Bill > HR1255

This bill amends the Internal Revenue Code of 1986 to reinstate and regulate advance refunding bonds, which are municipal bonds issued to refinance an existing bond before its first call date. The bill establishes new rules for how these bonds can be used, including allowing the first advance refunding of a bond issued after 1985, or the first or second advance refunding of a bond issued before 1986. The legislation sets specific conditions for these refundings, such as requiring that the issuer can realize present value debt service savings, limiting the timing of redemptions, and restricting investments in higher-yielding assets. The bill also prohibits using advance refunding bonds as a device to obtain financial advantages through arbitrage beyond interest rate savings. Specifically, for bonds issued before the bill's enactment, only one advance refunding is permitted for bonds issued before 1986, and refunding bonds issued more than 180 days before the original bond's redemption would be considered an advance refunding. The amendments will apply to advance refunding bonds issued after the date of the Act's enactment.

Budget and Finance

https://www.congress.gov/bill/119th-congress/house-bill/1255/all-info