Bill Text: IA HSB236 | 2015-2016 | 86th General Assembly | Introduced
Bill Title: A study bill for creating a student debt reduction organization tax credit available against the individual and corporate income tax, providing for the exclusion of student debt reduction grants from the individual income tax, and including retroactive and other applicability provisions.
Spectrum: Unknown
Status: (Introduced - Dead) 2015-04-15 - 11:30AM; House Lounge Ways and Means. [HSB236 Detail]
Download: Iowa-2015-HSB236-Introduced.html
House
Study
Bill
236
-
Introduced
SENATE/HOUSE
FILE
_____
BY
(PROPOSED
GOVERNOR
BILL)
A
BILL
FOR
An
Act
creating
a
student
debt
reduction
organization
tax
1
credit
available
against
the
individual
and
corporate
income
2
tax,
providing
for
the
exclusion
of
student
debt
reduction
3
grants
from
the
individual
income
tax,
and
including
4
retroactive
and
other
applicability
provisions.
5
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
6
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Section
1.
Section
422.7,
Code
2015,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
18.
Subtract,
to
the
extent
included,
the
3
amount
received
by
the
taxpayer
as
a
student
debt
reduction
4
grant
from
a
student
debt
reduction
organization
pursuant
to
5
section
422.11K.
6
Sec.
2.
NEW
SECTION
.
422.11K
Student
debt
reduction
7
organization
tax
credit.
8
1.
Definitions.
As
used
in
this
section,
unless
the
9
context
otherwise
requires:
10
a.
“Charitable”
means
the
same
as
defined
in
26
C.F.R.
11
§1.501(c)(3)-1.
12
b.
“Community
service
organization”
means
an
organization
13
that
meets
all
of
the
following
requirements:
14
(1)
The
organization
is
located
in
this
state.
15
(2)
The
organization
is
organized
under
chapter
504.
16
(3)
The
organization
qualifies
under
section
501(c)(3)
of
17
the
Internal
Revenue
Code
as
a
charitable
organization
exempt
18
from
federal
income
tax
under
section
501(a)
of
the
Internal
19
Revenue
Code.
20
(4)
The
organization
performs
charitable
work.
21
c.
“Educational
loan”
means
any
loan
that
is
made,
insured,
22
or
guaranteed
under
Tit.
IV
of
the
federal
Higher
Education
Act
23
of
1965,
as
amended.
24
d.
“Eligible
volunteer”
means
an
individual
who
is
a
25
resident
of
this
state
and
who
has
an
educational
loan
made
26
directly
to
that
individual
for
attendance
at
a
postsecondary
27
educational
institution.
28
e.
“Student
debt
reduction
grant”
means
a
grant
to
an
29
eligible
volunteer
to
cover
all
or
part
of
the
educational
loan
30
of
the
eligible
volunteer,
which
grant
is
paid
directly
to
the
31
holder
of
the
educational
loan.
32
f.
“Student
debt
reduction
organization”
means
an
33
organization
that
meets
the
requirements
of
subsection
2,
34
paragraph
“a”
.
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2.
Student
debt
reduction
organizations
——
registration
——
1
agreements
——
student
debt
reduction
grants.
2
a.
In
order
to
qualify
as
a
student
debt
reduction
3
organization,
an
organization
shall
meet
all
of
the
following
4
requirements:
5
(1)
The
organization
is
located
in
this
state.
6
(2)
The
organization
is
organized
under
chapter
504.
7
(3)
The
organization
qualifies
under
section
501(c)(3)
8
of
the
Internal
Revenue
Code
as
an
organization
exempt
from
9
federal
income
tax
under
section
501(a)
of
the
Internal
Revenue
10
Code.
11
(4)
The
organization
is
controlled
by
a
board
of
directors
12
consisting
of
at
least
seven
members.
The
names
and
addresses
13
of
the
members
shall
be
provided
to
the
department
and
made
14
available
by
the
department
to
the
public,
notwithstanding
any
15
state
confidentiality
restrictions.
16
(5)
The
organization
allocates
at
least
ninety
percent
17
of
its
annual
revenue
to
student
debt
reduction
grants
to
18
eligible
volunteers
who
have
fulfilled
a
student
debt
reduction
19
agreement.
