Reported from the Committee on Social Services, Medicaid & the Elderly, April 1, 1997, with recommendation that the House Committee Substitute for House Bill No. 302 Do Pass.
ANNE C. WALKER, Chief Clerk
To repeal section 143.805, RSMo 1994, and to enact in lieu thereof seven new sections for the
purpose of establishing the family development account program.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Section 143.805, RSMo 1994, is repealed and seven new sections enacted in lieu thereof, to be known as sections 143.805, 1, 2, 3, 4, 5 and 6, to read as follows:
143.805. 1. Credits granted by other provisions of the statutes shall be applied against the tax imposed by this chapter in the following order:
(1) Credit for income tax paid to another state authorized in section 143.081;
(2) New business facility credit authorized in sections 135.100 to 135.160, RSMo;
(3) Economic development credit authorized in subsection 6 of section 100.286, RSMo;
(4) Missouri low-income housing tax credit authorized in subsection 2 of section 135.352, RSMo;
(5) Employment of unemployed agriculture workers tax credit authorized in sections 135.275 to 135.287, RSMo;
(6) Wood energy producer tax credit authorized in sections 135.300 to 135.311, RSMo;
(7) Contributions to innovations centers and the corporation for science and technology tax credit authorized in sections 348.300 to 348.318, RSMo;
(8) Neighborhood assistance credit authorized in sections 32.105 to 32.125, RSMo;
(9) Special needs child adoption credit authorized in section 135.327, RSMo;
(10) Enterprise zone credit authorized in sections 135.200 to 135.255, RSMo;
(11) Senior citizens property tax credit authorized in sections 135.010 to 135.035, RSMo[.];
(12) Contributions to a family development account reserve fund authorized in sections 1 to 6 of this act.
2. The director of revenue may prescribe the priority of any other credit authorized by law.
Section 1. 1. Sections 1 to 6 of this act shall be known and may be cited as the family development account program.
2. For purposes of sections 1 to 6 of this act, the following terms mean:
(1) "Account holder", a person who is the owner of a family development account;
(2) "Community development organization", any religious or charitable association formed pursuant to chapter 352, RSMo, that is approved by the director of the department of economic development to implement the family development account program;
(3) "Department", the department of economic development;
(4) "Director", the director of the department of economic development;
(5) "Family development account", a financial instrument established pursuant to section 3 of this act;
(6) "Family development account reserve fund", the fund created by an approved community development organization for the purposes of funding the costs incurred in the administration of the program and for providing matching funds for moneys in family development accounts;
(7) "Federal poverty level", the most recent poverty income guidelines published in the calendar year by the United States Department of Health and Human Services;
(8) "Financial institution", any bank, trust company, savings bank, credit union or savings and loan association as defined in chapter 362, 369 or 370, RSMo, and with an office in Missouri which is approved by the director for participation in the program;
(9) "Program", the Missouri family development account program established in sections 1 to 6 of this act;
(10) "Program contributor", a person or entity who makes a contribution to a family development account reserve fund and is not the account holder.
Section 2. 1. There is hereby established within the department of economic development a program to be known as the "Family Development Account Program". The program shall provide eligible families and individuals with an opportunity to establish special savings accounts for moneys which may be used by such families and individuals for education, home ownership or small business capitalization.
2. The department shall solicit proposals from community development organizations seeking to administer the accounts on a not for profit basis. Community development organization proposals shall include:
(1) A requirement that the individual account holder or the family of an account holder match the contributions of a community development organization member by contributing cash;
(2) A process for including account holders in decision making regarding the investment of funds in the accounts;
(3) Specifying what eligible population the community development organization plans to target for priority participation in the program.
3. In reviewing the proposals of community development organizations, the department shall consider the following factors:
(1) The not for profit status of such organization;
(2) The fiscal accountability of the community development organization;
(3) The ability of the community development organization to provide or raise moneys for matching contributions;
(4) The ability of the community development organization, which shall receive all contributions from program contributors, to establish and administer a reserve fund account;
(5) The significance and quality of proposed auxiliary services; and
(6) The relationship of proposed auxiliary services to the goals of the family development account program.
4. No more than twenty percent of all funds in the reserve fund account may be used for administrative costs of the program.
