,i #aafth ,,congress #ast ,session ,h4 ,r4 #dabj ,,in ,,the ,,house ,,of ,,representatives ,july #cj1 #bjai,mr4 ,lawson of ,florida 7for himself and ,ms4 ,tlaib7 introduced the following bill2 which was referred to the ,committee on ,ways and ,means ,a ,,bill ,to amend the ,internal ,revenue ,code of #aihf to provide for the tax treatment of first-time homeowner assistance programs established by ,states4 #a4 ,short title ,this ,act may be cited as the ,first-,time ,homeowners ,assistance ,act of #bjai4 #b4 ,qualified first-time homeowner assistance program 7a7 ,in general ,part ,,viii of subchapter ,f of chapter #a of the ,internal ,revenue ,code of #aihf is amended by adding at the end the following new section3 #ecj;,a4 ,qualified first-time homeowner assistance program 7a7 ,general rule ,a qualified first-time homeowner assistance program shall be exempt from taxation under this subtitle4 ,notwithstanding the preceding sentence1 such program shall be subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable organizations74 7b7 ,qualified first-,time homeowner assistance program ,for purposes of this section-- 7#a7 ,in general ,the term qualified first-time homeowner assistance program means a program established and maintained by a ,state1 or agency or instrumentality thereof-- 7,a7 under which a person may make contributions to a first-time homeowner assistance account1 7,b7 under which neither contributors nor beneficiaries are prohibited by reason of residency within the ,state1 and 7,c7 which meets the other requirements of this subsection4 7#b7 ,cash contributions ,a program shall not be treated as a qualified first-time homeowner assistance program unless it provides that contributions-- 7,a7 may only be made in cash1 7,b7 may not be made after the date on which the account beneficiary attains age #dj1 or 7,c7 except in the case of rollover contributions1 if such contribution would result in aggregate contributions for all taxable years exceeding #bj1jjj4 7#c7 ,separate accounting ,a program shall not be treated as a qualified first-time homeowner assistance program unless it provides separate accounting for each designated beneficiary4 7#d7 ,limited investment direction ,a program shall not be treated as a qualified first-time homeowner assistance program unless it provides that any contributor to1 or designated beneficiary under1 such program may1 directly or indirectly1 direct the investment of any contributions to the program 7or any earnings thereon7 no more than #b times in any calendar year4 7#e7 ,no pledging of interest as security ,a program shall not be treated as a qualified first-time homeowner assistance program if it allows any interest in the program or any portion thereof to be used as security for a loan4 7#f7 ,certain restrictions disallowed ,a program shall not be treated as a qualified first-time homeowner assistance program unless1 with respect to each first-time homeowner assistance account1 the program does not-- 7,a7 prohibit the designated beneficiary from acquiring or constructing a principal residence outside of the ,state1 7,b7 limit any ,state tax preferences for contributions to these accounts based on the residence of the contributor or the designated beneficiary1 or 7,c7 condition withdrawals1 or limit any ,state tax preferences for withdrawals1 from these accounts from being applied only with respect to residences located within the ,state4 7c7 ,first-,time homeowner assistance account ,for purposes of this section-- 7#a7 ,in general ,the term first-time homeowner assistance account means an account established under a qualified first-time homeowner assistance program for the purpose of providing qualified down payment assistance to the designated beneficiary of the account4 7#b7 ,qualified down payment assistance 7,a7 ,in general ,the term qualified down payment assistance means a distribution-- 7i7 to a designated beneficiary who is a first-time homeowner of a principal residence in the ,united ,states1 7ii7 under a qualified first-time homeowner assistance program in connection with the acquisition1 construction1 or substantial improvement of a principal residence at or before the time of such acquisition or construction1 and 7iii7 the amount of which1 when added to all prior qualified down payment assistance under this subparagraph during any taxable year1 does not exceed #aj percent of the cost of acquiring1 constructing1 or substantially improving the principal residence of the designated beneficiary4 7,b7 ,first-time homeowner ,the term first-time homeowner means any individual if such individual 7and if married1 such individual's spouse7 had no present ownership interest in a principal residence during the #c-year period ending on the date of the acquisition1 construction1 or substantial improvement of the principal residence4 7,c7 ,principal residence ,the term principal residence has the same meaning as when used in section #aba4 7,d7 ,exception ,a residence may be taken into account for purposes of this paragraph only if-- 7i7 the residence is not acquired from a person related to the person acquiring such residence 7or1 if married1 such individual's spouse71 and 7ii7 the basis of the residence in the hands of the person acquiring such residence is not determined-- 7,i7 in whole or in part by reference to the adjusted basis of such residence in the hands of the person from whom acquired1 or 7,,ii7 under section #ajad7;a7 7relating to property acquired from a decedent74 7,e7 ,construction ,a residence which is constructed by the taxpayer shall be treated as purchased by