,i #aaith ,,congress #b;d ,session ,h4 ,r4 #hgji ,,in ,,the ,,house ,,of ,,representatives ,may #g1 #bjbf ,ms4 ,stevens 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 allow the establishment of homeownership savings accounts4 #a4 ,short title ,this ,act may be cited as the ,homeownership ,savings ,act4 #b4 ,homeownership savings account 7a7 ,in general ,part ,,vii of subchapter ,b of chapter #a of the ,internal ,revenue ,code of #aihf is amended by inserting after section #bbc the following new section3 #bbc;,a4 ,homeownership savings account 7a7 ,deduction allowed ,in the case of an account beneficiary1 there shall be allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by or on behalf of such individual to a homeownership savings account of such individual4 7b7 ,limitations 7#a7 ,annual dollar limitation ,the amount allowable as a deduction under subsection 7a7 to an individual for the taxable year shall not exceed-- 7,a7 #c1jjj in the case of a joint return1 7,b7 #b1ejj in the case of a head of household1 or 7,c7 #b1jjj in the case of any other individual4 7#b7 ,limitation based on earned income 7,a7 ,in general ,the amount allowable as a deduction under subsection 7a7 shall not exceed such individual's earned income for the taxable year4 7,b7 ,special rule for joint returns ,in the case of an individual whose earned income is less than the earned income of such individual's spouse and files a joint return for the taxable year1 the amount allowable as a deduction under subsection 7a7 shall not exceed the excess 7if any7 of-- 7i7 the earned income of the taxpayer for such taxable year1 over 7ii7 the deduction allowable under subsection 7a7 to such individual's spouse for such taxable year4 7,c7 ,earned income ,for purposes of this paragraph1 the term earned income has the meaning given such term in section #cb7;c77#b74 7#c7 ,limitation based on modified adjusted gross income 7,a7 ,in general ,the maximum amount that may otherwise be allowable as a deduction under subsection 7a7 shall be reduced 7but not below zero7 by an amount which bears the same ratio to such maximum amount as-- 7i7 in the case of a joint return-- 7,i7 the excess 7if any7 of the modified adjusted gross income of the account beneficiary for such taxable year over #bdb1jjj1 bears to 7,,ii7 #aj1jjj1 7ii7 in the case of a head of household-- 7,i7 the excess 7if any7 of the modified adjusted gross income of the account beneficiary for such taxable year over #bjj1jjj1 bears to 7,,ii7 #bj1jjj1 or 7iii7 in the case of any other individual-- 7,i7 the excess 7if any7 of the modified adjusted gross income of the account beneficiary for such taxable year over #aec1jjj1 bears to 7,,ii7 #ae1jjj4 7,b7 ,modified adjusted gross income ,for purposes of this paragraph1 the term modified adjusted gross income means the adjusted gross income of the taxpayer for the taxable year increased by any amount excluded from gross income under section #iaa1 #ica1 or #icc4 7#d7 ,denial of deduction to dependants ,no deduction shall be allowed under this section to any individual with respect to whom a deduction under section #aea is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual's taxable year begins4 7c7 ,definitions and special rules ,for purposes of this section-- 7#a7 ,homeownership savings account ,the term homeownership savings account means a trust created or organized in the ,united ,states exclusively for the purpose of paying the qualified homeownership expenses of the account beneficiary 7and designated as a homeownership savings account at the time created or organized71 but only if the written governing instrument creating the trust meets the following requirements3 7,a7 ,no contribution will be accepted-- 7i7 if such contribution would result in lifetime aggregate contributions to the account exceeding #dj1jjj1 7ii7 unless it is in cash1 or 7iii7 if such account beneficiary has not made the certification required under subparagraph 7,f74 7,b7 ,the trustee is a bank 7as defined in section #djh7n77 or another person who demonstrates to the satisfaction of the ,secretary that the manner in which that person will administer the trust will be consistent with the requirements of this section4 7,c7 ,no part of the trust assets will be invested in life insurance contracts4 7,d7 ,the assets of the trust shall not be commingled with other property except in a common trust fund or common investment fund4 7,e7 ,the account beneficiary has attained the age of #ah4 7,f7 ,the account beneficiary certifies1 under penalty of perjury1 at the time that the account is established that such account beneficiary would be a first-time homebuyer with respect to a purchase of a principal residence on the date of such establishment4 7#b7 ,qualified homeownership expenses ,the term qualified homeownership expenses means a down payment or closing costs relating to the purchase of the primary residence of the account