Chapter 765
AN ACT
HB 2094
Relating to development accounts for
individuals; creating new provisions; amending ORS 315.271, 458.670, 458.680,
458.685, 458.690, 458.695 and 458.700; repealing ORS 315.271, 417.900 and
458.690; and declaring an emergency.
Be It Enacted by the People of
the State of
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 $75,000 or 75 percent of the donation
amount. To qualify for a credit under this section, donations to a fiduciary
organization must be made prior to January 1, 2012.
(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
(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. 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]
a resident of this state who:
(a) Is 12 years of age
or older;
(b) Is a member of a
lower income household; and
(c) Has established an
individual development account with a fiduciary organization.
(2) “Fiduciary
organization” means an organization selected under ORS 458.695 to administer
state moneys directed to individual development accounts and that is:
(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] December 31, 2006; 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.
(6) “Resident of this
state” has the meaning given that term in ORS 316.027.
SECTION 3. ORS 458.680 is amended to read:
458.680. (1) A person who qualifies to become an account holder may enter
into an agreement with a fiduciary organization for the establishment of an
individual development account.
(2) [A person qualifies to become an account
holder if the person is] To become an account holder a person must, in addition
to meeting any other qualifications, be a member of a lower income
household that has a net worth of less than $20,000. As used in this
subsection, “net worth” means the value of all assets owned in whole or part by
household members, other than equity in a residence and in one vehicle,
minus the total debts and obligations of household members, all as measured at
the time that the person applies to establish the account.
(3) [A person applying to establish an account
must enroll in a personal development plan developed by the person and the
fiduciary organization. The plan must provide the person with appropriate
financial counseling, career or business planning and other services] Every account holder, with support from the fiduciary
organization, shall develop a personal development plan to advance account
holder self-reliance. The personal development plan must include appropriate
coaching, mentorship, social support, financial adequacy training and
asset-specific training designed to increase the independence of the person
and the person’s household through achievement of the account’s approved
purpose.
(4) Notwithstanding
subsection (1) of this section, a fiduciary organization may refuse to allow a
qualified person to establish an account if establishment of the account would
result in the members of a lower income household having more than one account.
Notwithstanding subsection (1) of this section, a fiduciary organization shall
refuse to allow a qualified person to establish an account if establishment of
the account would result in the members of a lower income household having more
than two accounts.
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, 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 college savings network account under ORS 348.841 to
348.873 on behalf of a designated beneficiary, the establishment of an
additional college savings network account on behalf of the same designated
beneficiary.
(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.
(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.
(f) Improvements,
repairs or modifications necessary to make or keep the account holder’s primary dwelling habitable, accessible or visitable
for the account holder or a household member. This paragraph does not apply to
improvements, repairs or modifications made to a rented primary dwelling to
achieve or maintain a habitable condition for which ORS 90.320 (1) places
responsibility on the landlord. As used in this paragraph, “accessible” and “visitable”
have the meanings given those terms in ORS 456.508.
(g) The purchase of
equipment, technology or specialized training required to become competitive in
obtaining or maintaining employment or to start or maintain a business, as
specified in the account holder’s personal development plan for increasing the
independence of the person.
(2)(a) If an emergency
occurs, an account holder may withdraw all or part of the account holder’s
deposits to an individual 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 maintain on deposit in the account 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:
(A) A savings account
jointly held by the account holder and the fiduciary organization and requiring
the signatures of both for withdrawals;
(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 college
savings network 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 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.]
(2) Account holders
may not accrue more than $3,000 of matching funds under subsection (1) of this
section from state-directed moneys in any 12-month period. A fiduciary
organization may designate a lower amount as a limit on annual matching funds.
A fiduciary organization shall maintain on deposit sufficient funds to cover
the matching deposit agreements for all individual development accounts managed
by the organization.
(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.]
The Housing and Community Services Department shall adopt rules to establish
a maximum total amount of state-directed moneys that may be deposited as
matching funds into an individual development account.
SECTION 6. ORS 458.695 is amended to read:
458.695. The Housing and
Community Services Department may select fiduciary organizations to administer
moneys directed by the state to individual development account purposes. In
making the selections, the department shall consider factors including, but not
limited to:
(1) The ability of the
fiduciary organization to implement and administer the individual development
account program, including the ability to verify account holder eligibility,
certify that matching deposits are used only for approved purposes and exercise
general fiscal accountability;
(2) The capacity of the
fiduciary organization to provide or raise matching funds for the deposits of
account holders;
(3) The capacity of the
fiduciary organization to provide [financial
counseling and other related services to account holders] appropriate
support services and general assistance to advance account holder self-reliance;
and
(4) The links that the
fiduciary organization has to other activities and programs designed to
increase the independence of this state’s lower income households through
education and training, home ownership and small business development.
SECTION 7. ORS 417.900 is repealed.
SECTION 8. The amendments to ORS 458.680 (3) by section
3 of this 2007 Act apply to holders of accounts established on or after the
effective date of this 2007 Act.
SECTION 9. ORS 315.271 and 458.690 are repealed on
January 2, 2016.
SECTION 10. 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 college savings network account:
(a) May make a qualified
withdrawal only at the direction of the designated beneficiary and only after
the college savings network 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 college savings network 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.
(6) The department may
make all reasonable and necessary rules to ensure fiduciary organization
compliance with this section and ORS 458.685[, 458.690] and 458.695.
SECTION 11. The amendments to ORS 458.700 by section 10
of this 2007 Act become operative on January 2, 2016.
SECTION 12. This 2007 Act being necessary for the
immediate preservation of the public peace, health and safety, an emergency is
declared to exist, and this 2007 Act takes effect on its passage.
Approved by the Governor July 16, 2007
Filed in the office of Secretary of State July 17, 2007
Effective date July 16, 2007
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