All of the following state tax provisions shall apply to an individual development account:
1. Payment by the state of a savings refund on amounts of up to two thousand dollars per calendar year that an account holder deposits in the account holder's account. Moneys transferred to an individual development account from another account shall not be considered an account holder deposit for purposes of determining a savings refund. Payment shall be made directly to the account in the most appropriate manner as determined by the administrator. The state savings refund shall be the indicated percentage of the amount deposited:
a. For an account holder with a household income, as defined in section 425.17, subsection 6, which is one hundred fifty percent or less of the federal poverty level, twenty-five percent.
b. For an account holder with a household income which is more than one hundred fifty percent but less than one hundred seventy-five percent of the federal poverty level, twenty percent.
c. For an account holder with a household income which is one hundred seventy-five percent or more but not more than two hundred percent of the federal poverty level, fifteen percent.
d. For an account holder with a household income which is more than two hundred percent of the federal poverty level, zero percent.
2. Income earned by an individual development account is not subject to state tax, in accordance with the provisions of section 422.7, subsection 28.
3. Amounts transferred between individual development accounts are not subject to state tax.
4. The administrator shall work with the United States secretary of the treasury and the state's congressional delegation as necessary to secure an exemption from federal taxation for individual development accounts and the earnings on those accounts. The administrator shall report annually to the governor and the general assembly concerning the status of federal approval.
5. The administrator shall coordinate the filing of claims for savings refunds authorized under subsection 1, between account holders, operating organizations, and the department of revenue and finance. Claims approved by the administrator may be paid by the department of revenue and finance to each account or for an aggregate amount for distribution to the accounts in a particular financial institution, depending on the efficiency for issuing the refunds. Claims shall be initially filed with the administrator on or before a date established by the administrator. Claims approved by the administrator shall be paid from the general fund of the state in the manner specified in section 422.74.
93 Acts, ch 97, §18; 96 Acts, ch 1106, § 11; 98 Acts, ch 1218, §78, 84
Referred to in § 422.7, 541A.2, 541A.4
1998 amendment to subsection 5 applies retroactively to January 1, 1998; 98 Acts, ch 1218, §84
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