beneficiary of a homeownership savings account if such account beneficiary is a first-time homebuyer4 7#c7 ,no contribution for individual who is not a first-time homebuyer ,in the case of an individual who would not be a first-time homebuyer with respect to a purchase of a principal residence on the date of any contribution to a homeownership savings account1 paragraph 7#a77;,a77i7 shall be applied by substituting #j for #dj1jjj4 7#d7 ,first-time homebuyer ,the term first-time homebuyer means an individual if-- 7,a7 such individual is a first-time homebuyer 7as defined in section #cf7;c77#a771 and 7,b7 such individual has never purchased a residential property using an amount which was excluded from the gross income of such individual by reason of subsection 7e77#a74 7#e7 ,account beneficiary ,the term account beneficiary means the individual on whose behalf the homeownership savings account is established4 7#f7 ,certain rules to apply ,rules similar to the following rules shall apply for purposes of this section3 7,a7 ,section #bai7;d77#b7 7relating to no deduction for rollovers74 7,b7 ,section #bai7;f77#c7 7relating to time when contributions deemed made74 7,c7 ,section #bai7;f77#e7 7relating to employer payments74 7,d7 ,section #djh7;g7 7relating to community property laws74 7d7 ,tax treatment of accounts 7#a7 ,in general ,a homeownership savings account is exempt from taxation under this subtitle unless such account has ceased to be a homeownership savings account4 ,notwithstanding the preceding sentence1 any such account is subject to the taxes imposed by section #eaa 7relating to imposition of tax on unrelated business income of charitable1 etc4 organizations74 7#b7 ,account terminations 7,a7 ,acquisition of principal residence ,if the account beneficiary acquires an ownership interest in a principal residence-- 7i7 each homeownership savings account of such beneficiary shall cease to be a homeownership savings account as of the close of the #fj-;day period beginning on the date of such acquisition1 and 7ii7 the balance of such account as of such date shall be treated as distributed to such beneficiary4 7,b7 ,prohibited transactions1 etc ,rules similar to the rules of paragraphs 7#b7 and 7#d7 of section #djh7;e7 shall apply to any homeownership savings account1 and any amounts treated as distributed under such rules shall be treated as not used to pay qualified homeownership expenses4 7e7 ,tax treatment of distributions 7#a7 ,amounts used for qualified homeownership expenses ,any amount paid or distributed out of a homeownership savings account which is used exclusively to pay qualified homeownership expenses of any account beneficiary shall not be includible in gross income4 7#b7 ,inclusion of amounts not used for qualified homeownership expenses ,any amount paid or distributed out of a homeownership savings account which is not used exclusively to pay the qualified homeownership expenses of the account beneficiary shall be included in the gross income of such beneficiary4 7#c7 ,excess contributions returned before due date of return 7,a7 ,in general ,if any excess contribution is contributed for a taxable year to any homeownership savings account of an individual1 paragraph 7#b7 shall not apply to distributions from the homeownership savings accounts of such individual 7to the extent such distributions do not exceed the aggregate excess contributions to all such accounts of such individual for such year7 if-- 7i7 such distribution is received by the individual on or before the last day prescribed by law 7including extensions of time7 for filing such individual's return for such 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 the gross income of the individual for the taxable year in which it is received4 7,b7 ,excess contribution ,for purposes of subparagraph 7,a71 the term excess contribution means any contribution if-- 7i7 after such contribution1 the aggregate contribution to homeownership savings accounts of the account beneficiary exceeds the amount in effect under subsection 7c77#a77;,a77i71 or 7ii7 if the amount of such contribution is not allowable as a deduction by reason of paragraph 7#b77;,a7 or 7#c77;a7 of subsection 7b74 7#d7 ,additional tax for distributions not used for homeownership expenses 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 homeownership savings account which is includible in gross income shall be increased by #bj 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 the account beneficiary 7or to the estate of such account beneficiary7 on or after the death of such account beneficiary1 or 7ii7 attributable to such account beneficiary's being disabled 7within the meaning of section #gb7m77#g774 7#e7 ,rollover contribution ,an amount is described in this paragraph as a rollover contribution if it meets the following requirements3 7,a7 ,in general ,paragraph 7#b7 shall not apply to any amount paid or distributed