20
(6)
The
organization
only
awards
student
debt
reduction
21
grants
to
eligible
volunteers
who
have
fulfilled
a
student
debt
22
reduction
agreement.
23
(7)
The
organization
prepares
an
annual
financial
statement
24
reviewed
by
a
certified
public
accounting
firm.
25
b.
A
student
debt
reduction
organization
shall
register
with
26
the
department
in
the
manner
prescribed
by
the
department.
The
27
registration
shall
include
all
of
the
following:
28
(1)
The
information
necessary
to
determine
whether
the
29
organization
qualifies
under
paragraph
“a”
of
this
subsection.
30
(2)
A
list
of
the
community
service
organizations
31
affiliated
with
the
student
debt
reduction
organization.
32
(3)
Any
other
information
deemed
necessary
by
the
33
department
to
evaluate
the
eligibility
of
the
student
debt
34
reduction
organization.
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c.
Once
the
student
debt
reduction
organization
has
1
registered,
it
is
not
required
to
amend
its
registration
unless
2
the
community
service
organizations
with
which
it
is
affiliated
3
changes.
4
d.
A
student
debt
reduction
organization
shall
notify
the
5
department
immediately
of
a
change
in
circumstances
that
would
6
cause
the
organization
to
no
longer
qualify
as
a
student
debt
7
reduction
organization.
8
e.
A
student
debt
reduction
organization
shall
notify
9
the
department
of
each
contribution
it
receives
in
the
time,
10
manner,
and
form
prescribed
by
the
department.
11
f.
A
student
debt
reduction
organization
shall
report
to
the
12
department,
on
a
form
prescribed
by
the
department,
by
January
13
12
of
each
tax
year
all
of
the
following
information:
14
(1)
The
name
and
address
of
the
members
and
the
chairperson
15
of
the
governing
board
of
the
student
debt
reduction
16
organization.
17
(2)
A
list
of
the
individual
donors
for
the
previous
tax
18
year
that
includes
the
dollar
value
of
each
contribution.
19
(3)
The
total
number
and
dollar
value
of
the
student
debt
20
reduction
agreements
entered
into
during
the
previous
year
21
with
each
affiliate
community
service
organization,
and
the
22
total
number
and
dollar
value
of
all
outstanding
student
debt
23
reduction
agreements
with
each
affiliate
community
service
24
organization.
25
(4)
The
total
number
and
amount
of
student
debt
reduction
26
grants
awarded
during
the
previous
year
from
student
debt
27
reduction
agreements
with
each
affiliate
community
service
28
organization,
identified
by
the
year
in
which
the
agreement
was
29
entered
into.
30
g.
A
student
debt
reduction
organization
may
affiliate
with
31
one
or
more
community
service
organizations,
but
a
community
32
service
organization
shall
be
affiliated
with
only
one
student
33
debt
reduction
organization.
34
h.
A
student
debt
reduction
organization,
an
affiliate
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community
service
organization,
and
an
eligible
volunteer
may
1
enter
into
a
student
debt
reduction
agreement
for
the
awarding
2
of
a
student
debt
reduction
grant
upon
completion
of
volunteer
3
service
by
the
eligible
volunteer
with
the
community
service
4
organization.
The
college
student
aid
commission
shall
by
5
rule
pursuant
to
chapter
17A
establish
uniform
agreement
6
requirements
relating
to
student
debt
reduction
grants,
7
including
but
not
limited
to
uniform
rules
on
eligibility
for
8
receiving
grants,
qualifying
volunteer
service,
amount
and
9
calculation
of
grants,
and
procedures
for
awarding
grants.
10
In
order
to
qualify
for
a
student
debt
reduction
grant,
the
11
volunteer
service
provided
by
the
eligible
volunteer
shall,
at
12
a
minimum,
be
charitable
work
performed
under
the
supervision
13
and
control
of
the
community
service
organization
and
in
14
furtherance
or
support
of
the
mission
of
the
community
service
15
organization.
The
volunteer
service
need
not
be
performed
in
16
this
state.
17
i.
