October 15, 2008, Introduced by Reps. Huizenga and Coulouris and referred to the Committee on Banking and Financial Services.
A bill to amend 2006 PA 513, entitled
"Individual or family development account program act,"
by amending sections 2, 3, 5, 7, 8, 9, and 10 (MCL 206.702,
206.703, 206.705, 206.707, 206.708, 206.709, and 206.710).
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Account holder" means a person who is the owner of an
individual or family development account or the family if the
account is a family account.
(b) "Agency" means the Michigan state housing development
authority of the department of labor and economic growth.
(c) "Contributor" means a person that makes a contribution to
an individual or family development account reserve fund and is not
an account holder.
(d)
"Director" means the executive director of the Michigan
state
housing development authority of the department of labor and
economic
growth.
(d) "Department" means the department of labor and economic
growth.
(e) "Education expenses" means tuition and fees required for
the enrollment or attendance of a student at an eligible
educational institution, and expenses for fees, books, supplies,
and equipment required for courses of instruction at an eligible
educational institution.
(f) "Eligible educational institution" means any of the
following:
(i) A college, university, community college, or junior college
described in section 4, 5, or 6 of article VIII of the state
constitution of 1963 or established under section 7 of article VIII
of the state constitution of 1963.
(ii) An independent nonprofit college or university located in
this state.
(iii) A state-licensed vocational or technical education
program.
(iv) A state-licensed proprietary school.
(g) "Federal poverty level" means the poverty guidelines
published annually in the federal register by the United States
department of health and human services under its authority to
revise the poverty line under section 673(2) of subtitle B of title
VI of the omnibus budget reconciliation act of 1981, Public Law 97-
35, 42 USC 9902.
(h) "Fiduciary organization" or "organization" means a
charitable organization exempt from taxation under section
501(c)(3) of the internal revenue code that is approved by the
director
of the agency or his or her
designee to manage a reserve
fund. A fiduciary organization may also be a program site.
(i) "Financial institution" means a state chartered bank,
state chartered savings bank, savings and loan association, credit
union, or trust company; or a national banking association or
federal savings and loan association or credit union.
(j) "Financial literacy" means personal financial planning and
education.
(k) "Individual or family development account" or "account"
means an account established pursuant to section 4.
(l) "Individual or family development account reserve fund" or
"reserve fund" means an account established and managed by a
fiduciary organization housed at a financial institution. The
reserve fund holds money that will be used to match participant
savings based on a participant savings plan agreement.
(m) "Program" means the individual or family development
account program established in section 3.
(n) "Program site" means a charitable organization exempt from
taxation under section 501(c)(3) or 501(c)(14) of the internal
revenue
code that is approved by the director or his or her
designee
agency to implement the individual or family development
account program.
Sec. 3. (1) The individual or family development account
program is established within the agency. The program shall provide
eligible individuals and families with an opportunity to establish
accounts to be used for education, first-time purchase of a primary
residence, or business capitalization as provided in section 4.
(2) The agency, in consultation with the department, shall
establish policies and procedures for the program taking into
consideration the policies and procedures adopted by the department
of human services to implement the individual development account
program under section 57k of the social welfare act, 1939 PA 280,
MCL 400.57k. Except as otherwise provided under this subsection,
the agency shall be responsible for approving fiduciary
organizations and program sites and for all activities related to
the program. The department shall be responsible for approving
fiduciary organizations and program sites and for all activities
related to these programs that relate solely to accounts to be used
for education or business capitalization as provided in section 4.
(3) In reviewing the qualifications of fiduciary organizations
and program sites, the agency shall consider all of the following
factors:
(a) The not-for-profit status of the organization.
(b) The fiscal accountability of the organization.
(c) The ability of the organization to provide or raise money
for matching contributions.
(d) The significance and quality of proposed auxiliary
services to support the goals of the program.
(e) The availability of a financial literacy program for
account holders.
(f) The ability to maintain and manage necessary program data
for tracking account holders and participants in the program and
for development of reports as required under section 9.
(4) The agency shall select fiduciary organizations to provide
technical
assistance and support to program sites and establish and
manage
oversee program sites' reserve accounts on a not-for-profit
basis. In reviewing the qualifications of fiduciary organizations,
the agency shall consider the ability of the fiduciary
organizations to do all of the following:
(a) Administer 1 or more reserve funds to provide matching
funds for account holders pursuant to participant savings plan
agreements.
(b) Administer any money appropriated by this state for the
purposes of this act.
(c) Collaborate with program sites on a regional basis.
(d) Provide technical assistance and support to program sites
to assist them to effectively administer programs.
(e) Work in conjunction with approved program sites to hold,
manage, and disburse matching funds for accounts as provided in
section 5.
(f) Maintain and manage necessary program data for tracking
account holders and participants in the program and for development
reports as required under section 9.
(5) The agency shall select program sites to administer the
accounts under the oversight of a fiduciary on a not-for-profit
basis. In reviewing the qualifications of program sites, the agency
shall consider the ability of the program site to do all of the
following:
(a) Develop and implement participant savings plan agreements
to be used with account holders that include at least all of the
following:
(i) The purpose for which the account holder's account is
established.
(ii) The schedule of deposits that the account holder will make
to the account.
(iii) The agreed-upon amount of matching funds and the projected
date when those matching funds will be provided.