from a homeownership savings account to the account beneficiary to the extent the amount received is paid into a homeownership savings account for the benefit of such beneficiary not later than the #fjth day after the day on which the beneficiary receives the payment or distribution4 7,b7 ,limitation ,this paragraph shall not apply to any amount described in subparagraph 7,a7 received by an individual from a homeownership savings account if1 at any time during the #a-year period ending on the day of such receipt1 such individual received any other amount described in subparagraph 7,a7 from a homeownership savings account which was not includible in the individual's gross income because of the application of this paragraph4 7#f7 ,special rules for death and divorce ,rules similar to the rules of paragraphs 7#g7 and 7#h7 of section #bbc7;f7 shall apply for purposes of this section4 7#g7 ,disallowance of excluded amounts as deduction1 credit1 or exclusion ,no deduction1 credit1 or exclusion shall be allowed to the taxpayer under any other section of this chapter for any qualified homeownership expenses to the extent taken into account in determining the amount of the exclusion under paragraph 7#a74 7f7 ,salary reduction prohibited ,no employer shall directly reduce the wages or salary of an employee by reason of a contribution made by such employer to a homeownership savings account on behalf of such employee4 7g7 ,inflation adjustment 7#a7 ,in general ,in the case of any taxable year beginning after #bjbf1 the dollar amounts in subsection 7b7 shall be increased by an amount equal to-- 7,a7 such dollar amount1 multiplied by 7,b7 the cost of living adjustment determined under section #a7;f77#c7 for the calendar year in which the taxable year begins1 determined by substituting calendar year #bjbd for calendar year #bjaf in subparagraph 7ii7 thereof4 7#b7 ,rounding ,if any increase under paragraph 7#a7 is not a multiple of #ajj1 such increase shall be rounded to the nearest multiple of #ajj4 7h7 ,reports 7#a7 ,in general ,the trustee of a homeownership savings account shall make such reports regarding such account to the ,secretary and to the account beneficiary with respect to contributions1 distributions1 and such other matters as the ,secretary may require4 7#b7 ,rollover distributions ,in the case of any distribution described in subsection 7e77#e71 the officer or employee having control of the homeownership savings account 7or their designee7 shall provide a report to the trustee of the homeownership savings account to which the distribution is made4 ,such report shall include information with respect to the contributions1 distributions1 and earnings of the homeownership savings account as of the date of the distribution described in such subsection1 together with such other matters as the ,secretary may require4 7#c7 ,time and manner ,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 the ,secretary determines appropriate4 4 7b7 ,deduction allowed above the line ,section #fb7;a7 of such ,code is amended by inserting after paragraph 7#ba7 the following new paragraph3 7#bb7 ,homeownership savings accounts ,the deduction allowed by section #bbc;,a4 4 7c7 ,exclusions for employer contributions to homeownership savings accounts 7#a7 ,exclusion from income tax 7,a7 ,in general ,part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after section #aci;,i the following new section3 #aci;,j4 ,homeownership savings account contributions ,in the case of an account beneficiary 7as defined in section #bbc;,a7c77#e771 gross income does not include amounts contributed by such account beneficiary's employer to any homeownership savings account 7as defined in section #bbc;,a7c77#a77 of such account beneficiary if such contribution1 taken in aggregate with all other contributions in all taxable years to homeownership savings accounts 7as so defined7 of such beneficiary1 does not exceed the amount in effect under section #bbc;,a7c77#a77;,a77i74 4 7,b7 ,clerical amendment ,the table of sections for part ,,iii of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #aci;,i the following new item3 ,sec4 #aci;,j4 ,homeownership savings account contributions4 4 7#b7 ,exclusion from employment taxes 7,a7 ,social security taxes 7i7 ,in general ,section #caba7;a7 of such ,code is amended by striking or at the end of paragraph 7#bb77;,b71 by striking the period at the end of paragraph 7#bc7 and inserting 1 or 1 and by inserting after paragraph 7#bc7 the following new paragraph3 7#bd7 any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #aci;,j4 4 7ii7 ,conforming amendment to ,social ,security ,act ,section #bji7;a7 of the ,social ,security ,act is amended by striking or at the end of paragraph 7#ai71 by striking 74 at the end of paragraph 7#bj7 and inserting 2 or1 and by inserting after paragraph 7#bj7 the following new paragraph3 7#ba7 any reimbursement which is excludable from gross