The
total
value
of
the
student
debt
reduction
grants
18
provided
for
in
the
outstanding
student
debt
reduction
19
agreements
of
a
student
debt
reduction
organization
shall
not
20
exceed
the
amount
of
contributions
the
student
debt
reduction
21
organization
has
received
that
are
allocated
to
and
available
22
for
the
payment
of
student
debt
reduction
grants.
23
3.
Student
debt
reduction
organization
tax
credit
——
24
application
——
maximum
tax
credits
——
reports.
25
a.
The
taxes
imposed
under
this
division,
less
the
credits
26
allowed
under
section
422.12,
shall
be
reduced
by
a
student
27
debt
reduction
organization
tax
credit
equal
to
sixty-five
28
percent
of
the
amount
of
the
voluntary
cash
contributions
made
29
by
the
taxpayer
during
the
tax
year
to
a
student
debt
reduction
30
organization,
subject
to
the
availability
of
tax
credits
as
31
provided
in
paragraph
“b”
.
The
tax
credit
shall
be
claimed
by
32
way
of
a
tax
credit
certificate
issued
by
the
department
and
33
included
with
the
person’s
tax
return.
34
b.
The
aggregate
amount
of
tax
credits
authorized
pursuant
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to
this
section
shall
not
exceed
two
million
dollars
per
1
calendar
year.
2
c.
(1)
To
receive
a
tax
credit,
a
taxpayer
must
submit
3
an
application
to
the
department
for
each
contribution.
The
4
application
shall
include
a
written
acknowledgment
from
the
5
student
debt
reduction
organization
and
any
other
information
6
required
by
the
department.
The
department
shall
not
issue
a
7
certificate
until
it
verifies
as
correct
the
date
and
amount
of
8
the
contribution
with
the
student
debt
reduction
organization.
9
The
department
shall
issue
certificates
under
this
section
on
10
a
first-come,
first-served
basis,
which
certificates
may
be
11
redeemed
for
tax
credits.
12
(2)
If
in
a
calendar
year
the
aggregate
amount
of
tax
13
credits
applied
for
exceeds
the
maximum
amount
specified
14
in
paragraph
“b”
of
this
subsection,
the
department
shall
15
establish
a
wait
list
for
certificates.
Applications
that
16
were
approved
but
for
which
certificates
were
not
issued
shall
17
be
placed
on
the
wait
list
in
the
order
the
applications
18
were
received
and
shall
be
given
priority
for
receiving
19
certificates
in
succeeding
calendar
years.
Placement
on
a
20
wait
list
pursuant
to
this
subparagraph
shall
not
constitute
a
21
promise
binding
the
state.
The
availability
of
a
tax
credit
22
and
issuance
of
a
tax
credit
certificate
pursuant
to
this
23
subsection
in
a
future
calendar
year
is
contingent
upon
the
24
availability
of
tax
credits
in
that
particular
calendar
year.
25
d.
To
be
eligible
for
this
credit,
all
of
the
following
26
shall
apply:
27
(1)
A
deduction
pursuant
to
section
170
of
the
Internal
28
Revenue
Code
for
any
amount
of
the
contribution
is
not
taken
29
for
state
tax
purposes.
30
(2)
The
contribution
does
not
designate
that
any
part
of
the
31
contribution
be
used
for
the
direct
benefit
of
the
taxpayer
or
32
any
other
person
designated
by
the
taxpayer.
33
e.
Any
credit
in
excess
of
the
tax
liability
is
not
34
refundable
but
the
excess
for
the
tax
year
may
be
credited
to
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the
tax
liability
for
the
following
five
tax
years
or
until
1
depleted,
whichever
is
the
earlier.
2
f.
A
tax
credit
shall
not
be
transferable
to
any
other
3
person.
4
g.
An
individual
may
claim
the
tax
credit
allowed
a
5
partnership,
limited
liability
company,
S
corporation,
estate,
6
or
trust
electing
to
have
the
income
taxed
directly
to
the
7
individual.
The
amount
claimed
by
the
individual
shall
be
8
based
upon
the
pro
rata
share
of
the
individual’s
earnings
of
9
the
partnership,
limited
liability
company,
S
corporation,
10
estate,
or
trust.
