House File 2294 - Introduced
HOUSE FILE
BY BAILEY, FOEGE, WHITAKER, WINCKLER,
WESSEL-KROESCHELL, ALONS, WENTHE,
L. MILLER, RAYHONS, HEATON, GAYMAN,
GASKILL, SWAIM, FREVERT, QUIRK,
ABDUL=SAMAD, SCHUELLER, MASCHER,
MERTZ, MURPHY, STAED, and KRESSIG
Passed House, Date Passed Senate, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to individual development accounts authorized for
2 certain individuals with low income, providing an
3 appropriation, and providing effective and applicability date
4 provisions.
5 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
6 TLSB 6334HH 82
7 jp/nh/24
PAG LIN
1 1 Section 1. Section 422.7, subsection 28, paragraph b, Code
1 2 Supplement 2007, is amended to read as follows:
1 3 b. The amount of any savings refund or state match
1 4 payments authorized under section 541A.3, subsection 1.
1 5 Sec. 2. Section 541A.1, subsection 2, Code 2007, is
1 6 amended to read as follows:
1 7 2. "Administrator" means the division of community action
1 8 agencies of the department of human services rights.
1 9 Sec. 3. Section 541A.1, Code 2007, is amended by adding
1 10 the following new subsection:
1 11 NEW SUBSECTION. 5A. "Household income" means the annual
1 12 household income of an account holder or prospective account
1 13 holder, as determined in accordance with rules adopted by the
1 14 administrator.
1 15 Sec. 4. Section 541A.2, subsection 4, paragraph a, Code
1 16 2007, is amended by adding the following new subparagraph:
1 17 NEW SUBPARAGRAPH. (7) A purpose approved in accordance
1 18 with rule for a refugee individual development account.
1 19 Sec. 5. Section 541A.2, subsection 10, Code 2007, is
1 20 amended to read as follows:
1 21 10. The total amount of sources of principal which may be
1 22 in an individual development account shall be limited to fifty
1 23 thirty thousand dollars.
1 24 Sec. 6. Section 541A.3, Code 2007, is amended to read as
1 25 follows:
1 26 541A.3 INDIVIDUAL DEVELOPMENT ACCOUNTS == REFUND STATE
1 27 MATCH AND TAX PROVISIONS.
1 28 All of the following state match and tax provisions shall
1 29 apply to an individual development account:
1 30 1. a. Payment by the state of a state savings refund
1 31 match on amounts of up to two thousand dollars per calendar
1 32 year that an account holder deposits in the account holder's
1 33 account. To be eligible to receive a state match an account
1 34 holder must have a household income that is equal to or less
1 35 than two hundred percent of the federal poverty level.
2 1 b. Moneys transferred to an individual development account
2 2 from another individual development account and a savings
2 3 refund state match received by the account holder in
2 4 accordance with this section shall not be considered an
2 5 account holder deposit for purposes of determining a savings
2 6 refund state match.
2 7 c. Payment of a savings refund state match either shall be
2 8 made directly to the account holder or to an operating
2 9 organization's central reserve account for later distribution
2 10 to the account holder in the most appropriate manner as
2 11 determined by the administrator.
2 12 d. The Subject to the limitation in paragraph "a", the
2 13 state savings refund match shall be the indicated percentage
2 14 of equal to one hundred percent of the amount deposited: by
2 15 the account holder.
2 16 a. For an account holder with a household income, as
2 17 defined in section 425.17, subsection 6, which is one hundred
2 18 fifty percent or less of the federal poverty level,
2 19 twenty=five percent.
2 20 b. For an account holder with a household income which is
2 21 more than one hundred fifty percent but less than one hundred
2 22 seventy=five percent of the federal poverty level, twenty
2 23 percent.
2 24 c. For an account holder with a household income which is
2 25 one hundred seventy=five percent or more but not more than two
2 26 hundred percent of the federal poverty level, fifteen percent.
2 27 d. For an account holder with a household income which is
2 28 more than two hundred percent of the federal poverty level,
2 29 zero percent.
2 30 2. Income earned by an individual development account is
2 31 not subject to state tax, in accordance with the provisions of
2 32 section 422.7, subsection 28.
2 33 3. Amounts transferred between individual development
2 34 accounts are not subject to state tax.
2 35 4. The administrator shall work with the United States
3 1 secretary of the treasury and the state's congressional
3 2 delegation as necessary to secure an exemption from federal
3 3 taxation for individual development accounts and the earnings
3 4 on those accounts. The administrator shall report annually to
3 5 the governor and the general assembly concerning the status of
3 6 federal approval.