the taxpayer on the date the taxpayer first occupies such residence4 7,f7 ,special rules relating to marriage 7i7 ,married couples must file joint return ,if the designated beneficiary is married on the date of the distribution1 the distribution shall not be treated as qualified down payment assistance unless the taxpayer and the taxpayer's spouse file a joint return for the taxable year4 7ii7 ,marital status ,an individual legally separated from his spouse under a decree of divorce or of separate maintenance shall not be considered as married4 7#c7 ,designated beneficiary ,the term designated beneficiary with respect to a first-time homeowner assistance account means-- 7,a7 the individual designated at the establishment of the account as the beneficiary of amounts paid 7or to be paid7 to the account1 and 7,b7 in the case of a change in beneficiaries described in subsection 7d77#c77;,c71 the individual who is the new beneficiary of the account4 7#d7 ,member of family ,the term member of the family means1 with respect to any designated beneficiary-- 7,a7 the spouse of such beneficiary1 7,b7 an individual who bears a relationship to such beneficiary which is described in subparagraphs 7,a7 through 7,g7 of section #aeb7;d77#b71 7,c7 the spouse of any individual described in subparagraph 7,b71 and 7,d7 any first cousin of such beneficiary4 7d7 ,tax treatment of designated beneficiaries and contributors 7#a7 ,in general ,except as otherwise provided in this subsection1 no amount shall be includible in gross income of-- 7,a7 a designated beneficiary under a qualified first-time homeowner assistance program1 or 7,b7 a contributor to such program on behalf of a designated beneficiary1 with respect to any distribution or earnings under such program4 7#b7 ,gift tax treatment of contributions ,for purposes of chapters #ab and #ac-- 7,a7 ,in general ,any contribution to a qualified first-time homeowner assistance program on behalf of any designated beneficiary-- 7i7 shall be treated as a completed gift to such beneficiary which is not a future interest in property1 and 7ii7 shall not be treated as a qualified transfer under section #bejc7;e74 7,b7 ,treatment of excess contributions for gift tax purposes ,if the aggregate amount of contributions described in subparagraph 7,a7 during the calendar year by a donor exceeds the limitation for such year under section #bejc7;b71 such aggregate amount shall1 at the election of the donor1 be taken into account for purposes of such section ratably over the #e-year period beginning with such calendar year4 7#c7 ,distributions 7,a7 ,in general ,any distribution under a qualified first-time homeowner assistance program shall be includible in the gross income of the distributee in the manner as provided under section #gb to the extent not excluded from gross income under this paragraph4 7,b7 ,distributions for qualified down payment assistance ,for purposes of this paragraph1 if-- 7i7 distributions under a qualified first-time homeowner assistance program do not exceed the qualified down payment assistance1 no amount shall be includible in gross income1 and 7ii7 in any other case1 the amount otherwise includible in gross income shall be reduced by an amount which bears the same ratio to such amount as such assistance bear to such distributions4 7,c7 ,change in beneficiaries or programs 7i7 ,rollovers ,subparagraph 7,a7 shall not apply to that portion of any distribution which1 within #fj days of such distribution1 is transferred-- 7,i7 to another qualified distribution under a qualified first-time homeowner assistance program or the benefit of the designated beneficiary1 or 7,,ii7 to the credit of another designated beneficiary under a qualified distribution under a qualified first-time homeowner assistance program who is a member of the family of the designated beneficiary with respect to which the distribution was made4 7ii7 ,change in designated beneficiaries ,any change in the designated beneficiary of an interest in a qualified distribution under a qualified first-time homeowner assistance program shall not be treated as a distribution for purposes of subparagraph 7,a7 if the new beneficiary is a member of the family of the old beneficiary4 7iii7 ,limitation on certain rollovers ,clause 7i77,i7 shall not apply to any transfer if such transfer occurs within #ab months from the date of a previous transfer to any qualified distribution under a qualified first-time homeowner assistance program for the benefit of the designated beneficiary4 7#d7 ,estate tax treatment 7,a7 ,in general ,no amount shall be includible in the gross estate of any individual for purposes of chapter #aa by reason of an interest in a qualified distribution under a qualified first-time homeowner assistance program4 7,b7 ,amounts includible in estate of designated beneficiary in certain cases ,subparagraph 7,a7 shall not apply to amounts distributed on account of the death of a beneficiary4 7,c7 ,amounts includible in estate of donor making excess contributions ,in the case of a donor who makes the election described in paragraph 7#b77;,b7 and who dies before the close of the #e-year period referred to in such paragraph1 notwithstanding subparagraph 7,a71 the gross estate of the donor shall include the portion of such contributions properly allocable to periods after the date of death of the donor4 7#e7 ,other gift tax rules ,for purposes of chapters #ab and #ac-- 7,a7 ,treatment of distributions ,except as provided in subparagraph 7,b71 in no event shall a distribution from a qualified distribution under a qualified first-time