To amend the Internal Revenue Code of 1986 to provide that certain bonds issued by local governments in connection with delinquent real property taxes may be treated as tax exempt.

Amends the Internal Revenue Code to provide that certain bonds issued by local governments in connection with delinquent real property taxes (delinquent tax bonds) may be treated as tax exempt.

Requires: (1) such a bond to be issued (with a three-month maturity date) primarily to facilitate the collection or receipt of delinquent real property taxes; and (2) that all delinquent real property taxes (and interest, fees, and penalties attributable to them) received by such governmental units after a specified date but before any maturity date are used, within three months of receipt, for the payment of principal, interest, or redemption price of the issue of which the bond is a part (to the extent that such taxes, interest, fees, and penalties do not exceed such principal, interest, and redemption price, in the aggregate).