deposit or account.

Clause (iv) of subparagraph (A) shall not apply to any guarantee by a Federal home loan bank unless such bank meets safety and soundness collateral requirements for such guarantees which are at least as stringent as such requirements which apply under regulations applicable to such guarantees by Federal home loan banks as in effect on April 9, 2008 .

To the extent provided in regulations prescribed by the Secretary, any entity with statutory authority to borrow from the United States shall be treated as an instrumentality of the United States. Except in the case of an exempt facility bond, a qualified small issue bond, and a qualified student loan bond, nothing in the preceding sentence shall be construed as treating the District of Columbia or any possession of the United States as an instrumentality of the United States.

The term “federally insured deposit or account” means any deposit or account in a financial institution to the extent such deposit or account is insured under Federal law by the Federal Deposit Insurance Corporation , the Federal Savings and Loan Insurance Corporation, the National Credit Union Administration , or any similar federally chartered corporation.

Except as provided in paragraph (2), no interest on any (2) Certain prior exemptions

Subparagraph (A) shall not apply to a (C) Description of bond A (i)

such section 608(a)(6)(A) of Public Law 97–468, as in effect on the date of the enactment of the Tax Reform Act of 1986; or

Nothing in section 103(a) or in any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any (2) Advance refunding

For purposes of this part, a (3) Regulations

The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection.

Nothing in section 103(a) or any other provision of law shall be construed to provide an exemption from Federal income tax for interest on any (2) Information reporting requirements A (A)

the date of issue, the amount of net proceeds of the issue, the stated interest rate, term, and face amount of each (C)

where required, the name of the applicable elected representative who approved the issue, or a description of the voter referendum by which the issue was approved,

the common parent of any affiliated group of corporations (within the meaning of section 1504(a)) of which such initial principal user is a member, and

if the issue is treated as a separate issue under section 144(a)(6)(A), any person treated as a principal user under section 144(a)(6)(B),

a certification by a State official designated by State law (or, where there is no such official, the Governor) that the (G)

The Secretary may grant an extension of time for the filing of any statement required under paragraph (2) if the failure to file in a timely fashion is not due to willful neglect.

Section 103(a) shall not apply to any pooled financing bond unless, with respect to the issue of which such (2) Reasonable expectation requirement

(A) In general The requirements of this paragraph are met with respect to an issue if the issuer reasonably expects that—

as of the close of the 1-year period beginning on the date of issuance of the issue, at least 30 percent of the net proceeds of the issue (as of the close of such period) will have been used directly or indirectly to make or finance (ii)

as of the close of the 3-year period beginning on such date of issuance, at least 95 percent of the net proceeds of the issue (as of the close of such period) will have been so used.

Expectations as to changes in interest rates or in the provisions of this title (or in the regulations or rulings thereunder) may not be taken into account in determining whether expectations are reasonable for purposes of this paragraph.

For purposes of subparagraph (A), the term “net proceeds” has the meaning given such term by section 150 but shall not include proceeds used to finance issuance costs and shall not include proceeds necessary to pay interest (during such period) on the (D) Refunding bonds

the payment of legal and underwriting costs associated with the issuance of the issue is not contingent, and

at least 95 percent of the reasonably expected legal and underwriting costs associated with the issuance of the issue are paid not later than the 180th day after the date of the issuance of the issue.

The requirement of this paragraph is met with respect to an issue if the issuer receives prior to issuance written loan commitments identifying the ultimate potential borrowers of at least 30 percent of the net proceeds of such issue.

is a State-created entity providing financing for water-infrastructure projects through the federally-sponsored State revolving fund program.

(5) Redemption requirement The requirement of this paragraph is met if to the extent that less than the percentage of the proceeds of an issue required to be used under clause (i) or (ii) of paragraph (2)(A) is used by the close of the period identified in such clause, the issuer uses an amount of proceeds equal to the excess of—

The term “pooled financing bond” means any bonds) to be used (or are intentionally used) directly or indirectly to make or finance (B) Exceptions Such term shall not include any (i)

any loan which is a nonpurpose investment (within the meaning of section 148(f)(6)(A), determined without regard to section 148(b)(3)), and

any use of proceeds by an agency of the issuer unless such agency is a political subdivision or instrumentality of the issuer.

