71st OREGON LEGISLATIVE ASSEMBLY--2001 Regular Session
Enrolled
House Bill 3391
Sponsored by Representatives MERKLEY, WESTLUND; Representatives
BECK, KAFOURY (at the request of Enterprise Foundation)
CHAPTER ................
AN ACT
Relating to individual development accounts; creating new
provisions; and amending ORS 315.271, 458.670, 458.685, 458.690
and 458.700.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 315.271 is amended to read:
315.271. (1) A credit against taxes otherwise due under ORS
chapter 316, 317 or 318 shall be allowed for donations to a
fiduciary organization for distribution to individual development
accounts established under ORS 458.685. The credit shall equal
the lesser of { - $25,000 or 25 - } { + $75,000 or 75 + }
percent of the donation amount.
(2) If a credit allowed under this section is claimed, the
amount upon which the credit is based that is allowed or
allowable as a deduction from federal taxable income under
section 170 of the Internal Revenue Code shall be added to
federal taxable income in determining Oregon taxable income. As
used in this subsection, the amount upon which a credit is based
is the allowed credit divided by { - 25 - } { + 75 + }
percent.
(3) The allowable tax credit that may be used in any one tax
year shall not exceed the tax liability of the taxpayer.
(4) Any tax credit otherwise allowable under this section that
is not used by the taxpayer in a particular year may be carried
forward and offset against the taxpayer's tax liability for the
next succeeding tax year. Any tax credit remaining unused in the
next succeeding tax year may be carried forward and used in the
second succeeding tax year. Any tax credit not used in the second
succeeding tax year may be carried forward and used in the third
succeeding tax year, but may not be carried forward for any tax
year thereafter.
SECTION 2. { + The amendments to ORS 315.271 by section 1 of
this 2001 Act apply to tax years beginning on or after January 1,
2002. + }
SECTION 3. ORS 458.670 is amended to read:
458.670. As used in this section and ORS 458.675 to 458.700,
unless the context requires otherwise:
(1) 'Account holder' means a member of a lower income household
who is the named depositor of an individual development account.
(2) 'Fiduciary organization' means { + :
Enrolled House Bill 3391 (HB 3391-B) Page 1
(a) + } A nonprofit, fund raising organization that is exempt
from taxation under section 501(c)(3) of the Internal Revenue
Code as amended and in effect on January 1, 1999 { + ; or
(b) A federally recognized Indian tribe or band + }.
(3) 'Financial institution' means { + :
(a) + } An organization regulated under ORS chapters 706 to
716, 722 or 723 { + ; or
(b) In the case of individual development accounts established
for the purpose described in ORS 458.685 (1)(c), a financial
institution as defined in ORS 348.841 + }.
(4) 'Individual development account' means a contract between
an account holder and a fiduciary organization, for the deposit
of funds into a financial institution by the account holder, and
the deposit of matching funds into the financial institution by
the fiduciary organization, to allow the account holder to
accumulate assets for use toward achieving a specific purpose
approved by the fiduciary organization.
(5) 'Lower income household' means a household having an income
equal to or less than 80 percent of the median household income
for the area as determined by the Housing and Community Services
Department. In making the determination, the department shall
give consideration to any data on area household income published
by the United States Department of Housing and Urban Development.
SECTION 4. ORS 458.685 is amended to read:
458.685. (1) A person may establish an individual development
account only for a purpose approved by a fiduciary organization.
Purposes that the fiduciary organization may approve are:
(a) The acquisition of post-secondary education or job
training.
{ + (b) + } If the account holder has established the account
for the benefit of a household member who is under the age of 18
years,
{ - an approved purpose may include - } the payment of
extracurricular nontuition expenses designed to prepare the
member for post-secondary education or job training.
{ + (c) If the account holder has established a qualified
tuition savings program account under ORS 348.841 to 348.873 on
behalf of a designated beneficiary, the establishment of an
additional qualified tuition savings program account on behalf of
the same designated beneficiary. + }
{ - (b) - } { + (d) + } The purchase of a primary
residence. In addition to payment on the purchase price of the
residence, account moneys may be used to pay any usual or
reasonable settlement, financing or other closing costs. The
account holder must not have owned or held any interest in a
residence during the three years prior to making the purchase.
However, this three-year period shall not apply to displaced
homemakers or other individuals who have lost home ownership as a
result of divorce.
{ - (c) - } { + (e) + } The capitalization of a small
business. Account moneys may be used for capital, plant,
equipment and inventory expenses or for working capital pursuant
to a business plan. The business plan must have been developed by
a financial institution, nonprofit microenterprise program or
other qualified agent demonstrating business expertise and have
been approved by the fiduciary organization. The business plan
must include a description of the services or goods to be sold, a
marketing plan and projected financial statements.
(2)(a) If an emergency occurs, an account holder may withdraw
all or part of the account holder's deposits to an individual
Enrolled House Bill 3391 (HB 3391-B) Page 2
development account for a purpose not described in subsection (1)
of this section. As used in this paragraph, an emergency includes
making payments for necessary medical expenses, to avoid eviction
of the account holder from the account holder's residence and for
necessary living expenses following a loss of employment.
(b) The account holder must reimburse the account for the
amount withdrawn under this subsection within 12 months after the
date of the withdrawal. Failure of an account holder to make a
timely reimbursement to the account is grounds for removing the
account holder from the individual development account program.
