House File 20

                                       HOUSE FILE       
                                       BY  MADDOX


    Passed House, Date               Passed Senate,  Date             
    Vote:  Ayes        Nays           Vote:  Ayes        Nays         
                 Approved                            

                                      A BILL FOR

  1 An Act relating to the taxation of activities involving out=of=
  2    state qualified state tuition programs and including effective
  3    and retroactive applicability date provisions.
  4 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
  5 TLSB 1140HH 80
  6 mg/sh/8

PAG LIN

  1  1    Section 1.  Section 422.7, Code 2003, is amended by adding
  1  2 the following new subsection:
  1  3    NEW SUBSECTION.  34A.  For purposes of this subsection,
  1  4 "out=of=state qualified state tuition program" or "program"
  1  5 means a qualified state tuition program established in a state
  1  6 other than Iowa which meets the requirements of section 529 of
  1  7 the Internal Revenue Code.
  1  8    a.  Subtract the maximum contribution that may be deducted
  1  9 for Iowa income tax purposes as a participant in the Iowa
  1 10 educational savings plan trust pursuant to section 12D.3,
  1 11 subsection 1, paragraph "a", for contributions made to an out=
  1 12 of=state qualified state tuition program.
  1 13    b.  Add the amount resulting from the cancellation of a
  1 14 participation agreement refunded to the taxpayer as a
  1 15 participant in the out=of=state qualified state tuition
  1 16 program to the extent previously deducted as a contribution to
  1 17 the program.
  1 18    c.  Subtract, to the extent included, income from interest
  1 19 and earnings received from the out=of=state qualified state
  1 20 tuition program.
  1 21    d.  Subtract, to the extent not deducted for federal income
  1 22 tax purposes, the amount of any gift, grant, or donation made
  1 23 to the out=of=state qualified state tuition program for
  1 24 deposit in the endowment fund, if any, of that program.
  1 25    Sec. 2.  EFFECTIVE AND APPLICABILITY DATES.  This Act,
  1 26 being deemed of immediate importance, takes effect upon
  1 27 enactment and applies retroactively to January 1, 2003, for
  1 28 tax years beginning on or after that date.
  1 29                           EXPLANATION
  1 30    Under present law, contributions to, donations to, and
  1 31 interest and earnings from the Iowa educational savings plan
  1 32 trust are exempt from Iowa income tax.  The Iowa educational
  1 33 savings plan trust is a trust set up by the state for the
  1 34 benefit of named beneficiaries to pay for educational costs
  1 35 beyond high school.  This bill treats the contributions to,
  2  1 distributions to, and interest and earnings from such a trust
  2  2 or program established by a state other than Iowa in the same
  2  3 manner.
  2  4    The bill takes effect upon enactment and applies
  2  5 retroactively to January 1, 2003, for tax years beginning on
  2  6 or after that date.
  2  7 LSB 1140HH 80
  2  8 mg/sh/8