homeowner assistance program be treated as a taxable gift4 7,b7 ,treatment of designation of new beneficiary ,the taxes imposed by chapters #ab and #ac shall apply to a transfer by reason of a change in the designated beneficiary under the program 7or a rollover to the account of a new beneficiary7 unless the new beneficiary is-- 7i7 assigned to the same generation as 7or a higher generation than7 the old beneficiary 7determined in accordance with section #bfea71 and 7ii7 a member of the family of the old beneficiary4 7#f7 ,additional tax for distributions not used for qualified downpayment assistance 7,a7 ,in general ,the tax imposed by this chapter for any taxable year on any taxpayer who receives a payment or distribution from a qualified first-time homeowner assistance program which is includible in gross income shall be increased by #aj percent of the amount which is so includible4 7,b7 ,exceptions ,subparagraph 7,a7 shall not apply if the payment or distribution is-- 7i7 made to a beneficiary 7or to the estate of the designated beneficiary7 on or after the death of the designated beneficiary1 7ii7 attributable to the designated beneficiary's being disabled 7within the meaning of section #gb7m77#g771 or 7iii7 an amount which is includible in gross income solely by application of paragraph 7#b77;,c77i77,,ii7 for the taxable year4 7,c7 ,contributions returned before certain date ,subparagraph 7,a7 shall not apply to the distribution of any contribution made during a taxable year on behalf of the designated beneficiary if-- 7i7 such distribution is made before the first day of the sixth month of the taxable year following the taxable year1 and 7ii7 such distribution is accompanied by the amount of net income attributable to such excess contribution4 ,any net income described in clause 7ii7 shall be included in gross income for the taxable year in which such excess contribution was made4 7e7 ,reports ,each officer or employee having control of the qualified distribution under a qualified first-time homeowner assistance program or their designee shall make such reports regarding such program to the ,secretary and to designated beneficiaries with respect to contributions1 distributions1 and such other matters as the ,secretary may require4 ,the reports required by this subsection shall be filed at such time and in such manner and furnished to such individuals at such time and in such manner as may be required by the ,secretary4 7f7 ,regulations ,notwithstanding any other provision of this section1 the ,secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section and to prevent abuse of such purposes1 including regulations under chapters #aa1 #ab1 and #ac of this title4 4 7b7 ,conforming amendments 7#a7 ,tax on ,excess ,contributions 7,a7 ,in general ,subsection 7a7 of section #digc of such ,code is amended by striking or at the end of paragraph 7#e71 by inserting or at the end of paragraph 7#f71 and by inserting after paragraph 7#f7 the following new paragraph3 7#g7 a first-time homeowner assistance account 7as defined in section #ecj;,a71 4 7,b7 ,excess contribution ,section #digc of such ,code is amended by adding at the end the following new subsection3 7i7 ,excess ,contributions to first-,time homeowner assistance account ,for purposes of this section-- 7#a7 ,in general ,in the case of a first-time homeowner assistance account 7as defined in section #ecj;,a7 7within the meaning of section #ebi;,a71 the term excess contributions means the amount by which the amount contributed for the taxable year to such account 7other than contributions under section #ecj;,a7d77#c77;,c77 exceeds the contribution limit under section #ecj;,a7b77#b77;,c74 7#b7 ,special rule ,for purposes of this subsection1 any contribution which is distributed out of the first-time homeowner assistance account 7as so defined7 in a distribution to which the last sentence of section #ecj;,a7d77#f77;,c7 applies shall be treated as an amount not contributed4 4 7#b7 ,section #bf7;b77#b7 is amended by striking and at the end of subparagraph 7,x71 by striking the period at the end of subparagraph 7,y7 and inserting 1 and1 and by inserting after subparagraph 7,y7 the following3 7,z7 section #ecj;,a7d77#c77;,a7 7relating to additional tax on first-time homeowner assistance account distributions not used for qualified homeowner assistance74 4 7#c7 ,penalty for ,failure to ,file ,reports ,section #ffic7;a77#b7 of such ,code is amended by striking and at the end of subparagraph 7,e71 by striking the period at the end of subparagraph 7,f7 and inserting 1 and1 and by inserting after subparagraph 7,f7 the following3 7,g7 section #ecj;,a7e7 7relating to qualified first-time homeowner assistance program71 and 4 7#d7 ,section #hgg;,a of such ,code is amended-- 7,a7 in subsection 7e77#b7 by inserting a qualified first-time homeowner assistance program 7as defined in section #ecj;,a71 after #ecj711 and 7,b7 in subsection 7g77#f7 by inserting #ecj;,a7c77#c71 after #ebi7;c77#c714 7#e7 ,section #dife7;c7 of such ,code is amended by striking or at the end of paragraph 7#g71 by striking the period at the end of paragraph 7#h7 and inserting 1 or1 and by inserting after paragraph 7#h7 the following new paragraph3 7#i7 a program described in section #ecj;,a4 4 7c7 ,clerical amendment ,the table of sections for part ,,viii of subchapter ,f of chapter #a of such ,code is amended by adding at the end the following new item3 ,sec4 #ecj;,a4 ,qualified first-time homeowner assistance program4 4 7d7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after the date of the enactment of this ,act4