11
4.
Reports.
The
department
shall
annually
submit
to
the
12
governor
and
the
general
assembly
a
report
containing
the
13
information
collected
by
the
department
pursuant
to
this
14
section,
and
any
other
information
the
department
may
deem
15
relevant
and
appropriate,
except
that
the
information
collected
16
pursuant
to
subsection
2,
paragraph
“f”
,
subparagraph
(2),
17
shall
be
reported
in
the
aggregate
and
shall
not
include
18
individual
donor
information.
19
5.
Rules.
The
department
and
the
student
aid
commission
20
shall
each
adopt
rules
pursuant
to
chapter
17A
to
administer
21
this
section.
22
Sec.
3.
Section
422.33,
Code
2015,
is
amended
by
adding
the
23
following
new
subsection:
24
NEW
SUBSECTION
.
27.
The
taxes
imposed
under
this
division
25
shall
be
reduced
by
a
student
debt
reduction
organization
tax
26
credit
allowed
under
section
422.11K.
The
maximum
amount
of
27
tax
credits
that
may
be
authorized
under
this
subsection
for
a
28
calendar
year
equals
twenty-five
percent
of
the
maximum
amount
29
of
tax
credits
that
may
be
authorized
for
a
calendar
year
30
pursuant
to
section
422.11K,
subsection
2,
paragraph
“b”
.
31
Sec.
4.
APPLICABILITY.
This
Act
applies
to
contributions
32
made
to
a
student
debt
reduction
organization
on
or
after
July
33
1,
2015.
34
Sec.
5.
RETROACTIVE
APPLICABILITY.
This
Act
applies
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retroactively
to
January
1,
2015,
for
tax
years
beginning
on
1
or
after
that
date.
2
EXPLANATION
3
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
4
the
explanation’s
substance
by
the
members
of
the
general
assembly.
5
This
bill
creates
a
student
debt
reduction
organization
tax
6
credit
equal
to
65
percent
of
the
amount
of
a
voluntary
cash
7
contribution
made
to
a
student
debt
reduction
organization,
8
provides
for
the
creation
of
student
debt
reduction
9
organizations,
and
excludes
student
debt
reduction
grants
from
10
the
individual
income
tax.
11
STUDENT
DEBT
REDUCTION
ORGANIZATIONS.
The
bill
provides
12
for
the
creation
and
registration
of
student
debt
reduction
13
organizations
(SDRO).
In
order
to
qualify
as
an
SDRO,
an
14
organization
must
be
a
nonprofit,
Internal
Revenue
Code
15
§501(c)(3)
tax-exempt
organization
located
in
Iowa
and
16
organized
under
Code
chapter
504
(revised
Iowa
nonprofit
17
corporation
Act).
The
organization
must
be
controlled
by
18
a
board
of
directors
consisting
of
at
least
seven
members,
19
the
names
and
addresses
of
which
must
be
provided
to
the
20
department
of
revenue
(department)
and
made
available
to
the
21
public.
The
organization
must
prepare
an
annual
financial
22
statement
reviewed
by
a
certified
public
accounting
firm.
The
23
organization
must
award
at
least
90
percent
of
its
annual
24
revenue
in
student
debt
reduction
grants,
and
such
grants
must
25
be
made
exclusively
to
eligible
volunteers
who
have
fulfilled
26
student
debt
reduction
agreements.
“Student
debt
reduction
27
grant”,
“eligible
volunteer”,
and
related
terms
are
defined
in
28
the
bill.
29
SDROs
are
required
to
register
with
the
department
in
30
the
manner
provided
in
the
bill
and
as
prescribed
by
the
31
department.
SDROs
are
authorized
to
affiliate
with
community
32
service
organizations
for
the
purpose
of
providing
student
debt
33
reduction
grants.
An
SDRO
may
affiliate
with
several
community
34
service
organizations,
but
a
community
service
organization
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S.F.
_____
H.F.
_____
may
be
affiliated
with
only
one
SDRO.
Community
service
1
organizations
are
nonprofit,
Internal
Revenue
Code
§501(c)(3)
2
tax-exempt
charitable
organizations
that
are
located
in
Iowa,
3
organized
under
Code
chapter
504,
and
that
perform
charitable
4
work.
