74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 336
House Bill 2094
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Housing and Community Services Department)
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Removes tax credit limit for donations to individual
development account fiduciary organizations. Applies to tax years
beginning on or after January 1, 2008.
Allows persons 12 years of age or older to be individual
development account holder. Repeals Individual Children's
Development Account Program. Allows exclusion of vehicle from net
worth calculation for potential account holder. Expands
permissible purposes of individual development account.
Eliminates restriction on individual development account size.
Limits annual and total amount for deposits of state-directed
moneys to accounts.
Revises fiduciary organization qualifications. Specifies
required content for personal development plans.
A BILL FOR AN ACT
Relating to development accounts for individuals; creating new
provisions; amending ORS 315.271, 458.670, 458.680, 458.685,
458.690 and 458.695; and repealing ORS 417.900.
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 $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 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. 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; or
(b) A federally recognized Indian tribe or band { + that is
located, to a significant degree, within the boundaries of this
state + }.
(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. + }
(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 { + of state-directed moneys + } by a fiduciary
organization to an { + individual development + } 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.
(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. { + (1) The amendments to ORS 315.271 by section 1
of this 2007 Act apply to tax years beginning on or after January
1, 2008.
(2) 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. + }
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