3 7 5. 4. The administrator shall coordinate the filing of
3 8 claims for a state savings refunds match authorized under
3 9 subsection 1, between account holders, and operating
3 10 organizations, and the department of administrative services.
3 11 Claims approved by the administrator may be paid by the
3 12 department of administrative services to each account holder,
3 13 for an aggregate amount for distribution to the holders of the
3 14 accounts in a particular financial institution, or to an
3 15 operating organization's central reserve account for later
3 16 distribution to the account holders depending on the
3 17 efficiency for issuing the refunds state match payments.
3 18 Claims shall be initially filed with the administrator on or
3 19 before a date established by the administrator. Claims
3 20 approved by the administrator shall be paid from the general
3 21 fund of the state in the manner specified in section 422.74
3 22 individual development account state match fund.
3 23 Sec. 7. Section 541A.5, Code 2007, is amended to read as
3 24 follows:
3 25 541A.5 RULES.
3 26 1. The administrator commission on community action
3 27 agencies created in section 216A.92A, in consultation with the
3 28 department of administrative services, shall adopt
3 29 administrative rules to administer this chapter.
3 30 2. a. The rules adopted by the administrator commission
3 31 shall include but are not limited to provision for transfer of
3 32 an individual development account to a different financial
3 33 institution than originally approved by the administrator, if
3 34 the different financial institution has an agreement with the
3 35 account's operating organization.
4 1 b. The rules for determining household income may provide
4 2 categorical eligibility for prospective account holders who
4 3 are enrolled in programs with income eligibility restrictions
4 4 that are equal to or less than the maximum household income
4 5 allowed for payment of a state match under section 541A.3.
4 6 c. Subject to the availability of funding, the commission
4 7 may adopt rules implementing an individual development account
4 8 program for refugees. Rules shall identify purposes approved
4 9 for withdrawals to meet the special needs of refugee families.
4 10 3. The administrator shall utilize a request for proposals
4 11 process for selection of operating organizations and approval
4 12 of financial institutions.
4 13 Sec. 8. Section 541A.6, Code 2007, is amended to read as
4 14 follows:
4 15 541A.6 COMPLIANCE WITH FEDERAL REQUIREMENTS.
4 16 The administrator commission on community action agencies
4 17 shall adopt rules for compliance with federal individual
4 18 development account requirements under the federal Personal
4 19 Responsibility and Work Opportunity Reconciliation Act of
4 20 1996, } 103, as codified in 42 U.S.C. } 604(h), under the
4 21 federal Assets for Independence Act, Pub. L. No. 105=285,
4 22 Title IV, or with any other federal individual development
4 23 account program requirements, as necessary for the state to
4 24 qualify to use federal temporary assistance for needy families
4 25 block grant funding or other available for drawing federal
4 26 funding for allocation to operating organizations. Any rules
4 27 adopted under this section shall not apply the federal
4 28 individual development account program requirements to an
4 29 operating organization which does not utilize federal funding
4 30 for the accounts with which it is connected or to an account
4 31 holder who does not receive temporary assistance for needy
4 32 families block grant or other federal funding.
4 33 Sec. 9. NEW SECTION. 541A.7 INDIVIDUAL DEVELOPMENT
4 34 ACCOUNT STATE MATCH FUND.
4 35 1. An individual development account state match fund is
5 1 created in the state treasury under the authority of the
5 2 administrator. Notwithstanding section 8.33, moneys
5 3 appropriated to the fund shall not revert to any other fund.
5 4 Notwithstanding section 12C.7, subsection 2, interest or
5 5 earnings on moneys deposited in the fund shall be credited to
5 6 the fund.
5 7 2. Moneys available in the fund for a fiscal year are
5 8 appropriated to the administrator to be used to provide the
5 9 state match for account holder deposits in accordance with
5 10 section 541A.3. At least eighty=five percent of the amount
5 11 appropriated shall be used for state match payments and the
5 12 remainder may be used for administrative costs.
5 13 Sec. 10. INDIVIDUAL DEVELOPMENT ACCOUNTS == STATE MATCH
5 14 APPROPRIATION. There is appropriated from the general fund of
5 15 the state to the department of human rights for the fiscal
5 16 year beginning July 1, 2008, and ending June 30, 2009, the
5 17 following amount, or so much thereof as is necessary, to be
5 18 used for the purposes designated:
5 19 To be credited to the individual development account state
5 20 match fund created in this Act:
5 21 .................................................. $ 500,000
5 22 Sec. 11. INDIVIDUAL DEVELOPMENT ACCOUNT RULES ==
5 23 TRANSITION, EFFECTIVE DATE, AND APPLICABILITY.