“Charitable”
is
defined
in
the
bill.
5
An
SDRO,
an
affiliate
community
service
organization,
and
6
an
eligible
volunteer
may
enter
into
a
student
debt
reduction
7
agreement
for
the
awarding
of
a
student
debt
reduction
grant
8
upon
completion
of
volunteer
service
with
the
community
9
service
organization.
The
college
student
aid
commission
is
10
required
to
establish
uniform
agreement
requirements
relating
11
to
student
loan
reduction
grants,
but
in
order
to
qualify
for
12
such
a
grant
the
volunteer
service
must,
at
a
minimum,
be
13
charitable
work
performed
under
the
supervision
and
control
14
of
the
community
service
organization
and
in
furtherance
or
15
support
of
the
mission
of
the
community
service
organization.
16
The
volunteer
service
need
not
be
performed
in
this
state.
The
17
bill
prohibits
the
value
of
the
student
debt
reduction
grants
18
provided
for
in
an
SDRO’s
outstanding
agreements
from
exceeding
19
the
amount
of
contributions
the
SDRO
has
received
that
are
20
allocated
to
and
available
for
the
payment
of
student
debt
21
reduction
grants.
22
When
the
volunteer
service
has
been
performed
and
the
23
agreement
fulfilled,
an
SDRO
is
authorized
to
award
a
student
24
debt
reduction
grant
to
the
eligible
volunteer
and
pay
the
25
grant
directly
to
the
holder
of
the
eligible
volunteer’s
26
educational
loan.
The
bill
provides
that
student
debt
27
reduction
grants
are
exempt
from
the
Iowa
individual
income
28
tax.
29
SDROs
are
required
to
notify
the
department
of
the
30
contributions
they
receive
and
are
required
to
annually
31
report
various
information
as
provided
in
the
bill
to
the
32
department.
The
department
is
required
to
annually
publish
a
33
report
containing
that
information
and
submit
the
report
to
the
34
governor
and
general
assembly.
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S.F.
_____
H.F.
_____
STUDENT
DEBT
REDUCTION
ORGANIZATION
TAX
CREDIT.
The
bill
1
provides
for
a
tax
credit
against
the
individual
and
corporate
2
income
tax
equal
to
65
percent
of
the
amount
of
a
voluntary
3
cash
contribution
made
to
an
SDRO
during
the
tax
year.
4
Contributions
may
not
be
deducted
as
a
charitable
deduction
for
5
state
tax
purposes
or
be
designated
for
the
direct
benefit
of
6
the
taxpayer
or
any
other
person
designated
by
the
taxpayer.
7
The
total
amount
of
tax
credits
authorized
each
calendar
8
year
shall
not
exceed
$2
million,
and
of
that
amount
only
25
9
percent
($500,000)
may
be
authorized
against
the
corporate
10
income
tax.
11
In
order
to
receive
a
tax
credit,
a
taxpayer
must
submit
12
an
application
for
each
contribution
to
the
department
13
containing
a
written
acknowledgment
from
the
SDRO
and
any
14
other
information
required
by
the
department.
After
verifying
15
the
validity
of
the
contribution,
the
department
shall
issue
16
a
tax
credit
certificate
to
the
taxpayer.
The
department
is
17
required
to
issue
tax
credit
certificates
each
calendar
year
on
18
a
first-come,
first-served
basis
until
the
$2
million
cap
is
19
reached.
Eligible
applicants
that
do
not
receive
a
tax
credit
20
certificate
in
a
given
calendar
year
are
placed
on
a
wait
21
list
in
the
order
the
application
was
received
and
are
given
22
priority
for
receiving
a
certificate
in
succeeding
calendar
23
years.
The
tax
credit
is
nontransferable
and
nonrefundable,
24
but
any
excess
credit
may
be
carried
forward
for
up
to
five
tax
25
years.
26
The
bill
applies
to
contributions
made
to
a
student
debt
27
reduction
organization
on
or
after
July
1,
2015,
and
applies
28
retroactively
to
tax
years
beginning
on
or
after
January
1,
29
2015.
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