Tax Credit Bonds: A Brief Explanation (CRS Report for Congress)
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| Release Date |
Revised June 9, 2008 |
| Report Number |
RS20606 |
| Report Type |
Report |
| Authors |
Steven Maguire, Government and Finance Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
This report explains the tax credit mechanism and describes the market forqualified zone academy bonds (QZABs), clean renewable energy bonds (CREBs), andgulf tax credit bonds (GTCBs). QZABs, which were the first tax credit bonds, wereintroduced as part of the Taxpayer Relief Act of 1997 (P.L. 105-34) and were firstavailable in 1998. CREBs were created by the Energy Policy Act of 2005 (P.L. 109-58)and GTCBs by the Gulf Opportunity Zone Act of 2005 (P.L. 109-135). Tax CreditBonds (TCBs) are a type of bond that offers the holder a federal tax credit instead ofinterest. Each type of TCB has a specific use. Issuers of QZABs are required to use theproceeds to finance public school partnership programs in economically distressed areas.CREBs are designated for clean renewable energy projects. GTCB proceeds are for therefinancing of outstanding government debt in Gulf Coast regions affected by HurricaneKatrina. GTCBs could only be issued in 2006. In December 2006, Congress extendedthe QZAB program, with modifications, for 2006 and 2007. Several bills have beenintroduced in the 110th Congress that would extend, expand, modify, or create new taxcredit bonds. Notably, S. 2886 would extend QZABs two years, through 2009, andwould add $400 million in capacity to the CREB program. And, H.R. 6049, which wasapproved by the Ways and Means Committee on May 15, 2008, would extend QZABsone year, expand CREBs, and create a new type of tax credit bond for energyconservation.
