HB-4969, As Passed House, February 5, 2004

SUBSTITUTE FOR

HOUSE BILL NO. 4969

                                                                             A bill to amend 1939 PA 280, entitled                                             

"The social welfare act,"                                                   

by amending section 57k (MCL 400.57k), as added by 1998 PA 361.             

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

1       Sec. 57k.  (1) The department shall operate a program                       

2   allowing an individual eligible for family independence                     

3   assistance to establish an individual development account for               

4   postsecondary education, business capitalization, or a first-time           

5   homebuyers home purchase in accordance with this section.  The            

6   department shall disregard  funds all savings deposited,                   

7   including accrued interest, in an individual development account            

8   in determining the individual's eligibility for family                      

9   independence assistance and the amount of the grant the                     

10  individual receives.                                                        

11      (2) An individual who is eligible to receive family                         

1   independence assistance, or another person on behalf of that                

2   individual, may establish an individual development account for             

3   the purpose of accumulating funds for a qualified purpose                   

4   described in subsection (3).  An individual shall only contribute           

5   money to the individual development account that is derived from            

6   earned income, as that term is defined in section 911(d)(2) of              

7   the internal revenue code of 1986.  The individual shall withdraw           

8   money from the individual development account only for a                    

9   qualified purpose described in subsection (3).                              

10      (3) An individual who has established an individual                         

11  development account under this section may withdraw and expend              

12  funds from the individual development account only for payment              

13  toward postsecondary education or business capitalization, or for           

14  payment of qualified acquisition costs with respect to a                    

15  qualified principal residence for a qualified first-time                    

16  homebuyer, if paid from an individual development account                   

17  directly to the persons to whom the qualified acquisition costs             

18  are due.                                                                    

19      (4) As used in this section:                                                

20      (a) "Date of acquisition" means the date on which a qualified               

21  first-time homebuyer enters into a binding contract to acquire,             

22  construct, or reconstruct the qualified first-time homebuyer's              

23  principal residence.                                                        

24      (b) "Individual development account" means a trust created or               

25  organized in the United States that is funded through periodic              

26  contributions by the establishing individual in accordance with             

27  this section and that may be matched by or through a qualified              

1   entity for a qualified purpose described in subsection (3).                 

2       (c) "Qualified acquisition costs" means the costs of                        

3   acquiring, constructing, or reconstructing a qualified principal            

4   residence.  The term includes any usual or reasonable settlement,           

5   financing, or other closing costs.                                          

6       (d) "Qualified entity" means either of the following:                       

7                                                                                (i) A not-for-profit organization described in section                              

8   501(c)(3) of the internal revenue code of 1986 and exempt from              

9   taxation under section 501(a) of  that the internal revenue code           

10  of 1986.                                                                    

11      (ii) A state or local governmental agency acting in                          

12  cooperation with an organization described in subparagraph (i).             

13      (e) "Qualified first-time homebuyer" means a taxpayer and, if               

14  married, the taxpayer's spouse who has no present ownership                 

15  interest in a principal residence during the 3-year period ending           

16  on the date of acquisition of the qualified principal residence             

17  to which this section applies.                                              

18      (f) "Qualified principal residence" means a principal                       

19  residence within the meaning of former section 1034 of the                  

20  internal revenue code of 1986, the qualified acquisition costs of           

21  which do not exceed 100% of the average area purchase price                 

22  applicable to that residence, determined in accordance with                 

23  paragraphs (2) and (3) of section 143(e) of the internal revenue            

24  code of 1986.