5. The department shall promulgate rules and regulations to implement and administer the provisions of sections 1 to 6 of this act. No rule or portion of a rule promulgated pursuant to the authority of sections 1 to 6 of this act shall become effective unless it has been promulgated pursuant to the provisions of section 536.024, RSMo.
Section 3. 1. A family or individual whose household income is less than or equal to two hundred percent of the federal poverty level may open a family development account for the purpose of accumulating and withdrawing moneys for specified expenditures. The account holder may withdraw moneys from the account on the approval of the community development organization, without penalty, for any of the following expenditures:
(1) Educational costs for any family member at an accredited institution of higher education;
(2) Job training costs for any family member eighteen years of age or older, at an accredited or licensed training program;
(3) Purchase of a primary residence;
(4) Major repairs or improvements to a primary residence; or
(5) Start-up capitalization of a small business for any family member eighteen years of age or older.
2. Financial institutions approved by the department shall be permitted to establish family development accounts pursuant to sections 1 to 6 of this act. The financial institution shall certify to the department, on forms prescribed by the department and accompanied by any documentation required by the department, that such accounts have been established pursuant to the provisions of sections 1 to 6 of this act and that deposits have been made on behalf of the account holder.
3. A financial institution establishing a family development account shall:
(1) Keep the account in the name of the account holder;
(2) Permit deposits to be made in the account by the following, subject to the indicated conditions:
(a) The account holder; or
(b) A community development organization on behalf of the account holder. Such a deposit may include moneys to match the account holder's deposits;
(3) Require the account to earn at least the market rate of interest; and
(4) Permit the account holder, after obtaining the cosignature of the administrator of the community development organization, to withdraw moneys from the account for any of the purposes listed in subsection 1 of this section.
4. The total of all deposits into a family development account in a calendar year shall not exceed two thousand dollars. The total balance in a family development account shall not exceed fifty thousand dollars.
Section 4. 1. Any moneys withdrawn during a calendar year from a family development account by an account holder which are not withdrawn pursuant to subsection 1 of section 3 of this act are subject to a penalty of fifteen percent and the account shall be closed. The account holder shall receive the moneys which the account holder deposited in the account less any penalties, but all matching moneys shall be forfeited.
2. All penalty moneys and moneys forfeited by an account holder pursuant to subsection 1 of this section shall be returned to the family development account reserve fund of the community development organization.
3. In the event of an account holder's death, the account may be transferred to the ownership of a contingent beneficiary. An account holder shall name contingent beneficiaries at the time the account is established and may change such beneficiaries at any time. If the named beneficiary is deceased or otherwise cannot accept the transfer, the moneys shall be transferred to the family development account reserve fund of the community development organization.
Section 5. 1. Moneys deposited in or withdrawn pursuant to subsection 1 of section 3 of this act from a family development account by an account holder are exempted from taxation pursuant to chapter 143, RSMo, excluding withholding tax imposed by sections 143.191 to 143.265, RSMo, and chapter 147, 148 or 153, RSMo;
2. Interest earned by a family development account is exempted from taxation pursuant to chapter 143, RSMo.
3. A program contributor shall be allowed a credit against the tax imposed by chapter 143, RSMo, excluding withholding tax imposed by sections 143.191 to 143.265, RSMo, and chapter 147, 148 or 153, RSMo, pursuant to sections 1 to 6 of this act. Contributions up to fifty thousand dollars per program contributor are eligible for the tax credit which shall not exceed fifty percent of the contribution amount.
4. The department of economic development shall verify all tax credit claims by contributors. The administrator of the community development organization, with the cooperation of the participating financial institutions, shall submit the names of contributors and the total amount each contributor contributes to a family development account reserve fund for the calendar year. The director shall determine the date by which such information shall be submitted to the department by the local administrator. The department shall submit verification of qualified tax credits pursuant to sections 1 to 6 of this act to the department of revenue.
5. The total tax credits authorized pursuant to sections 1 to 6 of this act shall not exceed four million dollars in any fiscal year.
Section 6. Subject to appropriations and to the provisions of chapter 34, RSMo, the
department shall annually award up to one hundred thousand dollars for an independent
evaluation of the program. Based on this program evaluation, the department shall
provide a comprehensive report on the program to the speaker of the house and the
president pro tem of the senate by March first of each year, beginning in