If only a portion of the proceeds of an issue is reasonably expected (at the time of issuance of the (g) Treatment of hedge bonds

(1) In general Section 103(a) shall not apply to any hedge bond unless, with respect to the issue of which such (A)

(2) Reasonable expectations as to when proceeds will be spent An issue meets the requirement of this paragraph if the issuer reasonably expects that—

10 percent of the spendable proceeds of the issue will be spent for the governmental purposes of the issue within the 1-year period beginning on the date the (B)

30 percent of the spendable proceeds of the issue will be spent for such purposes within the 2-year period beginning on such date,

60 percent of the spendable proceeds of the issue will be spent for such purposes within the 3-year period beginning on such date, and

85 percent of the spendable proceeds of the issue will be spent for such purposes within the 5-year period beginning on such date.

the issuer reasonably expects that 85 percent of the spendable proceeds of the issue will be used to carry out the governmental purposes of the issue within the 3-year period beginning on the date the (ii)

not more than 50 percent of the proceeds of the issue are invested in nonpurpose investments (as defined in section 148(f)(6)(A)) having a substantially guaranteed yield for 4 years or more.

Amounts in a bona fide debt service fund shall be treated as invested in (iii) Amounts held pending reinvestment or redemption

Amounts held for not more than 30 days pending reinvestment or (C) Exception for refunding bonds

the issuer reasonably expected that 85 percent of the spendable proceeds of the issue of which the original (III)

at least 85 percent of the spendable proceeds of the original issue (and all other prior original issues issued to finance the governmental purposes of such issue) were spent before the date the refunding (4) Special rules For purposes of this subsection—

The Secretary may, at the request of any issuer, provide that the requirement of paragraph (2) shall be treated as met with respect to the portion of the spendable proceeds of an issue which is to be used for any construction project having a construction period in excess of 5 years if it is reasonably expected that such proceeds will be spent over a reasonable construction schedule specified in such request.

The rules of subsection (f)(2)(B) shall apply.

The Secretary may prescribe regulations to prevent the avoidance of the rules of this subsection, including through the aggregation of projects within a single issue.

The Northwest Power Act, referred to in subsecs. (b)(3)(A)(iii) and (c)(2)(C)(i), probably means the Pacific Northwest Electric Power Planning and Conservation Act, Pub. L. 96–501, Dec. 5, 1980 , 94 Stat 2697, which is classified principally to chapter 12H (§ 839 et seq.) of Title 16, Conservation. For complete classification of this Act to the Code, see Short Title note set out under section 839 of Title 16 and Tables.

The date of the enactment of the Tax Reform Act of 1984, referred to in subsec. (b)(3)(A)(iii), is the date of enactment of Pub. L. 98–369, div. A, which was approved July 18, 1984 .

The date of the enactment of this clause, referred to in subsec. (b)(3)(A)(iv), is the date of enactment of Pub. L. 110–289, which was approved July 30, 2008 .

Section 11(b) of the United States Housing Act of 1937, referred to in subsecs. (b)(3)(C)(i)(I) and (c)(2)(C)(iii), is classified to section 1473i(b) of Title 42, The Public Health and Welfare.

The date of the enactment of the Tax Reform Act of 1986, referred to in subsec. (c)(2)(C)(ii), is the date of enactment of Pub. L. 99–514, which was approved Oct. 22, 1986 .

2018—Subsec. (b)(3)(A)(i). Pub. L. 115–141 substituted “ Department of Veterans Affairs ” for “Veterans’ Administration”.