(iv) A plan to provide financial literacy; homeownership
training; education, career, or business planning assistance, if
appropriate; and any other services designed to increase the
independence of the account holder or the account holder's family
through the achievement of the designated purpose of the account.
(b) Develop a partnership with all account holders with whom
the program site has a participant savings plan agreement to assist
the account holder to effectively make financial decisions relating
to the use of the funds available through the account and to offer
support services to maximize the opportunities provided by the
individual or family development account program.
(6) The agency shall work cooperatively with financial
institutions, fiduciary organizations, program sites, and
contributors
the department to implement the programs under this
act.
Sec. 5. (1) A program site shall enter into a participant
savings plan agreement with each account holder who is approved to
establish an individual or family development account.
(2)
The Upon request from a program site,
the fiduciary
organization shall provide matching funds for contributions to an
account by an account holder pursuant to a participant savings plan
agreement.
(3) Matching fund distributions shall be made on behalf of an
account holder pursuant to participant savings plan agreements at
the same time that an account holder withdraws money to pay
qualified expenses. Matching distributions shall be at least a
match of $1.00 for every $1.00 withdrawn from an account by an
account holder to pay expenses for a purpose described in section
4(7) or for a purpose approved by the agency.
(4) Matching distributions under this section shall be made by
check to the order of the account holder and the entity the account
holder is paying.
Sec. 7. (1) An individual who is not an account holder and who
is subject to the tax imposed by the income tax act of 1967, 1967
PA
281, MCL 206.1 to 206.532, may claim a credit under section 272
276
of the income tax act of 1967, 1967 PA
281, MCL 206.272
206.276, equal to 75% of the contributions made to the reserve fund
of a fiduciary organization against the tax imposed by the income
tax act of 1967, 1967 PA 281, MCL 206.1 to 206.532.
(2) The administrator of a fiduciary organization that
administers 1 or more reserve funds, with the cooperation of the
participating financial institutions, shall submit the names of
contributors
and the total amount that each contributor contributes
to
an individual or family development account reserve fund for
each
calendar year to the agency within 15 days after receipt of
each
contribution. The director shall
determine the date by which
the
information shall be submitted to the agency.
Sec.
8. (1) The total of all credits under section 272 276 of
the
income tax act of 1967, 1967 PA 281, MCL 206.272 206.276,
shall
not exceed $1,000,000.00 per calendar year.
(2) A taxpayer that makes a contribution to a reserve fund as
provided under section 7 shall apply to the agency for
certification that the contribution qualifies for a credit under
section
272 276 of the income tax act of 1967, 1967 PA 281, MCL
206.272
206.276. An application shall be approved or denied not
more than 45 days after receipt of the application. If the
application is not approved or denied 45 days after the application
is received by the agency, the application is considered approved
and the agency shall issue a certificate under this subsection. If
the agency approves an application under this section, the director
or his or her designee shall issue a certificate that states that
the taxpayer is eligible to claim a credit based on the
contribution and the amount of the credit. If an application is
denied under this section, a taxpayer is not prohibited from
subsequently applying under this section for another contribution.
(3) In reviewing applications for credits, the agency shall
consider all of the following criteria:
(a) The funds available to match contributions are deposited
into a reserve fund in the same year that the credit will be
claimed.
(b) The approval of the credit will not exceed the annual
maximum amount under subsection (1).
(c) The overall benefit to the program of the contribution for
which a credit is requested.
(4) A taxpayer shall not claim a credit in excess of the
amount approved under subsection (2).
(5) A taxpayer shall attach the certificate received pursuant
to subsection (2) to the return filed under the income tax act of
1967, 1967 PA 281, MCL 206.1 to 206.532, on which a credit allowed
under
section 272 276 of the income tax act of 1967, 1967 PA 281,
MCL
206.272 206.276, is claimed.
Sec. 9. (1) A fiduciary organization selected to administer an
individual or family development account program under this act
shall
file with the agency an annual report with the agency of the
fiduciary organization’s individual development account program
activity related to accounts established for the first-time
purchase of a primary residence. The report shall be filed no later
than September 30 each year. The report shall include, but is not
limited to, all of the following:
(a) The number of individual development accounts established
for the first-time purchase of a primary residence and 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.
(e) The number of terminated accounts and the reasons for
termination.
(f) Any other information the agency may require for the
purpose of making a return on investment analysis.
(2) A fiduciary organization selected to administer an
individual or family development account program under this act
shall file with the department an annual report of the fiduciary
organization’s individual development account program activity
related to accounts established either for educational purposes or
capitalization of a business. The report shall be filed no later
than September 30 each year. The report shall include, but is not
limited to, all of the following:
(a) The number of individual development accounts established
either for educational purposes or capitalization of a business and
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.
(e) The number of terminated accounts and the reasons for
termination.
(f) Any other information the department may require for the
purpose of making a return on investment analysis.
(3) (2)
The Not later than December
31 of each year, the
agency and the department shall jointly file with the clerk of the
house of representatives and the secretary of the senate a report
not
later than December 31 each year with the clerk of the house of
representatives
and the secretary of the senate that
includes all
of
the information under subsection subsections (1) and (2)
and
copies of any changes in policies or procedures used to administer
this act that occurred during the year.
Sec. 10. The Michigan state housing development authority and
the department, in consultation with one another, may promulgate
rules as needed to implement their respective responsibilities
under this act under the administrative procedures act of 1969,
1969 PA 306, MCL 24.201 to 24.328.