Bill Text: IA SSB1142 | 2017-2018 | 87th General Assembly | Introduced
Bill Title: A bill for an act exempting from the individual income tax the amount of income resulting from the discharge of certain student loan debt on account of death or total and permanent disability and including retroactive applicability provisions.
Spectrum: Committee Bill
Status: (N/A - Dead) 2017-03-15 - Subcommittee recommends passage. [SSB1142 Detail]
Download: Iowa-2017-SSB1142-Introduced.html
Senate
Study
Bill
1142
-
Introduced
SENATE
FILE
_____
BY
(PROPOSED
COMMITTEE
ON
WAYS
AND
MEANS
BILL
BY
CHAIRPERSON
FEENSTRA)
A
BILL
FOR
An
Act
exempting
from
the
individual
income
tax
the
amount
of
1
income
resulting
from
the
discharge
of
certain
student
loan
2
debt
on
account
of
death
or
total
and
permanent
disability
3
and
including
retroactive
applicability
provisions.
4
BE
IT
ENACTED
BY
THE
GENERAL
ASSEMBLY
OF
THE
STATE
OF
IOWA:
5
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_____
Section
1.
Section
422.7,
Code
2017,
is
amended
by
adding
1
the
following
new
subsection:
2
NEW
SUBSECTION
.
18.
a.
Subtract,
to
the
extent
included,
3
the
amount
of
income
resulting
from
a
discharge
of
qualified
4
student
loan
debt
under
either
of
the
following
circumstances:
5
(1)
The
discharge
occurs
pursuant
to
the
provisions
of
20
6
U.S.C.
ch.
28,
subch.
IV,
on
account
of
the
death
or
total
and
7
permanent
disability
of
the
student
or
borrower.
8
(2)
The
discharge
occurs
on
account
of
the
death
or
total
9
and
permanent
disability
of
the
student
or
borrower.
For
10
purposes
of
this
subparagraph,
“total
and
permanent
disability”
11
has
the
same
meaning
as
“totally
and
permanently
disabled”
in
34
12
C.F.R.
§685.102(b),
and
shall
be
proven
by
the
taxpayer
using
13
the
documentation
described
in
34
C.F.R.
§685.213(b)(2),
or
34
14
C.F.R.
§685.213(c)(1),
as
applicable,
and
pursuant
to
rules
15
prescribed
by
the
director.
16
b.
For
purposes
of
this
subsection,
“qualified
student
loan”
17
means
a
student
loan
as
defined
in
section
108(f)(2)
of
the
18
Internal
Revenue
Code
or
a
private
education
loan
as
defined
in
19
15
U.S.C.
§1650(a)(7).
20
Sec.
2.
RETROACTIVE
APPLICABILITY.
This
Act
applies
21
retroactively
to
January
1,
2017,
for
tax
years
beginning
on
22
or
after
that
date.
23
EXPLANATION
24
The
inclusion
of
this
explanation
does
not
constitute
agreement
with
25
the
explanation’s
substance
by
the
members
of
the
general
assembly.
26
Under
current
law
for
federal
income
tax
purposes
and
Iowa
27
income
tax
purposes,
a
discharge
(cancellation)
of
student
28
loan
debt
on
account
of
death
or
permanent
disability
results
29
in
taxable
income
to
the
debtor
for
the
amount
of
the
debt
30
discharged.
This
bill
exempts,
for
Iowa
individual
income
31
tax
purposes,
income
resulting
from
a
discharge
of
qualified
32
student
loan
debt
on
account
of
the
death
or
total
and
33
permanent
disability
of
the
student
or
borrower.
34
“Qualified
student
loan”
is
defined
in
the
bill,
but
35
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_____
generally
includes
postsecondary
education
student
loans
made
1
by
the
United
States
or
a
federal
agency
or
instrumentality,
a
2
state
or
political
subdivision
of
a
state,
a
tax-exempt
public
3
benefit
corporation
controlling
a
hospital,
certain
educational
4
organizations,
or
private
educational
lenders.
5
The
exemption
applies
to
qualified
student
loans
discharged
6
on
account
of
the
death
or
total
and
permanent
disability
of
7
the
student
or
borrower
pursuant
to
provisions
of
title
IV
8
of
the
federal
Higher
Education
Act
of
1965
(federal
student
9
financial
aid
programs).
10
Alternatively,
the
exemption
applies
to
qualified
student
11
loans
otherwise
discharged
on
account
of
the
death
or
total
and
12
permanent
disability
of
the
student
or
borrower.
For
purposes
13
of
the
bill,
“total
and
permanent
disability”
is
defined
to
14
mean
the
same
as
it
does
for
purposes
of
the
federal
student
15
financial
aid
programs,
which
generally
include
individuals
who
16
are
unable
to
engage
in
substantial
gainful
activity
by
reason
17
of
a
physical
or
mental
impairment
that
can
be
expected
to
18
result
in
death
and
that
has
lasted
or
will
last
for
at
least
60
19
months,
or
individuals
who
are
determined
by
the
secretary
of
20
veterans
affairs
to
be
unemployable
due
to
a
service-connected
21
disability.
For
this
alternative,
the
bill
requires
total
and
22
permanent
disability
to
be
proven
using
the
same
documentation
23
required
for
purposes
of
the
federal
student
financial
24
aid
programs,
which
require
a
physician
certification,
a
25
social
security
administration
disability
determination,
or
26
documentation
from
the
department
of
veterans
affairs.
27
The
bill
applies
retroactively
to
January
1,
2017,
for
tax
28
years
beginning
on
or
after
that
date.
29
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