HB1546 (As Introduced) - 2000 Regular Session

MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Ways and Means

By: Representative Henderson

House Bill 1546

AN ACT TO PROVIDE FOR INDIVIDUAL DEVELOPMENT ACCOUNTS; TO DEFINE CERTAIN TERMS; TO PROVIDE THAT QUALIFYING INDIVIDUALS MAY ESTABLISH AN INDIVIDUAL DEVELOPMENT ACCOUNT; TO PRESCRIBE THE DUTIES OF COMMUNITY DEVELOPMENT CORPORATIONS; TO PROVIDE A LIMIT ON THE NUMBER OF ACCOUNTS THAT MAY BE ESTABLISHED IN A YEAR; TO REQUIRE REPORTING; TO PROVIDE FOR DEPOSITS; TO PROVIDE FOR THE ESTABLISHMENT OF INDIVIDUAL DEVELOPMENT ACCOUNT FUNDS; TO REGULATE WITHDRAWALS FROM SUCH ACCOUNTS; TO PROVIDE FOR ACCOUNT EVALUATIONS; TO PROVIDE INCOME TAX CREDITS; TO PROVIDE THE PROCEDURE FOR CLAIMING A TAX CREDIT; TO LIMIT THE AMOUNT OF TAX CREDIT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The following words and phrases shall have the meanings ascribed herein unless the context clearly indicated otherwise:

(a) "Account" refers to an individual development account;

(b) "Community development corporation" means a private, nonprofit corporation:

(i) Whose board of directors consists primarily of community representatives and business, civic, and community leaders; and

(ii) Whose principal purpose includes the provision of:

1. Housing;

2. Community based economic development projects; and

3. Social services; that primarily benefit low income individuals and

(d) "Fund" refers to an individual development account fund established by a community development corporation;

(e) "Individual development, account" means an account in a financial institution administered by a community development corporation that allows a qualifying individual to deposit money:

(i) To be matched by the state, financial institutions, corporations, and other entities; and

(ii) That will be used by the qualifying individual for one (1) or more of the following:

1. To pay for costs at an accredited institution of higher education or a vocational school for the individual or for a dependent of the individual.

2. To pay for the costs associated with an accredited or licensed training program that may lead to employment for the individual or for a dependent of the individual.

3. To purchase a primary residence for the individual or for a dependent of the individual.

4. To begin or to purchase part or all of a business.

(f) "Qualifying individual" means an individual or a member of an individual's household who may establish an individual development account because the individual:

(i) Receives or is a member of a house hold that receives assistance;

(ii) Is a member of a household with an annual household income that is less than one hundred fifty percent (150%) of the federal income poverty level.

SECTION 2. (1) A qualifying individual may establish an account by applying at a community development corporation.

(2) At the time of establishing an account under this section, the qualifying individual must name a beneficiary to replace the qualifying individual as the holder of the account if the qualifying individual dies. If the beneficiary:

(a) Is a member of the qualifying individual's family, all funds in the account remain in the account; and

(b) Is not a member of the qualifying individual's family, all funds in the account provided by the state revert to the state.

The qualifying individual may change the name of the beneficiary at the qualifying individual discretion. A beneficiary who becomes the holder of an account under this chapter regarding withdrawals from the account.

(3) Only one (1) member of a qualifying individual's household may establish an account.

SECTION 3. A community development corporation shall be the following:

(a) Determine whether an individual who wants to establish an account is a qualifying individual.

(b) Administer, through a financial institution, and act as trustee for each account established through the community development corporation.

(d) Provide or arrange for training in money management, budgeting, and related topics for each individual who establishes an account.

SECTION 4. (1) An individual may deposit money from the individual's earned income into the individual's account.

(2) An individual may deposit an unlimited amount of money into the individual's account. However, only Three Hundred Dollars ($300.00) annually is eligible for a state deposit as provided in Section 7 of this act.

SECTION 5. (1) Not more than eight hundred (800) accounts may be established in the state each year.

(2) A community development corporation shall use money that is in an individual development account fund established under Section 8 of this act to allow a qualified individual on a waiting list maintained by the community development corporation to establish an account.

SECTION 6. (1) Each community development corporation shall annually provide the Department of Banking and Consumer Finance with information needed to determine:

(a) The number of accounts administered by the community development corporation;

(b) The length of time each account under subdivision one (1) has been established; and

(c) The amount of money an individual has deposited into each account under subdivision one (1) during the preceding twelve (12) months.

(2) The department of commerce shall use the information provided under subsection (a) to deposit the correct amount of money into each account as provided in Section 12 of this chapter.

SECTION 7. (1) The Department of Banking and Consumer Finance shall allocate, for each account that has been established for not more than four (4) years, Three Dollars ($3.00) for each One Dollar ($1.00) an individual deposited into the individual's account during the preceding twelve (12) months. However, the department's allocation under this subsection may not exceed Nine Hundred Dollars ($900.00) for each account described in this subsection.

(2) Not later that June 30 of each year, the department shall deposit into each account established under this act the appropriate amount of money determined under this section.

(3) Money from a federal block grant program under Title IV-A of the federal Social Security Act may be used by the state to provide money under this section for deposit unto an account held by an individual who receives assistance under IC

12-14-2.

SECTION 8. (1) Each community development corporation shall establish an individual development account fund to provide money to be used to finance additional accounts to be administered by the community development corporation under this chapter.

(2) Each community development corporation shall encourage individuals, financial institutions, corporations, and other entities to contribute to the fund. A contributor to the fund may qualify for a tax credit.

(3) A community development corporation may allow an individual to establish a new account as adequate funding becomes available.

(4) Only money from the fund may be used to make the deposit described in subsection (5) into an account established under this section.