Until the reimbursement has been made in full, an account holder
may not withdraw any matching deposits or accrued interest on
matching deposits from the account.
(3) If an account holder withdraws moneys from an individual
development account for other than an approved purpose, the
fiduciary organization may remove the account holder from the
program.
(4) If an account holder moves from the area where the program
is conducted or is otherwise unable to continue in the program,
the fiduciary organization may remove the account holder from the
program.
(5) If an account holder is removed from the program under
subsection (2), (3) or (4) of this section, all matching deposits
in the account and all interest earned on matching deposits shall
revert to the fiduciary organization. The fiduciary organization
shall use the reverted funds as a source of matching deposits for
other accounts.
SECTION 5. ORS 458.690 is amended to read:
458.690. (1) Notwithstanding ORS 315.271, a fiduciary
organization selected under ORS 458.695 may qualify as the
recipient of account contributions that qualify the contributor
for a tax credit under ORS 315.271 only if the fiduciary
organization structures the accounts to have the following
features:
(a) The fiduciary organization matches amounts deposited by the
account holder according to a formula established by the
fiduciary organization. The fiduciary organization shall deposit
not less than $1 nor more than $5 into the account for each $1
deposited by the account holder.
(b) The matching deposits by the fiduciary organization to the
individual development account are placed in { - either - } :
(A) A savings account jointly held by the account holder and
the fiduciary organization and requiring the signatures of both
for withdrawals; { - or - }
(B) A savings account that is controlled by the fiduciary
organization and is separate from the savings account of the
account holder { + ; or
(C) In the case of an account established for the purpose
described in ORS 458.685 (1)(c), a qualified tuition savings
program account under ORS 348.841 to 348.873, in which the
fiduciary organization is the account owner as defined in ORS
348.841 + }.
(2) Deposits by a fiduciary organization to an account
{ - shall - } { + may + } not exceed $2,000 in any 12-month
period. A fiduciary organization may designate a lower amount as
a limit on annual matching deposits to an account.
(3) The total amount paid into an individual development
account during its existence, including amounts from deposits,
matching deposits and interest or investment earnings, may not
exceed $20,000.
Enrolled House Bill 3391 (HB 3391-B) Page 3
SECTION 6. ORS 458.700 is amended to read:
458.700. (1) Subject to Housing and Community Services
Department rules, a fiduciary organization has sole authority
over, and responsibility for, the administration of individual
development accounts. The responsibility of the fiduciary
organization extends to all aspects of the account program,
including marketing to participants, soliciting matching
contributions, counseling account holders, providing financial
literacy education, and conducting required verification and
compliances activities. The fiduciary organization may establish
program provisions as the organization believes necessary to
ensure account holder compliance with the provisions of ORS
458.680 and 458.685. Notwithstanding ORS 458.670 (5) and 458.680
(2), a fiduciary organization may establish income and net worth
limitations for account holders that are lower than the income
and net worth limitations established by ORS 458.670 (5) and
458.680 (2).
(2) A fiduciary organization may act in partnership with other
entities, including businesses, government agencies, nonprofit
organizations, community development corporations, community
action programs, housing authorities and congregations to assist
in the fulfillment of fiduciary organization responsibilities
under this section and ORS 458.685, 458.690 and 458.695.
(3) A fiduciary organization may use a reasonable portion of
moneys allocated to the individual development account program
for administration, operation and evaluation purposes.
(4) A fiduciary organization selected to administer moneys
directed by the state to individual development account purposes
or receiving tax deductible contributions shall provide the
Housing and Community Services Department with an annual report
of the fiduciary organization's individual development account
program activity. The report shall be filed no later than 90 days
after the end of the fiscal year of the fiduciary organization.
The report shall include, but is not limited to:
(a) The number of individual development accounts administered
by the fiduciary organization;
(b) The amount of deposits and matching deposits for each
account;
(c) The purpose of each account;
(d) The number of withdrawals made; and
(e) Any other information the department may require for the
purpose of making a return on investment analysis.
{ + (5) A fiduciary organization that is the account owner of
a qualified tuition savings program account:
(a) May make a qualified withdrawal only at the direction of
the designated beneficiary and only after the qualified tuition
savings program account of the account holder that was
established for the designated beneficiary has been reduced to a
balance of zero exclusively through qualified withdrawals by the
designated beneficiary; and
(b) May make nonqualified withdrawals only if the qualified
tuition savings program account of the account holder that was
established for the designated beneficiary has a balance of less
than $100 or if the account holder or designated beneficiary has
granted permission to make the withdrawal. Moneys received by a
fiduciary organization from a nonqualified withdrawal made under
this paragraph must be used for individual development account
purposes. + }
{ - (5) - } { + (6) + } The department may make all
reasonable and necessary rules to ensure fiduciary organization
Enrolled House Bill 3391 (HB 3391-B) Page 4
compliance with this section and ORS 458.685, 458.690 and
458.695.
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Passed by House May 11, 2001
Repassed by House June 12, 2001
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate June 8, 2001
...........................................................
President of Senate
Enrolled House Bill 3391 (HB 3391-B) Page 5
Received by Governor:
......M.,............., 2001
Approved:
......M.,............., 2001
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2001
...........................................................
Secretary of State
Enrolled House Bill 3391 (HB 3391-B) Page 6