5 24 1. The division of community action agencies of the
5 25 department of human rights shall administer individual
5 26 development accounts in accordance with the administrative
5 27 rules pertaining to the accounts in 441 IAC ch. 10, in place
5 28 of the department of human services until replacement
5 29 administrative rules are adopted. The commission on community
5 30 action agencies may adopt emergency rules under section 17A.4,
5 31 subsection 2, and section 17A.5, subsection 2, paragraph "b",
5 32 to implement the provisions of this Act and the rules shall be
5 33 effective immediately upon filing unless a later date is
5 34 specified in the rules. Any rules adopted in accordance with
5 35 this subsection shall also be published as a notice of
6 1 intended action as provided in section 17A.4.
6 2 2. This Act, being deemed of immediate importance, takes
6 3 effect upon enactment.
6 4 3. The change from "savings refund" to "state match" as
6 5 authorized in section 422.7, subsection 28, and section
6 6 541A.3, as amended by this Act, is retroactively applicable to
6 7 January 1, 2008, for the tax year commencing on January 1,
6 8 2008.
6 9 EXPLANATION
6 10 This bill relates to individual development accounts
6 11 authorized for certain individuals with low income.
6 12 Under current law in Code chapter 541A, the department of
6 13 human services administers the accounts through operating
6 14 organizations who certify the accounts. Account holder
6 15 deposits may be matched by operating organizations, federal
6 16 individual development account funding, and state savings
6 17 refunds providing a state match for the deposits of account
6 18 holders with family incomes of 200 percent or less of the
6 19 federal poverty level. The state savings refund amount ranges
6 20 from 15=25 percent of account holder deposits, depending on
6 21 income. Interest and earnings on the accounts and the
6 22 deposits made to an account by others is exempt from state
6 23 income tax. Withdrawals from an account must be approved by
6 24 the operating organization for one of the following approved
6 25 purposes: higher education costs, training programs, purchase
6 26 of a primary residence or improvements to such residence,
6 27 capitalization of a small business start=up, or certain
6 28 emergency medical costs.
6 29 The bill makes a number of changes to the requirements for
6 30 individual development accounts. The maximum amount of
6 31 deposits of principal to an account is reduced from $50,000 to
6 32 $30,000. Administration of the program is moved from the
6 33 department of human services to the division of community
6 34 action agencies of the department of human rights.
6 35 Requirements for household income determinations and other
7 1 procedures for the accounts are required to be adopted in rule
7 2 by the commission on community action agencies with input from
7 3 the family development and self=sufficiency council. The
7 4 division is required to utilize a request for proposals
7 5 process for selection of operating organizations and approval
7 6 of financial institutions.
7 7 The bill includes a temporary authorization for operation
7 8 of the accounts in accordance with the rules adopted by the
7 9 department of human services until replacement rules are
7 10 adopted. The commission may adopt the replacement rules using
7 11 emergency procedures which forego public comment and review by
7 12 the administrative rules review committee.
7 13 The state savings refund is changed to a state match and is
7 14 increased to 100 percent of account holder deposits. The
7 15 current state match limit of a percentage of account holder
7 16 deposits of up to $2,000 per calendar year is charged with an
7 17 overall limit of $2,000. If funding is available the
7 18 commission may authorize implementing refugee accounts with
7 19 withdrawals approved for the special needs of refugee
7 20 families. Code section 422.7, providing for adjustments to
7 21 income for purposes of determining net income under the state
7 22 income tax, is amended to include a reference to state match
7 23 payments in the exemption provision relating to individual
7 24 development accounts. The provisions of the bill referencing
7 25 the state match payment are retroactively applicable to
7 26 January 1, 2008, for the tax year beginning on that date.
7 27 An individual development account state match fund is
7 28 created in new Code section 541A.7 with a standing
7 29 appropriation to the division for payments of state matches.
7 30 A requirement for the program administrator to work with the
7 31 federal government and the state's congressional delegation to
7 32 secure federal tax exemption for the accounts and account
7 33 earnings and to report annually is repealed. A portion of the
7 34 appropriation may be used for administrative costs. An
7 35 initial appropriation of $500,000 is made to the fund.
8 1 The bill takes effect upon enactment.
8 2 LSB 6334HH 82
8 3 jp/nh/24.2