2017—Subsec. (d)(1). Pub. L. 115–97, § 13532(a), substituted “to advance refund anotherPub. L. 115–97, § 13532(b)(1), redesignated pars. (5) and (7) as (2) and (3), respectively, and struck out former pars. (2), (3), (4), and (6) which described issuing of certain private activityPub. L. 111–147 inserted “or” at end of subpar. (A), substituted period for “, or” in subpar. (B), and struck out subpar. (C) which read as follows: “is described in section 163(f)(2)(B).”

2006—Subsec. (f)(1). Pub. L. 109–222, § 508(d)(1), substituted “paragraphs (2), (3), (4), and (5)” for “paragraphs (2) and (3)”.

Subsec. (f)(2)(A). Pub. L. 109–222, § 508(a), amended subpar. (A) generally. Prior to amendment, text read as follows: “The requirements of this paragraph are met with respect to an issue if the issuer reasonably expects that as of the close of the 3-year period beginning on the date of issuance of the issue, at least 95 percent of thePub. L. 109–222, § 508(b), added pars. (4) and (5) and redesignated former par. (4) as (6). Former par. (5) redesignated (7).

Subsec. (f)(7). Pub. L. 109–222, § 508(b), redesignated par. (5) as (7).

Subsec. (f)(7)(B). Pub. L. 109–222, § 508(d)(2), substituted “paragraph (6)(A)” for “paragraph (4)(A)”.

1996—Subsec. (g)(3)(B)(iii). Pub. L. 104–188 amended cl. (iii) generally. Prior to amendment, cl. (iii) read as follows: “ Investment earnings held pending reinvestment .—Investment earnings held for not more than 30 days pending reinvestment shall be treated as invested inPub. L. 101–239 added subsec. (g).

Subsec. (b)(4)(A). Pub. L. 100–647, § 1013(a)(21), substituted “and a qualified studentPub. L. 100–647, § 1013(a)(22), substituted “the failure to file in a timely fashion is not due to willful neglect” for “there is reasonable cause for the failure to file such statement in a timely fashion”.

“The amendments made by this section [amending this section, sections 163, 165, 871, 881, 1287, and 4701 of this title, and section 3121 of Title 31, Money and Finance] shall apply to obligations issued after the date which is 2 years after the date of the enactment of this Act [ Mar. 18, 2010 ].”

“The amendments made by this section [amending this section] shall apply to guarantees made after the date of the enactment of this Act [ July 30, 2008 ].”

“The amendment made by paragraph (1) [amending this section] shall take effect as if included in the amendments made by section 7651 of the Omnibus Budget Reconciliation Act of 1989 [Pub. L. 101–239].”

Except as otherwise provided in this subsection, the amendment made by subsection (a) [amending this section] shall apply to September 14, 1989 .

The amendment made by subsection (a) shall not apply to any September 15, 1989 , and issued before October 15, 1989 .

The amendment made by subsection (a) shall not apply to any issue issued after the date of the enactment of this Act [ Dec. 19, 1989 ] if the preliminary offering materials with respect to such issue were mailed (or otherwise delivered) to members of the underwriting syndicate before September 15, 1989 .

Amendment by section 1013(a)(20)–(22) of Pub. L. 100–647 effective, except as otherwise provided, as if included in the provision of the Tax Reform Act of 1986, Pub. L. 99–514, to which such amendment relates, see section 1019(a) of Pub. L. 100–647, set out as a note under section 1 of this title.

if the 3-year period described in section 149(f)(2)(A) of the 1986 Code would (but for this paragraph) expire on or before October 22, 1989 , such period shall expire on October 21, 1990 , and

if such period expires after October 22, 1989 , the portion of the proceeds of the issue of which the refundedOctober 21, 1988 ) for purposes of applying section 149(f) of the 1986 Code.”

Subsec. (e) applicable to Dec. 31, 1986 , see section 1311(d) of Pub. L. 99–514, as amended, set out as an Effective Date; Transitional Rules note under section 141 of this title.

Federal Savings and Pub. L. 101–73 set out as a note under section 1437 of Title 12, Banks and Banking.