(5) The community development corporation shall annually deposit at least Three Dollars ($3.00) into each account for each One Dollar ($1.00) an individual has deposited into the individual's account as of June 30.

(6) A community development corporation may not allow a qualifying individual to establish an account if the community development corporation does not have adequate funds to deposit into the account under subsection (e).

SECTION 9. (1) An account must earn interest at a rate that is competitive in the county where the account is located.

(2) Interest earned on an account during a taxable year is not subject to taxation.

SECTION 10. (1) An individual must request and receive authorization from the community development corporation that administers the individual's account before withdrawing money form the account for any purpose.

(2) An individual who is denied authorization to withdraw money under subsection (1) may appeal the community development corporation's decision to the department of commerce under rules adopted by the department of commerce under IC 4-22-2.

SECTION 11. (1) Money withdrawn form an individual's account is not subject to taxation if the money is used for at least one (1) of the following:

(a) To pay for costs at an accredited institution of higher education or a vocational school for the individual or for a dependent of the individual.

(b) To pay for the costs associated with an accredited or a licensed training program that may lead to employment for the individual or for a dependent of the individual.

(d) To begin or to purchase part of all of a business.

(2) At the time of requesting authorization under Section 10 of this act to withdraw money from an individual's account under subsection (1)(d), the individual must provide the community development corporations with a business plan that:

(a) Is approved by:

(i) A financial institution; or

(ii) A nonprofit loan fund that has demonstrated fiduciary stability;

(b) Includes a description of services or goods to be sold, a marketing plan, and projected financial statements; and

SECTION 12. Money in an account may not be considered:

(a) An asset of an individual when determining the individual's eligibility for assistance;

(b) A countable asset.

SECTION 13. Each community development corporation shall annually:

(a) Evaluate the individual development accounts administered by the community development corporation; and

(b) Submit a report containing the evaluation information to the department of commerce.

SECTION 14. (1) Not later than July 1, 2001 the Department of Banking and Consumer Finance shall begin to evaluate the program for individual development accounts established under this chapter to determine whether to extend the program.

(2) The evaluation under subsection (1) must be completed not later than December 1, 2001.

SECTION 15. An account may not be established under Section 5 of this act after June 30, 2001. However:

(a) An individual may continue to contribute to an existing account; and

(b) The state's obligation to match funds in an existing account as provided in Section 12 of this chapter continues; during the evaluation period provided in Section 19 of this chapter.

SECTION 16. The Department of Banking and Consumer Finance may adopt rules and regulations under to implement this act.

(a) A corporation that is exempt form the adjusted gross income tax under IC 6-3-2-2.8(2);

(b) A partnership;

(d) A limited liability partnership.

SECTION 17. (1) The State Tax Commission shall grant a tax credit against any gross, adjusted gross, or supplemental net income tax due equal to fifty percent (50%) of the amount contributed by a person or an individual to a fund if the contribution is not less than One Thousand Dollars ($1,000.00) and not more than Fifty Thousand Dollars ($50,000.00).

(2) The credit provided by this chapter shall only be applied against any income tax liability owned by the taxpayer after the application of any credits that must be applied before the credit provided by this act.

SECTION 18. If a pass through entity is entitled to a credit under Section 17 of this act but does not have state tax liability against which the tax credit may be applied, a shareholder, partner, or member of the pass through entity is entitled to a tax credit equal to:

(a) the tax credit determined for the pass through entity for the taxable year; multiplied by

(b) the percentage of the pass through entity's distributive income to which the share holder, partner, or member is entitled.

SECTION 19. The credit provided under Section 18 of this act

is in addition to a tax credit to which a shareholder, partner, or member of a pass through entity is otherwise entitled. However, a pass through entity and a shareholder, partner, or member of the pass through entity may not claim more than one (1) credit for the same qualified expenditure.

SECTION 20. (1) A person that or an individual who desires to claim a tax credit as provided in this act shall file with the State Tax Commission, in the form approved by the commission, an application stating the amount of the contribution that the person or individual proposes to make that would qualify for a tax credit and the amount sought to be claimed as a credit.

(2) The State Tax Commission shall promptly notify an applicant whether, or the extent to which, the tax credit is allowable in the state fiscal year in which the application is filed, as provided in Section 17 of this act. If the credit is allowable in that state fiscal year, the applicant shall within thirty (30) days after receipt of the notice file with the department a statement, in the form and accompanied by the proof of payment as the department may prescribe, setting forth that the amount to be claimed as a credit under this chapter has been paid to a fund as provided in Section 17 of this act.

(3) The State Tax Commission may disallow any credit claimed under this chapter for which the statement or proof of payment is not filed within the thirty (30) day period.

SECTION 21. (1) The amount of tax credits allowed under this chapter may not exceed Five Hundred Thousand Dollars ($500,000.00) in any state fiscal year.

(2) The State Tax Commision shall:

(a) record the time of filing of each application for allowance of a credit required under Section 20 of this act; and

(b) approve the applications, if they otherwise qualify for a tax credit under this act, in the chronological order in which the applications are filed in the state fiscal year.

(3) When the total credits approved under this section equal the maximum amount allowable in any state fiscal year, and application filed after that time for the same fiscal year may not be approved. However, if an applicant for whom a credit has been approved falls to file the statement of proof of payment required under Section 20 of this act, an amount equal to the credit previously allowed or set aside for the applicant may be allowed to any subsequent applicant in the year. In addition, the department may, if the applicant so request, approve a credit application, in whole or in part, with respect to the next succeeding state fiscal year.

SECTION 22. A tax credit shall be allowable under this act only for the taxable year of the taxpayer in which the contribution qualifying for the credit is paid.

SECTION 23. This act shall take effect and be in force from and after July 1, 2000.