income under section #aci;,j of the ,internal ,revenue ,code of #aihf4 4 7,b7 ,railroad retirement tax ,section #cbca7;e7 of such ,code is amended by adding at the end the following new paragraph3 7#ac7 ,homeownership savings account contributions ,the term #8compensation' shall not include any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #aci;,j4 4 7,c7 ,unemployment tax ,section #ccjf7;b7 of such ,code is amended by striking or at the end of paragraph 7#ai77;,b71 by striking the period at the end of paragraph 7#bj7 and inserting 2 or1 and by inserting after paragraph 7#bj7 the following new paragraph3 7#ba7 any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #aci;,j4 4 7,d7 ,withholding tax ,section #cdja7;a7 of such ,code is amended by striking or at the end of paragraph 7#bb71 by striking the period at the end of paragraph 7#bc7 and inserting 2 or1 and by inserting after paragraph 7#bc7 the following new paragraph3 7#bd7 any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section #aci;,j4 4 7#c7 ,employer contributions required to be shown on ,w-#b ,section #fjea7;a7 of such ,code is amended by striking and at the end of paragraph 7#af71 by striking the period at the end of paragraph 7#ag7 and inserting 1 and1 and by inserting after paragraph 7#ag7 the following new paragraph3 7#ah7 the amount contributed to any homeownership savings account 7as defined in section #bbc;,a7c77#a77 of such employee4 4 7d7 ,tax on excess contributions 7#a7 ,in general ,section #digc7;a7 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 homeownership savings account 7within the meaning of section #bbc;,a74 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 homeownership savings account 7#a7 ,in general ,for purposes of this section1 in the case of homeownership savings accounts 7as defined in section #bbc;,a71 the term excess contributions means the sum of-- 7,a7 the amount of any excess contribution 7as defined in section #bbc;,a7e77#c77;,b7 for the taxable year1 plus 7,b7 the excess 7if any7 of-- 7i7 the amount determined under this subsection for the preceding taxable year1 over 7ii7 the distribution out of the homeownership savings accounts which were included in gross income under section #bbc;,a7e77#a7 during the taxable year4 7#b7 ,treatment of returned excess contributions ,for purposes of this subsection1 any contribution which is distributed out of the homeownership savings account in a distribution to which section #bbc;,a7e77#c77;,a7 applies shall be treated as an amount not contributed4 4 7e7 ,tax on prohibited transactions 7#a7 ,section #dige7;c7 of such ,code is amended by adding at the end the following new paragraph3 7#h7 ,special rule for homeownership savings accounts ,an individual for whose benefit a homeownership savings account 7within the meaning of section #bbc;,a7c77#a77 is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account 7which would otherwise be taxable under this section7 if1 with respect to such transaction1 the account ceases to be a homeownership savings account by reason of the application of section #bbc;,a7d77#b7 to such account4 4 7#b7 ,section #dige7;e77#a7 of such ,code is amended by striking or at the end of subparagraph 7,f71 by redesignating subparagraph 7,g7 as subparagraph 7,h71 and by inserting after subparagraph 7,f7 the following new subparagraph3 7,g7 a homeownership savings account described in section #bbc;,a7c74 4 7f7 ,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 following new subparagraph3 7,g7 ,section #bbc;,a7h7 7relating to homeownership savings accounts74 4 7g7 ,conforming amendments 7#a7 ,section #bf7;b77#b7 of such ,code is amended by striking and at the end of subparagraph 7,y71 by striking the period at the end of subparagraph 7,z7 and inserting 1 and1 and by inserting after subparagraph 7,z7 the following new subparagraph3 7,,aa7 section #bbc;,a7e77#b7 7relating to additional tax on homeownership savings account not used for qualified homeownership expenses74 4 7#b7 ,section #djh7;e77#b77;ii7 of such ,code is amended by inserting or to a homeownership savings account under section #bbc;,a7e77#g7 before the period4 7#c7 ,section #ecj7;d77#i77;,a77ii7 of such ,code is amended by inserting 1 to a homeownership savings account under section #bbc;,a7e77#g71 after section #djh7;e77#b74 7#d7 ,section #hgg;,a of such ,code is amended-- 7,a7 in subsection 7e77#b7 by inserting a homeownership savings account 7as defined in section #bbc;,a71 after section #bbc711 and 7,b7 in subsection 7g77#f7 by inserting #bbc;,a7e77#d711 after #ebi;,a7c77#c714 7#e7 ,the table of sections for part ,,vii of subchapter ,b of chapter #a of such ,code is amended by inserting after the item relating to section #bbc the following new item3 ,sec4 #bbc;,a4 ,homeownership savings account4 4 7h7 ,effective date ,the amendments made by this section shall apply to taxable years beginning after ,december #ca1 #bjbf4