SB3217 (As Introduced) - 2000 Regular Session

MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Finance

By: Senator(s) Furniss

Senate Bill 3217

AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF INDIVIDUAL DEVELOPMENT ACCOUNTS WITH COMMUNITY DEVELOPMENT CORPORATIONS BY CERTAIN QUALIFYING INDIVIDUALS; TO REQUIRE THAT BENEFICIARIES MUST BE NAMED FOR SUCH ACCOUNTS AND TO PROVIDE THAT ONLY ONE MEMBER OF EACH HOUSEHOLD MAY ESTABLISH SUCH AN ACCOUNT; TO GIVE COMMUNITY DEVELOPMENT CORPORATIONS CERTAIN POWERS AND DUTIES WITH REGARD TO SUCH ACCOUNTS; TO PROVIDE FOR CERTAIN PAYMENTS TO SUCH ACCOUNT FOR DEPOSITS MADE BY AN INDIVIDUAL; TO REQUIRE COMMUNITY DEVELOPMENT CORPORATIONS TO ESTABLISH AN INDIVIDUAL ACCOUNT FUND TO PROVIDE MONEY TO FINANCE ADDITIONAL INDIVIDUAL DEVELOPMENT ACCOUNTS UNDER THIS ACT; TO REQUIRE COMMUNITY DEVELOPMENT CORPORATIONS TO ENCOURAGE CONTRIBUTIONS TO SUCH FUND; TO LIMIT THE NUMBER OF INDIVIDUAL DEVELOPMENT ACCOUNTS THAT MAY BE ESTABLISHED; TO REQUIRE AN INDIVIDUAL TO RECEIVE AUTHORIZATION FROM THE COMMUNITY DEVELOPMENT CORPORATION BEFORE WITHDRAWING MONEY FROM THE ACCOUNT; TO PROVIDE THAT MONEY WITHDRAWN FROM AN ACCOUNT SHALL NOT BE SUBJECT TO STATE INCOME TAXATION IF IT IS USED TO PAY CERTAIN EDUCATIONAL COSTS, TO PAY THE COST OF CERTAIN TRAINING PROGRAMS, TO PURCHASE A RESIDENCE OR TO PURCHASE A BUSINESS; TO PROVIDE THAT MONEY IN AN ACCOUNT SHALL NOT BE CONSIDERED AN ASSET WHEN DETERMINING AN INDIVIDUAL'S ELIGIBILITY FOR TEMPORARY ASSISTANCE TO NEEDY FAMILIES; TO PROVIDE A STATE INCOME TAX CREDIT FOR CERTAIN AMOUNTS CONTRIBUTED TO INDIVIDUAL DEVELOPMENT ACCOUNT FUNDS ESTABLISHED BY COMMUNITY DEVELOPMENT CORPORATIONS; AND FOR RELATED PURPOSES.

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

SECTION 1. As used in this act:

(a) "Account" means 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 communities.

(d) "Fund" means 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 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 household that receives Temporary Assistance for Needy Families; or

(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 is a member of the qualifying individual's family, all funds in the account remain in the account. If the beneficiary 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's discretion. A beneficiary who becomes the holder of an account under this subsection subject to this act and rules adopted under this act 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 do 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 has been established; and

(2) The Department of Banking and Consumer Finance shall use the information provided under subsection (1) to deposit the correct amount of money into each account as provided in Section 7 of this act.

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 into an account held by an individual who receives Temporary Assistance for Needy Families.

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 act.

(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 the tax credit established in Section 15 of this act.

(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 (5).

SECTION 9. (1) An account shall 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 from 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 Banking and Consumer Finance under such rules as it may establish.

SECTION 11. (1) Money withdrawn from 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 an asset of an individual when determining the individual's eligibility for Temporary Assistance for Needy Families;

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 Banking and Consumer Finance.

SECTION 14. The Department of Banking and Consumer Finance may adopt rules and regulations to implement this act.

SECTION 15. (1) A credit against the income taxes imposed in this chapter shall be allowed in an amount equal to fifty percent (50%) of the amount contributed by a person or an individual to an individual development account fund established by a community development corporation under Section 8 of this act; provided, however, that the contribution not be less than One Hundred Dollars ($100.00) and not more than Fifty Thousand Dollars ($50,000.00).

(2) A person who desires to claim a tax credit as provided in this section 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 proposes to make that would qualify for the credit and the amount sought to be claimed as a credit.

(3) 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. If the credit is allowable, the applicant shall, within thirty (30) days after receipt of the notice, file a statement with the State Tax Commission, in the form and accompanied by such proof of payment as the commission may prescribe, setting forth that the amount to be claimed as a credit under this section has been paid to a fund as provided in Section 8 of this act. The State Tax Commission may disallow any credit claimed under this section for which the statement or proof of payment is not filed within the thirty-day period.

(3) The amount of tax credits allowed under this section shall not exceed Five Hundred Thousand Dollars ($500,000.00) in any state fiscal year.

(4) The State Tax Commission shall:

(a) Record the time of filing of each application for allowance of a credit required under this section; 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.

(5) When the total credits approved under this section equal the maximum amount allowable in any state fiscal year, an application filed after that time for the same fiscal year shall not be approved. If an applicant for whom a credit has been approved fails to file the statement of proof of payment as required by this section, an amount equal to the credit allowed for the applicant may be allowed to any subsequent applicant in the fiscal year. The State Tax Commission may, if the applicant so requests, approve a credit application, in whole or in part, with respect to the next succeeding fiscal year.

(6) A tax credit under this section shall be allowed only for the taxable year of the taxpayer in which the contribution qualifying for the credit is paid.

SECTION 16. The provisions of Section 15 of this act shall be codified in Chapter 7, Title 27, Mississippi Code of 1972.

SECTION 17. This act shall take effect and be in force from and after July 1, 2000.